USA- WK Kellogg Co. announced on August 6, 2024, its decision to close its Omaha, Nebraska, cereal manufacturing facility by the end of 2026 and reduce operations at its Memphis, Tennessee, plant starting next year.
This strategic move aims to consolidate production into newer, more efficient facilities located in Battle Creek, Michigan; Lancaster, Pennsylvania; and Belleville, Ontario.
The company plans to invest US$390 million in upgrading infrastructure and technology across these sites while incurring a one-time restructuring cost of US$110 million.
The closure of the Omaha plant, which has been operational for over 75 years, will result in a net loss of approximately 550 jobs.
This figure includes new hires at the facilities where production will be increased. However, WK Kellogg did not specify how many employees would be affected in Omaha and Memphis.
Omaha Mayor Jean Stothert expressed her disappointment, stating, “I’m certainly disappointed that Kellogg’s would make such a significant announcement this way. After more than 75 years in Omaha, Kellogg’s will leave a big void.”
The Omaha plant was notably the center of a significant strike in 2021, when workers protested against a two-tier wage structure, leading to a two-month work stoppage.
The strike concluded with an agreement for wage increases and improved benefits. This history adds emotional weight to the current announcement, as many employees have dedicated their careers to the company.
Former union leader Dan Osborn remarked, “A lot of these people have dedicated their entire lives to working here. People are proud of the name and what they’ve done here.”
This reorganization comes in response to a decline in U.S. cereal demand, which surged during the pandemic as families gathered for breakfast but has since faltered.
According to Nielsen IQ, unit sales of cereal have dropped by 4.2% over the past year, following a 3.6% decline in the previous year.
WK Kellogg’s recent financial report revealed a 4% decrease in net sales, totaling US$672 million for the April to June period.
Although the company experienced some growth from premium products like Special K Zero, overall sales volumes fell by 4.8%, partly due to competition from store-brand cereals as consumers seek better value.
Kellogg’s Chairman and CEO Gary Pilnick stated, “Actions that impact our people and the communities where we operate are challenging and are made with thoughtful consideration. We recognize and appreciate the tremendous contributions of our teams in Omaha and Memphis, and we are committed to providing them support throughout this transition.”
In light of the impending changes, Kellogg’s has pledged to assist affected employees through severance packages, Employee Assistance Programs, and connections to job fairs and resume writing services.
Employees are understandably anxious about their futures. One worker expressed, “It’s the unknown that bothers me. At my age, it makes it harder to find something else. I was hoping to work towards retirement.”
As WK Kellogg moves forward with its plans, the emotional and economic impact on the affected communities remains a pressing concern.
The company’s decision reflects broader trends in the cereal market and highlights the challenges faced by traditional food manufacturers in adapting to shifting consumer preferences.
Sign up to receive our email newsletters with the latest news updates and insights from Africa and the World HERE.
