Kellogg has devised a new plan according to which they would not deliver its foods to the stores directly, but instead they would use warehouses of grocers. This decision, however, is not good news for the workers as they might lay off about 1100 workers or more.
On Wednesday, the company revealed that it will be shutting down 39 distribution centers as it plans exits from the delivery network to the direct store. The sites that are closing have an average of approximately 30 workers that work full-time and that is equal to about 1170 jobs.
Kris Charles, a spokesperson of Kellogg said that this decision was very difficult as it had a great deal of impact on the distribution employees, but it was also profitable to the company for achieving the objectives in the long term.
For the execution of this program, Kellogg is shutting down the distribution centers in Cicero, New York with about 30 workers, Evansville with up to 30 workers, Hagerstown with 85 workers, the snacks center Houston, Sharonville, Ohio with 80 to 90 employees, and Warren, Ohio. All these centers will close by the end of this year and leave all its workers unemployed. Kellogg has also offered job openings at Oklahoma city, Orlando, Atlanta, and California.
Paul Norman, President of Kellogg, North America said that this move has clearly suggested the competitiveness of Kellogg to emerge as the fastest growing company in the business of snacks. As this would save a lot of capital, the company will invest it in building the brand name of Kellogg.
Reiterating the statement by Charles, the president said that it had been a difficult decision for the company; however, this would push the company in the direction of setting more trends for shoppers and consumers.
The Chief Financial Officer, Ron Dissinger said that this plan had been abbreviated as Project K. Project K was first introduced in the year 2013 and will be in execution till the year 2019. Its purpose was to reshape the existing infrastructure and the modularity of the business and bring about more efficiency and optimal use of resources. This however has caused a number of layoffs that included the decision to lay off 250 jobs in North America last month.
With the statistics of the fourth quarter, the company saw a decline of 53 million dollars despite the profits being 28 percent high with the value of 1.4 billion dollars for that year.
The quarter also witnessed adjusted earnings to be 92 cents per share, which is about 3.74 dollars for the entire year of 2016. This had beaten the expectations of Wall Street. And the stock prices also went up by 4 percent with the value closing at 76.44 dollars per share on Thursday.