Mondelez International will close a factory in Philadelphia as it moves to consolidate US biscuit production on the East Coast.
The Philadelphia factory, which employs 350 people, will shut by early 2015. Mondelez announced it would invest $130 million in new biscuit manufacturing technology at existing cookie and cracker plants in Fair Lawn, N.J., and Richmond, Va.
Philadelphia plant unfit for business needs
The company said that the Philadelphia site produced only a limited number of core products and other facilities were better placed to support the firm’s future business needs.
“This announcement is also bittersweet. It's always a difficult decision to close a manufacturing facility, especially one like the Philadelphia bakery, which has been part of our organization and the community for many years," said Cindy Waggoner, vice president, North America Integrated Supply Chain, Biscuits, for Mondelez.
Supply chain restructuring
In September last year, Mondelez said that it needed to grow total capacity by 25% over the next three years and said that 14 plants would become its main manufacturing hubs, while older ‘subscale’ facilities would close.
The company said at the time it would open five previously unannounced sites by 2020 as part of a five-step supply chain efficiency program. The firm is already investing $350m to build the world’s largest cookie plant in Mexico, due to be operational in the second half of 2014.
Mondelez biscuit category
Waggoner said investments at the Fair Lawn and Richmond plants would lead to further efficiencies.
Biscuits are Mondelez’s largest operating category accounting for around 30% of sales, just ahead of chocolate on 27%.
The company is the number one biscuit player in the world with an 18% share with brands such as Oreo, Lu, Ritz and Chips Ahoy!