The cereal giant announced March 12 it will close in July the PowerBar manufacturing facility in Boise, Idaho, in a bid to make the iconic, but long-struggling sports nutrition products brand profitable. The company said it will outsource production to third party facilities and that it remains committed to PowerBar, which it acquired from Nestle a little more than a year ago in February 2014. (Read more about the deal HERE.)
The closure should save Post about $4 million annually beginning in fiscal 2016, but it will cost 165 employees their jobs and the company about $5 million in a pre-tax charge, the firm said.
The bulk of the $5 million charge, roughly $4.2 million, will cover severance, retention and related expenses, according to documents the firm filed with the Securities and Exchange Commission. The company also says it will provide employees with “transition assistance.”
The announcement comes after Post outlined in its first quarter report in February that it wanted to revitalize PowerBar through production innovation, re-branding and new marketing efforts. At that time, CEO Robert Vitale said Post would invest in the brand in 2015 with the goal of making it profitable in fiscal 2016 and beyond. (Read more about the revitalization plan HERE.)
Vitale also said during the first quarter earnings report that he did not expect PowerBar to be profitable until 2016. And he took the position of aiming to simply maintain – rather than gain – distribution for the brand, which parented the energy bar category but then failed to keep pace with competitors creating more palatable alternatives. Thus suggesting continued competitive threats to the brand’s shelf space and relevancy with consumers.
Despite this, Vitale remained optimistic about the brand.
Post is not alone in cutting jobs and costs.
The Campbell Soup Co. announced in February that it likely will lay off “excess layers of management” following a restructuring. (Read more HERE.) In addition, rival cereal company General Mills said in January it would close two of its Pillsbury dough factories, costing 500 jobs. This is on top of the 1,400 jobs it previously cut in 2014. Kellogg also shuttered its plant in London, Ontario, eliminating 550 jobs. And Cargill announced in January that 118 employees would lose their jobs when it relocated a meat slicing and packing facility in Springfield, Mo., to facilities in Nebraska and Texas.
Representing sentiments echoed by all the companies, Cargill said the change would improve customer service and production, but recognizes “it always hurts when people’s jobs are impacted.”