TreeHouse Foods follows Kellogg in cutting Battle Creek cereal production

By Douglas Yu

- Last updated on GMT

TreeHouse's Battle Creek cereal plant shutdown will affect 84 employees. Pic: ©GettyImages/jrwasserman
TreeHouse's Battle Creek cereal plant shutdown will affect 84 employees. Pic: ©GettyImages/jrwasserman
Private-label packaged foods manufacturer TreeHouse Foods has announced it will close the remaining operations at its cereal production plant in Battle Creek, Michigan, later this year, due to low economic viability.

The move comes a few months after Kellogg cut 223 jobs​ at one of its ready-to-eat cereal plants in Battle Creek.

TreeHouse announced its initial decision to downsize the facility in November 2016.

“Following completion of the first phase of downsizing, it was determined that the remaining operations would not be commercially viable,”​ it said.

The costs to close the site are expected to be around $30m, including $10m non-cash asset write-offs, $2m employee-related costs and other closure costs of approximately $18m.

“The decision is consistent with the August 2017 announcement of TreeHouse 2020, the company's restructuring program. TreeHouse 2020 is a multi-year plan to fully integrate the business and reduce its cost structure in order to invest in market-differentiated capabilities that will serve the rapidly evolving needs of its customers who are strategically focused and highly committed to their corporate brands,”​ said the company.

Affected employees

TreeHouse said the plant closure will affect approximately 84 employees by the fourth quarter of 2018.

“The decision is being announced well in advance of the closure in order to provide employees with as much notice as possible and to ensure a seamless transition for customers,”​ it said.

The sluggish cereal market has affected many US producers, according to Mintel, noting that total US sales of hot and cold cereal has declined 9% since 2012 to an estimated $10.5bn in 2017​.

TreeHouse is no exception in this losing game: It reported its Q3 2017 sales of its meals portfolio declined to $285m compared to $348m during the same period a year ago, primarily caused by “unfavorable volume/mix from competitive pressure, principally in the ready-to-eat cereal category.”

On the plus side, Q3 net sales of TreeHouse’s baked goods (refrigerated and frozen dough, cookies, and crackers) increased by 6.6%, reaching $351m.

TreeHouse currently operates 40 manufacturing facilities across the US, Canada and Italy. It Q4 2017 earnings results are expected to be released on February 15.  

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