Mondelez considers closing bakery plants in the US that are no longer geographically strategic

US – American multinational confectionery and food company Mondelez has said that it it would officially close plants in Atlanta and Fair Lawn, New Jersey as early as mid-2021 in an effort to consolidate it’s US operations and reduce operations costs.

Mondelez said the two locations are no longer geographically strategic and the plants are facing operational challenges, including aging infrastructure that would require “significant investment” to be modernized.

The closure in Georgia will affect more than 400 people, while the shuttering of the New Jersey plant will impact roughly 600 workers.

Instead, Mondelez will focus on ramping up production at its facilities in Richmond, Virginia; Chicago; and Portland, Oregon.

Plant Closures; a common occurrence

Plant closures have been common during the last several years as companies look to cut costs and respond to shoppers whose buying habits are more frequently online and direct-to-consumer.

ADVERT

In the past, many companies have taken this approach to increase efficiencies and boost their bottom line.

Nestlé, Kraft Heinz, TreeHouse Foods and General Mills are among the companies that have announced plant closures in the past.

Mondelez’s decision to review the future of these two facilities is thus not unique, rather it underscores the company’s need to evolve and “make our products in more flexible, agile and efficient ways,” Glen Walter, president of North America for Mondelez, said in a statement.

In an earlier statement Mondelez had said it would retain its manufacturing in the U.S. if these plants were shuttered.

However, in 2016 the Chicago Tribune reported roughly half of the 1,200 workers at the company’s Chicago location were laid off after the company cut back on the number of brands it manufactured at the facility, with some jobs moving to Mexico.

To avoid that fate for its residents, the Patch reported New Jersey Democratic Rep. Josh Gottheimer and Fair Lawn Mayor Kurt Peluso met with Mondelez management and union representatives.

“The closing of this facility would have a devastating impact on 600 hardworking men and women and their families right here in North Jersey — workers who may no longer be able to put food on their tables in the midst of a global pandemic,” Gottheimer said.

Spike in Snacking demand not enough

While millions of Americans are beset by job loss and financial constraints due to the pandemic, it does not mean that people have stopped snacking.

In its State of Snacking report, Mondelez found snacking has become a “lifeline” during the pandemic with 88% of adults saying they are doing it more or the same than they were before the outbreak.

An NPD Group study similarly found snack food consumption jumped 8% between April and July.

Additionally, Mondelez said in April it was experiencing “unprecedented demand” for its snack offerings, including Oreo, Ritz and Triscuit.

The Fair Lawn facility –which is now facing closure-, is one of the largest producers of Oreo cookies.

Mondelez’s decision to focus on manufacturing sites that are “strategically located and operationally advantaged,” is indicative of its efforts to accelerate innovation, grow and strengthen its position as a snacking giant, according to the statement.

Once the pandemic abates and shopper consumption habits normalize, analysts at FoodDive project that more companies may choose to reassess the future of some of the plants they use.

Liked this article? Subscribe to Food Business Africa News, our regular email newsletters with the latest news insights from Africa and the World’s food and agro industry. SUBSCRIBE HERE

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.