Mondelez International Shutters Philadelphia Bakery, Invests $130 Million In U.S. Production Network
By Isaac Fletcher, contributing writer, Food Online
Continuing its ongoing restructuring, snack-manufacturing giant closes PA plant, eliminating 350 jobs
Mondelez International, producer of brands such as Cadbury, Chips Ahoy!, and Ritz, plans to close it Philadelphia bakery and invest $130 million in a U.S. snack manufacturing network. The investment aims to create a new manufacturing technology and increase the capability for further modernization and competitiveness.
The company’s Feb 6 press release states that the company is “taking another important step in creating a best-in-class global supply chain” by shutting down the Philadelphia bakery in 2015, laying off 350 employees, consolidating production, and focusing its investment on bakeries in Fair Lawn, NJ and Richmond, VA. Because the Philadelphia location produces only a limited number of core products, Mondelez believes its other facilities are better suited to address its future needs. The 350 jobs eliminated by the closure are only a small share of the 110,000 employed across the globe by Mondelez International.
In September of 2013, Mondelez stated that its total capacity needed to see 25% growth over the next three years. To achieve this, 14 plants would become its manufacturing network while other, subscale facilities, like the Philadelphia bakery, would be shut down. After claims were made a month later by activist investor Nelson Peltz — who has since become a member of Mondelez’s board — that Mondelez could nearly double its per-share earnings if the company could better manage its costs. Mondelez has faced pressure to eliminate unnecessary costs and redirect its spending into areas with better returns. These factors illuminate the reasoning behind the plant closure as well as the restructuring Mondelez hopes to achieve.
Following announcements made in November and in early December of a $100+ million investment in a European factory and a planned $190 million investment in India, respectively, Mondelez “further demonstrates its global focus on redesigning its manufacturing network and creating an integrated supply chain organization capable of delivering a demonstrable advantage while generating savings that can be reinvested for growth.” The firm has already invested $350 million in creating the world’s largest cookie and biscuit factory in Mexico, which Mondelez hopes to have operational in the second half of 2014.
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