General Mills' Supply-Chain Review Forces California Plant's Closure

By Sam Lewis

Under plans to cut costs by $40 million, the cereal maker will close the doors and sell its Lodi, CA facility

Early last month, General Mills announced its plans to shut down its 67-year-old plant in Lodi, CA, affecting nearly 430 employees. Now, the company has verified its intent to sell the cereal-making facility along with its surrounding land. According to the company, the plant’s closure is part of General Mills’ review of its supply-chain network across North America. General Mills will begin the closing process in January, 2015. The majority of jobs will be cut in September and November when 122 and 282 jobs will be lost, respectively. The final layoffs will occur in January, 2016, completing the closure of the plant. Consequently, the decision to close the facility will consolidate the plant’s production to other General Mills’ facilities across the country.

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Commencing last June, the company’s review of its North American supply-chain network is hoping to save General Mills about $40 million through “streamlining operations and identifying potential capacity reductions,” says General Mills CEO Ken Powell. In addition to the Lodi, CA plant closing, General Mills also closed one of its yogurt plants, impacting more than 140 employees, in September as part of its supply-network review.

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General Mills’ review of its supply chain comes at a critical time for the company. The famed cereal maker is struggling to keep its head above water in an increasingly-challenging market. The company’s first-quarter 2015 sales saw a drop of almost 25 percent from the same time last year. Despite the disparaging figures, Powell is confident that General Mills will be able to use its new and overhauled product lines, better marketing schemes, and brand face-lifts to pull itself above water.