|Project Century is a review being undertaken by General Mills of its North American manufacturing and distribution network to look for additional opportunities to reduce cost.|
MINNEAPOLIS — General Mills, Inc. plans to close its ready-to-eat cereal plant in Lodi, Calif., as part of its larger Project Century effort, the company announced in a Sept. 18 filing with the Securities and Exchange Commission.
Project Century is a review being undertaken by General Mills of its North American manufacturing and distribution network to look for additional opportunities to reduce cost. The effort is focused on streamlining and simplifying the company’s North American operations and positioning General Mills’ supply chain for future growth.
“We’re relocating production to make our network simpler and more responsive, and we’ll capture cost savings in the process,” John Church, executive vice-president of global supply chain at General Mills, said during a Sept. 18 conference call with analysts. “We’re targeting $100 million in cumulative cost savings by F.Y. 17, with material savings realized in beginning of F.Y. 16.”
One of those cost savings will be the closing of the Lodi plant.
“We notified the union member employees and union representatives at our Lodi, Calif., facility of our tentative decision, pending negotiations and consultation with the union, to close this plant to eliminate excess cereal and dry mix capacity in our U.S. retail supply chain,” the company noted in the S.E.C. filing. “If implemented, this action could affect approximately 430 positions, and we expect to incur charges of approximately $70 million in fiscal 2015, including approximately $31 million of severance expense and $39 million of additional expense, primarily fixed asset write-offs. We expect this action to be completed by the end of fiscal 2017 with a total cost of approximately $123 million, of which approximately $24 million will be cash.”Another one of the cost saving initiatives detailed in the S.E.C. filing was the closing of a Methuen, Mass., yogurt facility. General Mills said the move will affect approximately 250 positions, and the company expects to record approximately $7 million of severance expense in the second quarter of fiscal 2015. The company also expects to record approximately $16 million of additional expense in the second quarter of fiscal 2015 and $18 million of expense in the remainder of fiscal 2015, primarily fixed asset write-offs. The action is expected to be completed by the end of fiscal 2017 with a total cost of about $65 million, of which $17 million will be cash.