OAK BROOK, ILL. – TreeHouse Foods, Inc. plans to close two plants in Brooklyn Park, Minn., and Plymouth, Ind. The company also said it will shift non-peanut packaging operations out of its Dothan, Ala., plant. The decisions are part of a restructuring effort being undertaken by the company to improve its competitive position.
|Sam K. Reed, chairman and c.e.o. of TreeHouse Foods|
“The decisions to close these facilities are difficult ones given their impact on families and communities,” said Sam K. Reed, chairman and chief executive officer of TreeHouse Foods. “However, despite the toll they exact, these measures are required if we are to remain competitive in a rapidly changing marketplace for packaged foods. In order to win in today’s marketplace, we must not only produce the finest quality at the lowest costs, but also fully utilize the capacity of our plants and the capability of our people in doing so.”
The Brooklyn Park plant produces boxed dinners and packaged side dishes for the company. The plant is scheduled to cease operations by the end of 2017. The Plymouth plant produces banana peppers, jalapeños, pickles and pickle relish, and will also close by the end of the year. At total of approximately 240 employees will be affected by the closings.
The transition at the Dothan plant will occur over a 10-month period and begin in November.
The closings are the first phase of a program the company is calling TreeHouse 2020. It is designed to reduce costs with an eye toward improving profitability.
“It is clear that we are witnessing an evolution in the retail landscape, as digital technology and bricks and mortar compete for the attention of consumers in a slow to no growth food and beverage marketplace,” Mr. Reed said. “As our customers seek growth in this environment by reinvesting in their corporate brands, we continue to believe that we are best positioned to capitalize on the opportunity. However, it is imperative that we as an organization return to our legacy levels of profitability.”Costs associated with the closings are expected to be approximately $44.5 million, of which approximately $29.7 million is expected to be in cash. Components of the charges include non-cash asset write-offs of approximately $14.8 million, employee-related costs of approximately $7 million, and other closing costs of approximately $22.7 million.