After a second-quarter drop in sales, WK Kellogg Co plans to close its Omaha, Neb., plant and scale back production in its Memphis, Tenn., facility, with both actions occurring gradually in 2025.
The Omaha plant will begin winding down in late 2025 with full closure coming at the end of 2026. The Memphis facility will scale back production in late 2025, “resulting in a more focused, streamlined facility,” the company said in its second-quarter financial call with analysts on Aug. 6.
The twin actions would reduce headcount by approximately 550 people, including estimated headcount additions at the plants where production would increase.
Investments in new infrastructure, equipment, technology and capabilities will increase production and presumably employment at plants in Battle Creek, Mich.; Belleville, Ontario; and Lancaster, Pa.
Kellogg officials used the analysts call to re-emphasize its supply chain modernization plan. The company plans to spend approximately $450-500 million on supply chain modernization, including capital expenditures of up to $390 million and restructuring and non restructuring costs of approximately $110 million.
“These actions will help transform our supply chain and will allow us to enhance our production across a more reliable, agile, and cost-effective manufacturing network, supporting top line delivery and driving margin expansion,” said Chairman and CEO Gary Pilnick.
Second-quarter sales were $672 million, a drop of 3.9% from the year earlier. Six-month sales were $1.379 billion, a 2.9% decrease from the first six months of 2023. Pilnick called them “on track to achieve our full-year financial guidance despite a difficult business environment.”
