IBC closes seventh bakery in one year

Bankrupt US bakery group Interstate Bakeries Corporation (IBC) yesterday announced that it is to close another bakery as it continues its restructuring efforts in an attempt to get back on track.

IBC's Lakewood bakery in Washington is the seventh bakery the company has shuttered since filing for bankruptcy protection in September last year.

Together with the consolidation of operations in California and the Northwest region, the latest closure, which is forecast to carry a charge of $15m (€12.5m), is due to be completed by December 17.

After this time, IBC's bread products will no longer be sold in the states of Washington and Oregon, though its branded cake products will continue to be available on those markets, the company announced.

IBC, which makes bread and cakes under some of America's best known brands including Wonder, Hostess and Twinkies, said the closure will eliminate 200 jobs.

Earlier closures include bakeries in South Carolina, Buffalo, New York and Monroe, Los Angeles.

"We have divided up areas where we have operations into ten profit centers.

So far we have assessed performance in six of the profit centers, and the restructuring activities that have been announced are a result of this assessment," said IBC spokesperson Sandra Sternberg.

She added that the company aimed to complete its financial assessment of the remaining profit centers by the end of the year, and said that further consolidations were "very likely" , but could not comment on further bakery closures.

Restructuring activities to date have resulted in a reduction of the company's 32,000 workforce by around 14 per cent, or 4,500 jobs.

The company has blamed its financial troubles on a combination of declining bread sales as a result of low-carb diets, higher costs for ingredients and energy, excess industry capacity and rising employee healthcare and pension costs.

By the time it had filed for bankruptcy, IBC had run up $1.3 billion (more than €1 million) worth of debts.

"Part of our reorganization activities include the elimination of underperforming product lines, such as the Parisian sourdough products.

From now on, our focus is going to be on branded bread and cakes," Sternberg told BakeryAndSnacks.com.

External links to companies or organisations mentioned in thisstory: IBC