The move follows a 10% decline in sales from General Mills' (GM) international business - which includes operations in Europe, Canada, Asia/Pacific and Latin America - in fiscal 2016. The company has also reported that foreign currency exchange effects reduced net sales growth by 13 points, and that its international operating profit had dropped by 11.9% in the period.
GM has now announced plans to close its Marilia manufacturing facility and distribution center in Brazil and transfer production out of the Sao Bernardo do Campo facility to other facilities in the country.
Former Yoki sites
The Marilia facility processes peanuts used in General Mills products while the Sao Bernardo do Campo facility makes snacks, farofa (a toasted cassava flour mixture) and desserts. Both plants were taken on by GM when it acquired Brazilian food business Yoki acquisition in 2012.
The closures in Brazil will impact around 420 employees, added the company, although it insisted Brazil will continue to play a critical role in its overall business.
GM is cutting 300 jobs in China by axing production of Trix - a fruit snack brand in the Chinese market - but will continue to produce Bugles at its Nanjing facility.
“Our snacks business in Greater China has been under-performing for some time," said the company. "Market conditions, brand position and the relatively low priority of snacks in our China portfolio have all played a role… We will pay severance to impacted employees and have established a special task force to support employees through this transition.”
US sell-off and closure
The US is also set to be impacted, with General Mills proposing the closure of its Vineland soup plant in New Jersey, which could result in 370 layoffs. The company also plans to sell its Martel facility in Ohio (see box-out).
“Martel, Vineland and Brazil are all tentative decisions, subject to negotiations with union officials. So it’s too early to know what a transition plan could be,” said a GM spokesperson.
The closures in Brazil and China are not part of the company's Project Compass, which is expected to eliminate approximately 725 to 775 job positions from GM’s facilities worldwide.
Approved in the first quarter of fiscal 2016, Project Compass is designed to “accelerate long-term growth” of General Mills' international segment through “increased organizational effectiveness and reduced administrative expense.”
Mennel Milling Co set to acquire General Mills baking mix plant
General Mills has reached a tentative agreement to sell its dry baking mix and packaging facility in Martel, Ohio, to Mennel Milling Company.
The deal, which is subject to negotiations with union officials, is expected to close before November this year. If it goes through, Mennel will act as a supplier to General Mills, which has operated the Martel facility since 2001.
Mennel described the acquisition as “an exciting opportunity” to extend into the bakery mix business.
“It allows us to continue to add value to wheat flour and expand our product offerings to better serve our customer base,” said Mennel president D Ford Mennel in a statement.
“With this acquisition we will no longer be constrained to selling flour as an ingredient into baked goods or bakery mix. We will now be able to offer a full line of bakery mix products to our big box, commercial, wholesale and bakery customers and marketplaces.”
General Mills said closing the plant would impact approximately 180 employees.