WK Kellogg to close Omaha plant, downsize in Memphis as it shifts production to newer facilities
WK Kellogg Co. is closing one U.S. cereal plant and downsizing another as part of a plan to consolidate operations in newer facilities.
The company said Tuesday it will close its plant in Omaha, Nebraska, by the end of 2026. It also plans to cut production at its plant in Memphis, Tennessee, starting next year.
WK Kellogg said it will increase production and invest in new infrastructure, equipment and technology at its plants in Battle Creek, Michigan; Lancaster, Pennsylvania; and Belleville, Ontario. The company said it plans to invest $390 million in new technology and infrastructure and will take a one-time charge of $110 million in restructuring costs.
Battle Creek-based WK Kellogg said the plan will result in a net loss of 550 jobs, a figure that includes hiring at plants that will increase production. The company did not immediately respond when asked Tuesday how many workers would lose their jobs in Omaha and Memphis.
Omaha Mayor Jean Stothert said in a statement that she was not informed of the planned closure until Tuesday morning.
“I am certainly disappointed that Kellogg’s is making such a significant announcement in this manner,” Stothert said. “After more than 75 years in Omaha, Kellogg’s will be leaving a big hole.”
WK Kellogg’s Omaha factory was the epicentre of a strike against the company in 2021, when workers went on strike for two months to protest a two-tiered wage structure and other issues. At one point, Kellogg sued its unionand said striking workers were blocking entrances to the Omaha plant.
The strike ended at the end of 2021 when the company agreed to salary increases and other benefits.
The reorganization comes amid a decline in U.S. demand for breakfast cereals. Cereal sales soared during the pandemic, when families were home and eating breakfast together. But they’ve struggled since then. Cereal sales are down 4.2% in the past year and 3.6% the year before, according to Nielsen IQ, a market researcher.
WK Kellogg Co. was founded last year when former parent company Kellogg Co. — founded in 1906 — split into two companies. W.K. Kellogg retained the cereal business, which includes brands such as Frosted Flakes, Fruit Loops, Rice Krispies and Raisin Bran. Kellanova, based in Chicago, is home to many of the company’s best-sellers, including Pop-Tarts, Pringles, Eggo waffles and Cheez-Its.
WK Kellogg said Tuesday that net sales fell 4% to $672 million in the April-June period, boosted by higher prices and growing sales of premium products such as Special K Zero. But total sales volumes fell 4.8%, and the company said it felt some pressure from private-label cereals as customers sought better value.
Shares of WK Kellogg fell more than 7% on Tuesday.