ConAgra Announces Early Plant Closures
By fiscal 2009, the company expects total plant rationalization efforts, including those changes announced today and in September 2006, to result in a $100 million reduction in annual fixed costs.
26/01/07 ConAgra Foods, Inc. has announced new details of its previously announced companywide effort to streamline manufacturing operations. The company has announced the closure of two plants, the expansion of another facility, and shifts in production between plants, all within its Popcorn and Seeds platform.
In March 2006, ConAgra Foods announced it would close 10 to 12 plants as part of the first phase of its strategy to achieve sustainable, profitable growth. The company provided details of its first round of changes in September 2006, including the closure of five plants. Today's announcements are the next step in that process. Collectively, these actions will help streamline operations, reduce operating costs, improve capacity utilization and improve gross margins.
The operational changes announced are expected to be completed within the next eight to nine months and will result in a work force reduction of approximately 200 employees. These changes, including the associated restructuring costs, are part of the company's previously announced plant rationalization program. Additional changes will be announced as the program continues. By fiscal 2009, the company expects total plant rationalization efforts, including those changes announced today and in September 2006, to result in a $100 million reduction in annual fixed costs.
The announcement includes:
• The closure of the ConAgra Foods microwave popcorn plant in Edina, Minn. Beginning in late April 2007, equipment and production capability will be transferred to plants in Rensselaer, Ind., and Irapuato, Mexico, where ConAgra Foods will be able to better meet customer demand while also maximizing efficiencies in warehousing, storage, and transportation.
• The expansion of the Rensselaer, Ind., facility, where the company will increase production capacity and reorganize warehousing operations for improved efficiency in storing and distributing products.
• The partial closure of the ConAgra Foods plant in Lake View, Iowa, which supplies bulk popcorn in tins and tote bags among other popcorn products. Production of bulk popcorn in tins and totes will halt in late May 2007. Going forward, ConAgra Foods will produce popping corn and popcorn seed at its Lake View facility.
• The closure of the ConAgra Foods South St. Paul, Minn., plant, which produces popcorn balls, and the transfer of its production capability to the ConAgra Foods plant in Lakeville, Minn. By moving the seasonal production of popcorn balls to Lakeville, ConAgra Foods will be able to expand this business to meet increasing consumer demand for this product.
• ConAgra Foods will sell its property in Edina and South St. Paul, Minn. Equipment will be moved from those locations to other ConAgra Foods facilities.
"To ensure the long-term growth of ConAgra Foods, we are committed to identifying and implementing business processes that will maximize our investments in the production, storage and transportation of our products and ingredients," said Jim Hardy, executive vice president, Product Supply. "By realigning production in our Popcorn and Seeds platform, we have taken yet another important step toward achieving a more efficient business model and building a stronger manufacturing base for growth, innovation and continued success."
