Kellogg distribution job cuts have 'minimal' B.C. impact

Kellogg Co. could lay off more than 1,100 employees as a result of its decision to leave its direct store delivery network this year, though its impact on Battle Creek is said to be "minimal."

The company said Wednesday it plans to begin exiting the network in favor of the warehouse model in the second quarter of 2017. As a result, the company will close 39 of its distribution centers. Company spokesperson Kris Charles told the Enquirer on Thursday those sites average about 30 full-time workers, which would equate to some 1,170 job cuts by the company.

Closures are expected to be completed by the fourth quarter of 2017.

"While this is the right move for the company to achieve our long-term objectives, it was a difficult decision because of its impact on some sales and distribution employees," Charles said in an email statement.

Kellogg already uses the warehouse system for some of its businesses, including Pringles and its morning foods and frozen foods brands.

Charles said the closures "will not have a sizable impact on any one community," including in Battle Creek, where she said, "the impact is minimal." She said the company's only Michigan distribution center is in Detroit.

Syracuse.com reported Wednesday that the company will close a distribution center in Cicero, N.Y.

The company did not immediately provide a list of other communities affected by the closures.

Kellogg North America President Paul Norman discussed the move on the company's investor call Thursday. He said the move reiterates "how serious we are at creating a more competitive and a faster-growing snack business."

The decision frees up funds for other areas such as brand building, Norman said.

"(It's) a very difficult decision," he said. "We firmly believe this is the right move for our business as we look forward to changing consumer and shopper trends."

Outgoing Kellogg Chief Financial Officer Ron Dissinger also said Thursday the company is extending its Project K program into 2019. The cost-cutting program, first introduced in 2013 to promote efficiency and reshape the business, has resulted in a number of company layoffs, including last month's decision to cut 250 North American jobs. It had been scheduled to end this year.

Dissinger is retiring from the company's CFO position. He is being replaced by Fareed Khan, formerly of US Foods Holding Corp.

On Thursday, the company reported a loss of $53 million in the fourth quarter. Adjusted earnings for the quarter were 92 cents per share, surpassing Wall Street expectations.

Contact Dillon Davis at 269-966-0698 or dwdavis@battlecreekenquirer.com. Follow him on Twitter: @DillonDavis