UPDATE: Kellogg's cutting 'thousands' of U.S. jobs in warehouse switch

Kellogg-Layoffs
Kellogg’s cereals are on display at a Pittsburgh grocery market.

UPDATE JUNE 1: A Kellogg’s veteran who is among those losing a job when regional centers in Horsham, Pa. and 38 other cities close in August — he asked me not to use his name “because I don’t want to get fired early” — tells me Kellogg’s total Direct Store Delivery (DSD) jobs being eliminated have so far been “under reported” and likely includes “8,000 to 10,000 employees across the U.S.,” or around “one-quarter” of the company’s total workforce of 36,000.

That estimate is supported by the hundreds of jobs to be eliminated at each of several sites that have been marked for shutdowns so far, in states including Pennsylvania (Horsham and Pittsburgh), Maryland (Hagerstown), New Jersey (Cranford), Missouri, New York, North Carolina, Ohio, Texas, and others. He figures those losing their jobs include “at least 1,500 sales reps”, plus several support workers and merchandisers for each rep, plus Teamsters truck drivers, loaders, and warehouse support personnel.

Is Walmart a factor? The nation’s largest store retailer, which has a big regional warehouse near Bethlehem, has struggled to keep its massive grocery business competitive. The Kellogg’s veteran says Walmart has pressured Kellogg’s and other suppliers to “change our model” and cut the regional centers in order to simplify distribution, in hopes of reducing its own costs.

MAY 31: Kellogg Co., the Michigan-based maker of Froot Loops, Corn Flakes, Nutri-Grain, Pringles, Keebler, MorningStar Farms, and other mass-market breakfast, cereal, and snack brands, plans to close two Pennsylvania regional offices and distribution centers in August and put more than 500 workers on the street, as part of a national switch from shipping boxed products straight to stores to instead piling them up at retailers’ warehouses.

About 292 Kellogg’s workers will lose their jobs in the closing of the Witmer Road regional center in Horsham, Montgomery County, which serves the Philadelphia region, according to state Department of Labor and Industry records. An additional 211 will be let go in the closing of a Kellogg’s distribution facility in Pittsburgh.

Kellogg’s did not respond to phone calls or an email seeking comment on the scale of the job cuts Wednesday. The company said in February that it expected to lay off scores or hundreds of workers at each of 39 centers across the United States. Besides the local distribution centers and offices, Kellogg’s operations in this region include a cereal-processing plant in East Hempfield Township, Lancaster County, one of several Kellogg’s grain plants that had been threatened with possible closings in recent years.

In the February statement, Kellogg’s chief executive John Bryant blamed the switch on improved distribution technology and a shift in consumer habits, and said the shutdowns would free the company to more aggressively promote Kellogg’s snack brands. Bryant noted that Kellogg’s already distributed its Pringles chips and frozen foods, among other products, not directly to stores, but to retailers’ warehouses, as it will now do with cereals.

Like its rival General Mills, maker of Cheerios, Kellogg’s saw its sales peak in 2012-13, and decline since then. Both companies’ share prices also have slipped from historic highs in the last year. But at the same time, both Kellogg’s and General Mills have continued to boost profits, for now, by cutting costs and shutting locations.

Like Herr’s, Snyder’s, Tastykake owner Flowers Foods, Pennsauken-based J&J Snack Foods, and other such companies, Kellogg’s has continued to purchase smaller brands, including those claiming to sell “natural” snacks. Indeed, total Kellogg’s employment rose to 36,000 last year, from about 30,000 in 2012, even as sales flattened, according to the company’s annual reports.