Kellogg to close London cereal factory next year

Kellogg's will close its breakfast cereal factory in London, Ont., next year, throwing 500 people out of work.
London, Ont., Mayor Joe Fontana criticizes Kellogg's 'lack of decency' for announcing a factory closure so close to the holidays 2:22

Kellogg's will close its breakfast cereal factory in London, Ont., next year, throwing 500 people out of work.

The company announced that the iconic factory will be shuttered by the end of 2014 as part of a global cost-cutting strategy.

"As with any project of this scope and one that impacts people, these are difficult decisions," Kellogg president John Bryant said. “We are very mindful of the impact these changes will have – particularly to our employees. As our employees and others would expect from Kellogg, we will help those who are impacted through their transitions."

In addition to the London cereal plant, a snack-making facility in Charmhaven, Australia is being closed.

In the same release, Kellogg announced it will expand a snack and cereal factory in Rayong, Thailand by early 2015.

Sales slowdown

Last month Kellogg had announced a 20 per cent reduction in staffing at the London plant. After those cuts, there were about 500 remaining workers there.

The company has been dealing with a prolonged slump in cereal sales for several quarters. Last month, Kellogg's revealed its breakfast foods division saw a 2.2 per cent sales decline. Other cereal makers report a similar trend.

Slumping sales coupled with cheaper production costs elsewhere make moves like this expected, one expert says.

"It's consistent with what's been happening in food processing across the province and across the country," University of Guelph marketing and consumer studies professor SylvainCharlebois said in an interview. 

"Most of our food processing plants aren't efficient, they aren't productive and the business case to keep them operating is becoming weaker and weaker by the day."

Kellogg invested $43 million to upgrade its Belleville, Ont., plant in 2011, creating a more efficient operation that needs fewer employees.

Workers at the London, Ont., plant are wondering where they're going to find jobs in the region.

Steve Addison started working here when he lost his job at the Sterling Truck plant just four years ago.

"The good paying jobs are running out...," he told CBC News.

"This area has been devastated not only by Sterling where I was, but by Ford and Caterpillar and Heinz in Leamington.  It just seems to be neverending."

Last month, Heinz announced it would shutter its iconic tomato-processing in nearby Leamington, Ont., cutting 740 jobs.

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