Kellogg Closing Another Distribution Center, Laying Off Dozens
One of America’s biggest and most popular manufacturers of breakfast cereals and snacks, Kellogg Company, has announced that it will be closing its distribution center near Hagerstown, Maryland. The company confirmed that 76 employees working at the facility will lose their jobs.
The warehouse facility at Hunters Green Business Park II was being used to distribute cookies and crackers produced by the giant food company.
Kellogg has filed a Worker Adjustment and Retraining Notification (WARN) with the Maryland Department of Labor, which requires that companies inform affected employees about mass layoffs at least 60 days in advance.
The employees being laid off will receive severance packages.
New Distribution Model at Kellogg Company
The closure of the distribution center is part of Kellogg’s new distribution model, under which the company will no longer be maintaining its own warehouses. Under its old “Direct Store Delivery” (DSD) model, Kellogg was using these distribution warehouses for housing goods that were received from its factories and were later delivered to supermarkets and other retailers.
As I reported in June, under the new distribution model, Kellogg will be delivering goods directly to the retailers’ warehouses. The new strategy has been undertaken to cut costs that were being incurred by operating these large distribution warehouses.
The Hagerstown distribution center is one of the 39 facilities that the company has announced it will close in 2017.
Kellogg, which produces popular brands including “Corn Flakes,” “Rice Krispies,” “Special K,” “Pringles ,”and “Pop-Tarts,” reported a decline in sales in the first quarter of this year. According to Kellogg CEO John Bryant, the sales slowdown has partly been because of an “industrywide softening of consumption trends.”
More warehouse closures are expected as Kellogg continues its transition toward its new delivery model. The transition is expected to be completed by the end of the fourth quarter of this fiscal year.
“76 to lose jobs at Kellogg center near Hagerstown,” Herald-Mail Media, July 18, 2017.
“Kellogg will close its Roseville office and lay off 230 employees,” The Sacramento Bee, June 14, 2017.