This audio is generated automatically. Please let me know if you have any comments.
Diving overview:
-
Lamb Weston plans to close its old, costly processing facility in Cornell, Washington, and temporarily scale back certain production lines and schedules across its North American network. Additionally, there are plans to reduce 4% of the workforce, or approximately 428 jobs, and eliminate unfilled jobs. The Idaho company employed 10,700 people as of July 17.
-
A company that supplies frozen potato products to restaurants and retailers said demand continues to struggle compared to supply. “We believe the economy will remain soft for the remainder of fiscal 2025,” Lamb Weston CEO Tom Werner said in a statement.
-
Lamb Weston is the latest food company to cut staff and close old production facilities to lower operating costs and keep production in line with slow consumer demand.
Dive Insights:
As consumers eat out less and spend less, food producers like Lamb Weston are wasting little time transforming their businesses.
Businesses face pressure to increase margins and sales even in a difficult economic environment. Most companies are looking internally for ways to reduce costs.
Lamb Weston said it had decided to implement a restructuring plan to improve operating and cost efficiencies and boost cash flow, with little short-term improvement in sight. The overhaul will result in approximately $55 million in pre-tax cost savings and a reduction in working capital in fiscal 2025.
“We expect these actions will help us better manage plant utilization rates and alleviate the current supply-demand imbalance in North America,” Werner said.
Several companies have announced changes to their manufacturing networks for 2024 to reduce costs and grow their businesses.
Last July, Wonder maker Flowers Foods announced plans to close a bread manufacturing plant in Louisiana, and Bimbo Bakeries USA, which oversees Entenmann’s and Sara Lee, will close two facilities in New York and Texas. Dr Pepper also announced plans to close manufacturing plants in Virginia and Vermont this year and invest in a coffee roasting and manufacturing facility in South Carolina.
Campbell Soup said in May it would close one plant and downsize a second facility. At the same time, the soup and snack maker announced it would invest $230 million in newer, more efficient plants by fiscal 2026 to improve its supply chain competitiveness.
