WK Kellogg Co to keep Michigan plant, avoiding layoffs

Dive Brief:

• WK Kellogg Co will continue operating its cereal plant in Battle Creek, Michigan — allowing it to keep 170 workers that would have been laid off — after announcing its intention to move its operations to Canada.
• The decision came after the Michigan Strategic Fund Board approved a business development grant of $5 million, which keeps the company in its home state for 15 years.
• The newly spun-off cereal company is working to improve its supply chain after a slew of issues in recent years.

Dive Insight:

Three months after its creation as a new business, WK Kellogg Co’s decision to maintain a manufacturing presence in Michigan signals a shift in approach to its cereal operations.

Stacy Flathau, the cereal giant’s chief corporate affairs officer, said in a statement to Bakery and Snacks that the company intends to add more jobs and invest millions into the plant to help it reach its full potential.

“We are seeing some green shoots of some real engagement at our Battle Creek plans in recent months and we are very optimistic that will continue,” Flathau said.

The move follows a series of issues the company has faced in meeting supply for its cereal, which began after the onset of the COVID-19 pandemic in 2020.

A fire in July 2021 at its Memphis facility complicated its ability to replenish its inventory of products like Frosted Flakes and Froot Loops. In the fall of 2021, Kellogg workers at four of its ready-to-eat cereal production plants went on strike for 11 weeks, including at the Battle Creek plant. The workers and company came to a five-year contract agreement at the end of the labor dispute, granting a cost of living adjustment for wage increases for employees and a path toward higher wages for “legacy” employees.

In embarking on a new era amid the backdrop of a long-term decline in cereal consumption, WK Kellogg Co has said one of its primary goals is to modernize its cereal supply chain. CEO Gary Pilnick told Food Dive in October this process will include updating its technology and making its operations overall more efficient.