Mondelez bakeries, which makes Oreo cookies, Ritz crackers, and Cadbury chocolates, has announced yet another round of layoffs at its Chicago bakery.
The company is enlarging its Mexico facilities as it closes nine bakery lines in the Windy City, some of which have been operating for 60 years.
The company has been cutting costs since its 2012 separation from Kraft Foods’ grocery business. The goal is to reduce costs by at least $1.5 billion by the end of 2018.
In 2013, Mondelez said its cost-cutting strategies included outsourcing white-collar jobs to countries where labor was less costly, shutting down old plants and bakery lines, improving plants in less costly areas, and corporate reorganization.
By 2015 the company had already reduced its work force from an estimated 107,000 employees to 104,000.
Mondelez says changing customer interests in pre-packaged foods, rising U.S. costs, and cheaper foreign labor costs are at the root of the changes.
By October of last year, the company had announced it was outsourcing hundreds of white-collar jobs to overseas and was laying-off many of its Deerfield, Illinois-based office workers.
At that time, Chief Financial Officer Brian Gladden told investors its “global shared-services” initiative is “causing significant changes in our [organizational] model and disruption” throughout its global operations.
As the company “migrated” white-collar jobs overseas, CFO Gladden noted, “We’re migrating about 150 separate processes largely to external partners in lower-cost countries.”
Earlier in 2015, the company had already moved to lay off half its 1,200 employees, or 600 workers, at its Chicago bakery. The company noted it was improving its facilities in Mexico instead of investigating in upgrades to its 60-year-old Chicago bakery lines.
Mondelez expects to generate up to $46 million in annual savings by investing in four state-of-the-art production lines in its recently opened Salinas, Mexico, plant. The $130 million investment going to Mexico instead of to expansion at its Chicago plant angered three employee unions in the Windy City.
But the announcement that Oreo cookies would now be made in Mexico prompted several activists to start separate boycotts of the cookie classic.
By January 1 of this year, the unions had filed a lawsuit against Mondelez due to the mass layoffs, citing discrimination and the voiding of a collective-bargaining agreement.
Despite the lawsuit, Mondelez is continuing with its layoff plans and warned 277 employees of their separation on January 20. This will only be the first round of up to 600 layoffs in Chicago.
At this time Mondelez says the Chicago plant will continue to make BelVita, Mini Chips Ahoy, Cheese Nips, and other products, on seven to-be-upgraded production lines. But the company will shutter the nine lines that produce Oreos, and Ritz and Graham crackers.
Follow Warner Todd Huston on Twitter @warnerthuston or email the author at igcolonel@hotmail.com