General Mills, the food company selling goods like Cheerios cereal and Betty Crocker products, announced on Tuesday that as part of a "productivity and costing savings plan," they will cut 850 jobs globally in the coming weeks.
Many of the jobs that will be eliminated, according to the press release issued by General Mills, include those in the administrative and support positions, said the Los Angeles Times. The change came as a result of productive values of General Mills' food products rising, as well as consumers being reluctant to purchase their expensive food brands.
General Mills stated that it will cost them approximately $109 million pre-tax to fire the estimated 850 employees both at the Minnesota headquarters - at which 35,000 people are employed - and around the world, which would include severance packages, separation expenses, and the asset-related costs, said the company in a press release. Of the $109 million estimated, about $94 million will be recorded in the company's fourth quarter of the 2012 fiscal year, ending this week on May 27, 2012; the remaining costs, said the company, will fall over to the 2013 fiscal year.
General Mills spokeswoman Kristie Foster said that the timing of the layoffs will vary, but that "most individual decisions will be communicated in the coming weeks," according to the Los Angeles Times. Foster also told the Wall Street Journal that the restructuring for General Millions would create "meaningful" cost savings for the 2013 fiscal year, though she did not give the publication an actual amount.
The Wall Street Journal also reported that a large contribution to the change came from reports that consumers did not purchase as many General Mills products at higher prices as store brands. The Journal noted that General Mills and other food companies like Campbell Soup Co. were "struggling to find growth in a packaged food industry where consumers are visiting supermarkets less and buying fewer products when they do."
"The fact remains that consumers are still cautious, given a slow economy and rising gas prices, so the food-service industry is still facing some head winds," said John T. Machuzick, the company's senior vice president of bakeries and food service, in a conference call with analysts in March, according to the LA Times.
