What really killed the London, Ontario Kellogg Plant?
The Kellogg cereal plant at 100 Kellogg Lane in London, Ontario has been owned and operated by Kellogg since 1924. Prior to 1924, the plant was owned and operated by another company licenced to produce cereal for Kellogg.
Kellogg is a publicly traded company under the "K" symbol on the NYSE (New York Stock Exchange)
In December 2013, Kellogg announced it was going to close the London cereal production plant by the end of 2014. News media reports and commentators have said the closing is because of fewer people eating ready to eat cereal, pointing to evidence as the eating habits of baby boomers, and the ever changing diet crazes. That sounds simple enough, and there is the problem; it is never that simple.
The food manufacturing industry is complex; however, I will focus on the cereal sales of Kellogg, as reported in its financial reports, over the past few years because this is what many in the news media say is the reason for the plant closure.
There is no specific data regarding the Canadian market, so I will use sales data from the U.S. or North America (Mexico is listed separately) markets. It should be noted breakfast cereal is sometimes included under "Morning Foods" that contain other breakfast food products. These findings are by no means conclusive.
2013: Decline of 1.9% (U.S.)
2012: Increase of 2.7% (U.S.. A decline is mentioned for Canada, but no data given. A "competitive" Canadian market is mentioned for decline)
2011: Increase of 4% (U.S.)
2010: Decline of 5% (U.S.. A recall by Kellogg of some of its cereal is blamed for this decline)
2009: Increase of 4% (North America)
2008: Increase of 3% (North America, cereal specific)
2007: Increase (North America, no data given. Increase mentioned for Canada)
2006: Increase of 3% (North America. Canada cereal sales in "low single-digit numbers")
2005: Increase of 8% (North America. Canada cereal sales "strong")
2004: Increase of 2% (North America)
2003: Increase of 7% (North America)
Except for a 4 weeks shutdown in January, 2014, the London Kellogg plant has been producing 24 hours a day, seven days a week, since the announcement was made in December 2013 that the plant is scheduled for closure by the end of 2014. The London plant closure oddly is not even mentioned in the 2013 anual report.
I do not know the exact reasons why the London, Ontario Kellogg plant is going to be shuttered, but I do know the true reasons for a factory closure are never as simple as some might believe.
© Trevor Dailey
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