BATTLE CREEK, MICHIGAN
The Kellogg Company began implementing plans announced February to close 39 distribution centers. It will now ship its products to retailers’ warehouses instead of their stores. To date, thirty centers have closed, cutting 4,499 positions. The move is not unlike that taken by the Coca-Cola Company last year. It is attributed to “the Amazon effect” taking more and more business away from brick-and-mortar retailers. Shrinking breakfast cereal sales are also a motivator. Year-over-year, first-quarter sales were down 4.1%. Former employees are now threatening a class-action lawsuit, asking injunctive relief and compensatory damages and claiming the company is guilty of “unjust enrichment” and “breach of contract.” Kellogg’s says the move is logistically more efficient and effective, and the company expects to realize savings of $600-$700 million by 2019.