UK food producer Premier Foods plc (LSE:PFD) announced today that 900 jobs will be lost in its bread division as the company seeks to simplify its manufacturing and distribution operations.
The restructuring is intended to improve efficiency and enhance the performance of the Hovis brand, which has been hit by rising wheat prices and intense competition in the bread market.
Under the plans, Premier Foods will close bakery sites in Birmingham and Greenford, west London at some point in 2013. This is in addition to the previously announced closure of the Eastleigh bakery. Production from these locations will be consolidated into the company’s remaining bread manufacturing sites.
In addition, Premier Foods said that it plans to remove approximately 130 distribution routes, simplifying its bread distribution network. This takes into account the reduction in volumes from the loss of a low margin bread contract with a retail customer. As a result of this decision the company expects to close distribution operations in Greenford, Birmingham, Mendlesham and Plymouth.
The changes will result in charges amounting to GBP28m, most of which is expected to be recovered in the future through site disposals, reduced working capital requirements and lower capital expenditure.
A total of 511 of the 900 job losses announced today are in Birmingham, where 323 staff will leave the bakery operation and 188 distribution jobs will go.
The UK’s largest trade union, Unite, described the announcement by Premier Foods as a “devastating blow for the 900 workers, their families and the local communities in west London and Birmingham.” The union, which has more than 2,500 members across all divisions of Premier Foods, said that it was joining with the Bakers, Food and Allied Workers Union (BFAWU), the majority union on the affected sites, to call for urgent talks with the company’s management about the job losses.
Premier Foods, whose other brands include Ambrosia, Mr. Kipling, Sharwood’s, Loyd Grossman, Bisto, Oxo and Batchelors, has sold a number of food brands this year including Branston, Sarson’s, Hartley’s, Robertson’s, Frank Cooper and Sun-Pat.
At at 12:55 GMT Premier Foods’ shares were up 3.3%, Reuters reported.