Yoplait announces 49 layoffs at Reed City facility

REED CITY – General Mills will layoff 49 production employees at the Reed City Yoplait yogurt production facility within the next two months.

Spokesperson Bridget Christenson, who works in the Minneapolis corporate office, said Wednesday the manufacturer is “aligning production” at the facility.

Individual workers affected by the job cuts have not yet been notified.

“We are moving into a phase in which we will be aligning production to make improvements in our production capacity and capability,” Christenson said.

“We expect the layoffs to take place within a 60 day transition period. Workers who will be impacted will be notified within a few weeks. We will be following the guidelines set down in contractual arrangements with the union.”

In October 2011, the Retail, Wholesale and Department Store Union reported workers at Yoplait signed a labor agreement with General Mills.

At the time, there were 370 union members out of 386 workers at Reed City’s Yoplait manufacturing facility producing a reported 11 cases of yogurt each month (source: RWDSU.) In late June, Yoplait reportedly also eliminated eight salaried positions and reassigned three salaried employees to other jobs.

Reed City Chamber of Commerce president Tyler Thompson noted that any news such as the announcement by General Mills was disappointing, but pointed out he hoped the layoffs reflected a temporary situation brought about by larger general issues in the national economy – one that would be remedied in the future.

“The chamber stands behind both Yoplait and the employees being affected by this news,” he said. “Yoplait and General Mills have been wonderful industrial neighbors over the years, and the investment they have made in this community is extensive.

“Just recently they invested in the North Star milk processing facility. We believe the jobs will eventually return and we will be here to help that process however we can.”

According to business publications that cover the food manufacturing industry, Yoplait has struggled to maintain a substantial hold on the American yogurt market that it once ruled.

The Wall Street Journal’s Market Watch noted in a June 25 article, “Industry-watchers remain skeptical as to whether General Mills can grasp a meaningful foothold in the Greek yogurt category, given the dominance of the likes of market leader Chobani, which is owned by Agro Farma Inc., or post strong growth of non-Greek yogurt products, given the fast-consumer shift to the thicker, protein-rich Greek variety.

Market Watch went on to note General Mills was expected “to report a decline in Yoplait’s sales over the past year after posting just slight growth in the previous two years. The division has sapped General Mills of a once reliable and robust growth engine.”

“Yoplait was a high-margin business and steady, consistent volume grower,” UBS food analyst David Palmer said. “But that is no longer the case.”

Market Watch continued noting “General Mills acknowledges the yogurt category has been significantly shaken by Greek yogurt, which now accounts for nearly a third of the $6.4 billion U.S. category, but hasn't settled yet, meaning that there's still a chance for it to become a larger player in the Greek-yogurt category.

Reuters News Service also recognized that General Mills was facing problems in the yogurt market.

“One key area of investment for General Mills this year is the North American yogurt business, where the recent popularity of Greek yogurt, especially the Chobani brand, is fueling growth among health-conscious consumers,” Reuters pointed out in June.

Yoplait has been facing serious competition, and predicted productivity was in question said the analysis.

“S&P Capital IQ lowered its opinion on General Mills shares to ‘Buy’ from ‘Strong Buy’ following the disappointing outlook.

"We like the long-term prospects for the cereal and yogurt categories, though we think General Mills has lagged in U.S. Greek yogurt," said S&P Capital IQ analyst Tom Graves.

Reuters then noted “General Mills said it will launch 35 new yogurt products in the United States in the first half of the fiscal year, including a 100-calorie Greek Yoplait yogurt, a Yoplait yogurt with six or fewer ingredients and new variations of its Liberte brand.

“General Mills plans to increase marketing to support those brands.”