Dive Brief:
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Utz Brands is permanently closing its manufacturing facility in Birmingham, Alabama, on or around July 3 as part of “the company’s dedication to network optimization and cost containment,” the snack maker said in a filing with the Securities and Exchange Commission.
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The facility, which makes Golden Flake fried pork skins and other products, employs about 275 individuals. While manufacturing operations are being shuttered, Utz said approximately 100 employees will continue working in Birmingham in its distribution center.
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Utz is the latest company to announce the closure of a manufacturing plant in recent months as food and beverage manufacturers aim to boost efficiency and cut costs.
Dive Insight:
Utz, a manufacturer of chips, cheese balls, pretzels and other snacks, has spent the last several years increasing its size.
Through the purchase of filled pretzel brand H.K. Anderson from Conagra Brands and the addition of Festida Foods, the largest manufacturer of tortilla chips for the company’s On The Border brand, Utz has doubled down on its dominant position in the snacking space.
The snack maker is now taking a different approach as it shores up its manufacturing operations in the U.S. Utz said Golden Flake and other products being produced at the facility will continue to be made at other locations and that it expects no distribution or availability issues due to the closure.
The Pennsylvania-based snack maker said it expects to incur pre-tax cash charges of $1.5 million in severance expenses and $1.5 million to $3.5 million in closing and transfer of production costs. The company also expects to incur non-cash charges of approximately $8.5 million to $11 million in asset impairments.
Utz’s decision to shutter an existing plant is hardly unique in the food and beverage space lately. Tyson Foods announced last month it will close its poultry processing, broiler and hatching operations in Glen Allen, Virginia andh Van Buren, Arkansas, which will result in the loss of roughly 1,700 workers. And Diageo recently announced it plans to close its production plant near Baltimore by June, with 97 people expected to be laid off.
