Dive Brief:
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Nestlé is “considering options” for its instant coffee plant in Northern New Jersey that employs about 227 people, a spokesperson said in an email. The food and beverage giant has invited the union representing the facility to talk about the future of the site. “At this point no final decision has been made,” the individual said.
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The facility in Freehold opened in 1948, and even though Nestlé has made investments since then, “the factory is limited based on its age, flexibility and ability to meet growing consumer demand in a cost-effective way,” the spokesperson added.
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Food and beverage manufacturers have been especially active lately in shuttering older, less efficient facilities that are costly to run while constructing new, more advanced locations to meet the growing demand for their offerings.
Dive Insight:
As companies grapple with a host of challenges such as high inflation and ongoing supply chain headaches, CPG giants are paying extra attention to squeezing more out of what they own.
“As Nestlé evolves to meet consumer needs now and in the future, we must ensure our manufacturing network is dynamic and set up to support our business,” the spokesperson noted.
As companies deal with aging infrastructure across their networks, it makes fiscal sense for many to consider closing a plant even if it results in the loss of jobs.
Automation and other forms of technology are constantly improving and to stay competitive, food and beverage companies are faced with deciding how to best spend their money.
In many cases, that means closing aging plants rather than retrofitting them. It’s often easier and less costly to move production to another location across their existing network or to build a new plant.
In just the last few years, food companies of all sizes have announced plant closures.
Mondelēz International said in 2021 it would close bakery plants in Atlanta and Fair Lawn, New Jersey, moves that would impact roughly 1,000 workers. Most recently, Tyson Foods announced it will close its poultry processing, broiler and hatching operations in Glen Allen, Virginia and in Van Buren, Arkansas, which will result in the loss of roughly 1,700 workers.
Last year, Nestlé said it was closing its Sweet Earth Foods facility in Moss Landing, California, with production moving to Ohio. The move, the company said, “will help optimize production and utilization across our meals manufacturing network, as well as streamline delivery to our customers.”
One thing Tyson, Mondelēz and Nestlé all have in common, like many other companies in the food space, is while they have closed some plants they have simultaneously expanded others or built new ones. As companies look for any advantage they can for their businesses, executives will keep a close watch on the health of their production network to determine what changes they need to make.
