MODESTO — After making breakfast cereals for more than a generation, Post Foods will close its south Modesto facility and put at least 140 people out of work by September 2014.
The closure is expected to save the company $14 million per year in manufacturing costs.
Post's St. Louis-based executives warned last month they were considering the shutdown, but they promised to discuss possible options with the employees' Teamsters Local 386.
"The company and the union discussed and evaluated alternatives to the potential plant closure, however, on April 3, 2013, the company's management made the decision to proceed with closing the Modesto plant," Post stated in a notice to its shareholders.
The Whitmore Avenue plant has been making mostly Grape-Nuts and Post Selects cereals lately.
Post President Terence Block last month said his company has "excess capacity" and needs to "increase efficiency."
So the company has decided to transfer Modesto's "production capabilities" to Post's other plants in Battle Creek, Mich., Jonesboro, Ark., and Niagara Falls, Ontario.
Besides the 140 Post employees who will lose their jobs, the plant's closure is expected to impact assorted businesses that provide services such as maintenance and security patrols there. Suppliers also will be hurt.
Post told its shareholders the company plans to spend about $10.7 million closing the plant and moving equipment.
That includes spending $3.6 million for severance payments to employees and related expenses. About $4 million in plant closure costs are expected, plus $3.1 million to shift production to Post's other facilities.
Post anticipates a loss of $1.5 million to $2.5 million related to its employee benefit pension plan.
"Upon completion of the transfer and start-up of production at other facilities, which is estimated to require capital expenditures of approximately $29.8 million, Post expects to achieve net pretax annual cash manufacturing cost savings of approximately $14 million," the company told its shareholders.
That savings is supposed to "better position Post to compete in today's competitive landscape."
The Bee was unable Tuesday to reach representatives from Post or the Teamsters.
Post hasn't announced what it plans to do with the 282,000-square-foot, six-story Modesto plant and the 80 acres around it.
The Stanislaus County assessor's office last year valued the plant at nearly $43.3 million, and its annual property tax bill has been nearly $525,000.
The plant was built in 1976, but the company's ownership has shifted repeatedly since then. The Post brand has been owned by General Foods, Kraft, Philip Morris and Ralcorp Holdings. Last year, Post Holdings took over as an independent, publicly traded company.
The Modesto plant's unionized workers earn $18 to $22 per hour. Employment there has been declining since the mid-1990s, when more than 225 people worked there.
Over the decades, the plant has manufactured products ranging from Kool-Aid and Tang to Banana Nut Crunch and Honeycomb. The building is designed to accommodate cooking, baking and various extrusion manufacturing techniques. It also has rail access for grain delivery and storage.
Bee staff writer J.N. Sbranti can be reached at firstname.lastname@example.org or (209) 578-2196.