Kellogg to lay off more than 200 Twin Cities workers

Kellogg Co. is laying off more than 200 Twin Cities-based workers, the company told the state of Minnesota.

The cuts are part of a larger national cost-cutting initiative that the maker of Raisin Bran announced in February, said Joe Lierz, Kellogg's director of labor relations.

"This is directly related to that," he said by phone Monday, and "is one in a series" of layoff announcements nationwide.

The Battle Creek, Mich.-based maker of Cheez-It crackers and Nutri-Grain bars is dismantling its direct-store-delivery system, called DSD, used for its snacks business.

The move, like those taken by several other major food companies, is a way to save money in the face of consumer trends challenging the packaged-foods industry.

While the announcement was made months ago, the company had not yet revealed which employees and what locations would be effected.

The letter — dated May 4 and sent to the Department of Employment and Economic Development (DEED) — says 216 workers at its Vadnais Heights distribution center will be permanently laid off in July and August. The jobs include both on-site warehouse employees and truck drivers.

Some of the employees are represented by Teamsters Local 471. Dave Laxen, the union's top elected official, has not returned requests for comment.

"We've been actively engaged in conversations with some of our biggest retail partners who have expressed strong interest in hiring these employees for high-demand roles once the transition is complete," Kellogg said in an e-mail statement.

"As a result, we are optimistic that our employees will find similar employment once this transition is complete," it said.

By operating a DSD system, food companies can bypass a third-party warehouse intermediary, delivering its products directly to stores.

The company relies on the warehousing model for about 75 percent of its business.

Kellogg's leadership said in February that disbanding its costly DSD system would free up money that could be reinvested in its slumping snack business.

The change in its distribution model is part of its "Project K" initiative, which Kellogg began in 2013.

That cost-savings program, which is primarily job cuts and improved operational efficiency, was projected to save the company as much as $475 million annually by next year, according to Reuters.

Kellogg has a meeting scheduled for Monday with DEED staff "to see what sort of assistance we can provide for the workers through our dislocated worker program," said Shane Delaney, a DEED spokesman.

The letter sent to DEED was a WARN notice, required by the federal Worker Adjustment and Retraining Notification Act when an employer with more than 100 workers has a large layoff.

Kristen Leigh Painter • 612-673-4767