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City Faces Kellogg's Cut

Kellogg Co. on Saturday announced it would close most of its historic hometown plant and cut about 550 jobs in its latest effort to revive a sagging bottom line.

"Continuing to reduce costs and increase efficiencies is an important part of our global strategy to return Kellogg Company to strong, steady growth," said President and CEO Carlos M. Gutierrez.

The decision is a heavy blow to Battle Creek, where the scent of freshly baked cereal often permeates the air and generations of families have banked on jobs with the company.

Kellogg said restructuring its business would result in a charge of $100 million to $150 million against earnings this quarter, with more charges expected later this year and early next year.

The third-largest employer in this community of 56,000 (which calls itself "Cereal City"), Kellog said it would offer assistance to workers whose jobs are eliminated.

The closure is the latest change at the financially troubled company, whose annual earnings dropped 21 percent last year.

Kellogg had announced in June it was considering closing the aging South Plant to save an estimated $35 million to $45 million annually and reduce excess cereal production. The company said the closure would begin later this year and end in the first three months of 2000.

In Battle Creek, there are 2,250 employees, both production and salaried. About 1,100 work at the South Plant. The rest work at corporate headquarters or at the North Plant, which would not be affected by the proposed shutdown. Kellogg has 6,400 jobs in North America.

The company has been hurt by competition from cheaper, store-brand cereals, as well as market-wide demographic changes. Fewer Americans are eating cereal in the morning, preferring convenience foods that can be eaten on the run, like bagels, instead.

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