Keebler: Some Elves Must Go

Kellogg Co. affirmed its full-year earnings outlook Thursday and confirmed it is seeking to close two of its Keebler bakeries.

The company will tell the unions representing hourly workers at the operations in Macon, Ga., and Des Plaines, Ill., that it recommends the closings to improve efficiency and better position Kellogg for growth, company spokeswoman Kimberley Goode said.

The Macon operation has about 400 employees and its hourly workers are represented by the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union. About 350 people work at the Des Plaines site, where the Teamsters represent production employees.

The national president of Keebler's union in Macon, Frank Hurt, said the closing of the Macon operation appears imminent.

Hurt told The Macon Telegraph that a company official told him, "They are going to close that shop and not much can be done to prevent it."

"We really just took a look at our business and made a decision that we needed to make this recommendation, to close these plants as a way of supporting our overall business," Goode said.

Cereal and snack maker Kellogg, based in Battle Creek, has about 25 production facilities in the United States and 18 overseas. It reported nearly $10 billion in sales for 2004.

Kellogg also has decided to handle its own snacks merchandising by adding 1,700 part-time positions nationwide. The work of stocking store shelves with Kellogg and Keebler snacks is now handled by another firm, and the change will improve customer service, Goode said.

If the plants are closed, Kellogg predicted that it would cost 15 cents per share, up from the 8 cents to 10 cents that it previously forecast. Still, the company expects its per-share earnings to be in the range of $2.28 to $2.32.

Kellogg shares fell 65 cents to close at $42.41 Thursday on the New York Stock Exchange. The shares have traded between $37.70 and $45.59 during the past 52 weeks.

By James Prichard