- B&G Foods will lay off 86 employees as it closes its B&M beans factory in Portland, Maine, the company announced Monday. The closure of the more-than-100-year-old factory is part of B&G's commitment to improve productivity and reduce costs, the company said. According to the Portland Press Herald, the factory will stop operations this year.
- The factory and its 13.5 acres of waterfront property have been sold to a nonprofit that runs Northeastern University's Roux Institute, a graduate educational institution focused on digital engineering, genomics, and life sciences. The institute will be headquartered on the site, and the B&M factory will be renovated and converted into incubator space for business startups.
- This is the first big business move under B&G President and CEO Kenneth C. "Casey" Keller, who took the helm of the company in June.
The B&M factory closure could help B&G capitalize on a good deal, increase its efficiency, and be a good neighbor to the community that has made the New England-style baked beans and other products since 1867. The factory was built in 1913, and has been constantly in operation ever since, the Portland Press Herald reported.
No price was given for the sale, though Charles Hewett, executive director of the nonprofit that is developing the property, told the Portland Press Herald the build out would likely cost in the hundreds of millions of dollars.
It's not clear if B&G had plans to decommission the century-old plant before starting to negotiate with Northeastern's Roux Institute, which told the Maine newspaper it had been looking for a site for more than three years. Hewett said the move seems emblematic of a shift toward the future. The B&M plant had been an engine of the local economy for decades, and the science and technology campus could be the driver of jobs for years to come.
In a written statement, Keller agreed with that sentiment.
“While this was a very difficult decision, we believe it is in the best interest for the future of Portland," he said. "We are confident The Roux Institute will build a new longstanding legacy on the property, one that will enrich Portland residents in new and exciting ways, and will endure as a force for good in the community for generations to come.”
As for B&G, the sale is a gateway to the future. B&G will still produce B&M beans, but it plans to consolidate some of the manufacturing to its other plants and move parts of it to third-party co-manufacturers. Closing down an old plant provides B&G opportunity to find more efficiencies by manufacturing somewhere that's more technologically up to date. It may cut down on transportation costs because more brands will be made in the same place. It also frees up funds that B&G would have allocated to the maintenance of an aging building.
While B&G may have wanted to shutter the aging facility in the name of efficiency, the fact that a buyer that wanted to redevelop it was willing to pay sweetens the deal. For the employees who are losing their jobs, B&G said it expects to trigger a pension plan withdrawal liability currently worth $14.1 million, which would be payable over 20 years in annual installments of $0.9 million. A hefty sum, for sure, but the company said it expects the costs will be offset in the sale, which is expected to close late this year or in early 2022.
Because the new owner of the facility will be an educational and job-creating institution, the Roux Institute has also committed to use its capabilities to help transition B&G's 86 employees to new jobs.
Although B&G has seen a huge boost in sales during the pandemic, with net sales in the most recent quarter 25.1% higher than the same time period in 2019, the company has been sounding the alarm on the rising threat of inflation and shortages. CFO Bruce Wacha said in the most recent earnings call that B&G has already increased prices across 80% of the brands in its portfolio. The trend of inflationary price increases, he said, is likely to continue well into 2022. However, Wacha said he projects B&G is on track to have a year of growth.