- Private label manufacturer TreeHouse Foods will be closing its office in Omaha, Nebraska by Jan. 31, 2019, according to a company statement. The closure will impact about 200 employees.
- The closure is a part of the company's TreeHouse 2020 restructuring plan, which aims to reduce costs through simplification and aligning operations with needs.
- TreeHouse Foods is headquartered in Oak Brook, Illinois. It also has another office in Green Bay, Wisconsin. Work will be moved to those two offices, and the company has promised Omaha employees separation pay and outplacement assistance. The company estimates that costs associated with the office closure will be about $6 million.
The announcement, which came Wednesday afternoon, is the second big move TreeHouse Foods has made this week that may help the struggling private label manufacturer improve its financial outlook. Earlier this week, it sold McCann's Irish Oatmeal brand to B&G Foods for $32 million cash. It's not clear if there is any reason that TreeHouse is making a lot of big changes now, but it remains to be seen if this office closure and brand sale will help the manufacturer regain its footing.
Even though private label sales are becoming more popular among consumers, the nation's largest private label manufacturer has been struggling. In its most recent earnings report, the company reported a net loss of $34.1 million, which officials said was the result ofhigher commodity, operating and freight costs. This closure is part of the company's TreeHouse 2020 restructuring plan, which is meant to streamline operations and spending.
Already, the company has announced closures of factories in Brooklyn Park, New York, and Plymouth, Indiana — laying off about 375 workers — and a pretzel and cereal snack mix plant in Visalia, California — affecting 294 employees. This closure in Omaha, which impacts the company's operations center — with employees working on various administrative duties including customer service, information technology, operations, procurement, research and development and supply chain — is the first to hit support staff.
Ironically, TreeHouse's financial troubles today may be a result of the very same reason the manufacturer has an office in Nebraska. In 2015, TreeHouse announced it was acquiring Ralcorp, Conagra's private label brands business, for $2.7 billion. At the time, the move was hailed as a smart one for TreeHouse, making it the undisputed leader in private label manufacturing and bringing more volume in areas where it had many efficiencies.
At the time of the acquisition, Conagra's headquarters were in Omaha, and TreeHouse established the office there to hire about 280 former Conagra employees with deep knowledge of Ralcorp's brands and processes. “This location is critical for leveraging the knowledge and talent most familiar with our customers’ needs,” Dennis Riordan, then TreeHouse's chief financial officer, told the Omaha World-Herald in 2016.
What TreeHouse may have overlooked while making the Ralcorp acquisition were deep problems with the business and its operations. After all, Conagra had purchased it in 2013 for $5 billion and sold it at a significant loss only three years later. In Conagra's first year after the Ralcorp acquisition, its profits in one quarter plummeted more than 50%
As TreeHouse took over, Ralcorp's problems continued. In May 2016, one of TreeHouse's first post-acquisition moves was closing two former Conagra plants in California and Wisconsin — and eliminating 720 jobs — to right-size manufacturing. And as early as November 2016, then-TreeHouse CEO Sam Reed said the new acquisition did not live up to expectations.
Last year, TreeHouse announced its restructuring plan. It has already cut down on more than a quarter of its SKUs and is working to divest itself of brands that do not fit with the core private label mission. On the most recent earnings call, Reed, who is now retired, explained how the savings program would benefit the company. "Taken as a whole, these initiatives will return our TreeHouse to private label fundamentals in order to deliver progress, productivity, and prosperity in transitioning from the past to the future," he said.
It's not known whether any more big changes are in TreeHouse's immediate future. However, the company may want to make all of its large shifts before it reports earnings on Aug. 2.