Major job losses as shrinking giant closes loss-making bakery
Northern Foods is closing its Trafford Park Bakery in Manchester, with the loss of 690 jobs, as it restructures its chilled pastry operations in advance of their disposal.
It is also cutting 210 jobs at its Market Drayton pastry operation, which employs over 1,000 people making sausage rolls, pies, pasties and quiches for Asda.
The moves are designed to make Northern's remaining pastry divisions, which include names such as Pork Farms Bowyers, more attractive to potential purchasers as it exits a number of traditional areas of business.
The news follows the announcement in May by chief executive Pat O'Driscoll that Northern planned to sell 40% of its businesses in areas where sales were falling and margins were squeezed.
Trafford Park makes own-label chilled savoury pastry products, such as quiches, sausage rolls and pies, for Tesco. Northern bought it in 1991. Over the past year, the site had lost more than £3M.
The phased closure is expected to be completed by December 2006 at an overall cost of £12M, including £7M in direct costs.
"[The closure] is in line with our overall goal to improve the performance of the business," said Northern. "This is a loss-making site. We have had long discussions with customers over a long period of time and we couldn't come up with a workable plan [to keep the site open]."
Northern did not rule out more closures: "Across the entire portfolio we are looking at performance and restructuring where appropriate to improve performance."
The company said its disposal strategy, which includes chilled pastry, Smiths flour milling and speciality breads, was "on track". Northern expected to raise about £200M from the sale of these divisions, which are expected to be completed by next May.
Northern recently sold NFT, its chilled distribution business, for £51.2M to a management buy-out group, backed by Phoenix Equity Partners.