McCormick to shut two plants in restructuring

By staff reporter

- Last updated on GMT

Related tags: Raw material prices, Food, Mccormick

Leading spice company McCormick is to close two manufacturing
facilities this year as part of the company's restructuring plans
to improve margins.

The announcement comes after a difficult year, which saw the company hit by high raw material prices, slow sales and the impacts of hurricane Katrina.

McCormick is to close its manufacturing facility in Salinas, California by the end of the year, slashing 400 jobs as it transfers the plant's manufacturing activities to operations in Hunt Valley, Maryland, Dallas, Texas and London, Canada.

The company also said its restructuring plans include the closure of its condiment manufacturing plant in Hunt Valley by the end of the year. Production will be moved to the company's existing facility in South Bend, Indiana.

In a statement issued last week, McCormick said its fourth quarter results, due to be published on January 25, will be impacted by the two intended closures.

The company, which manufactures and markets spices and flavors both to the food industry and to consumers, in September reported a one percent fall in sales for its industrial business, down to $307 million compared to last year's figure of $310 million.

However, overall sales were boosted by a good performance from the company's consumer business, where sales rose 4 percent to $315 million compared to $303 million last year.

"During 2005, the Company has been challenged by a high cost inventory of vanilla beans, weakness in industrial sales, an accounting adjustment and the effects of hurricane Katrina. Together, these factors have interrupted a period of strong sales and profit growth that began in 1999,"​ the company's president and chief executive officer Robert Lawless had said at the time.

"As announced early in September, a review of our industrial business is underway as well as certain actions to improve the efficiency of our entire supply chain. With these actions, we are confident that long term, our sales growth, margin improvement and strong cash flow will once again lead to excellent financial results,"​ he had added.

In February last year, McCormick's director of public relations Laurie Harrsen commented that "as Americans' interest in international flavors and bold tastes grows, so does their desire for herbs, spices and seasonings."

"In fact, spice consumption has doubled during the past 20 years, to more than one billion pounds in 2003, and we project that figure will continue to increase,"​ she added.

And consumer demand for ethnic foods, driven by globalization, travel and more adventurous taste buds, is stimulating the food industry to design food products that target this growing market.

However, according to the database company Productscan, the number of spice, extract and seasoning food products launched in the US and Canada since 1999 has been fairly static. The figure was at 629 products in 1999, down to 518 the following year, before climbing steadily to reach 697 items in 2003. The figure for 2004 dipped slightly to 610.

Related topics: Flavours and colours

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