FARMDALE Kraft to close cottage cheese plant, idling about 60

The decision is part of a restructuring at the food company.
THE VINDICATOR
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Kraft Foods is closing a plant in northern Trumbull County as part of an effort to consolidate production.
About 60 workers who produced cottage cheese and sour cream will lose their jobs at the plant in Farmdale.
Diane Wolf, northeast area vice president of operations for Kraft, said the company has excess capacity in its plants that produce cultured products.
Production from Farmdale and another plant that's closing in Canton, N.Y., will be moved to two plants in New York and one in California. It would have been too expensive to improve the Farmdale plant to make it capable of receiving more production from other plants, Wolf said.
Restructuring
The closings are the first in a new restructuring plan announced Tuesday by Kraft, which is based in Northbrook, Ill.
Over three years, Kraft plans to close 20 plants and eliminate 6,000 manufacturing and salaried positions, or 6 percent of its work force, at all levels.
The restructuring plan comes amid a growing trend toward healthier eating that is taking a bite out of sales and profits at Kraft.
Also Tuesday, Kraft reported a 7 percent decline in fourth-quarter profits -- the latest in a series of financial disappointments -- and said 2004 earnings also will come in below expectations.
Kraft isn't alone in its struggles in the food business. American consumers' increased health concerns have put the entire packaged food industry under severe pressure to change quickly. Worries about the artery clogger "trans fat," rising obesity and the trend toward low-carbohydrate, high-protein diets have hurt sales of cookies and some other packaged foods.
"The growing importance of health and wellness has altered buying patterns to a degree I have not seen before in the food industry," Kraft CEO Roger Deromedi told analysts in New York. "Low-carb diets like Atkins and South Beach, the focus on trans fat, concerns about obesity and increased demand for organic and natural products are requiring a shift in how we market and what we market."
But Kraft also has hurt itself through overpricing, new-product fizzles and a failure to recognize sooner the "fundamental shift" Deromedi says has occurred with consumers and retailers, who now put a higher priority than ever before on price and value.
"When we took pricing actions early last year in response to rising costs, we misjudged the magnitude of the value trend, and it took us too long to react with more competitive pricing," he said.
Financial info
The company anticipates that the restructuring will result in pretax charges of as much as $1.2 billion over the next three years and generate an estimated $400 million in annual savings by 2006.
At the same time it is laying off employees, Deromedi also said the company will spend $500 million to $600 million more on marketing in 2004, focusing on healthier snacks.
Net earnings for the last three months of the year amounted to 50 cents a share, matching the consensus estimate of analysts surveyed by Thomson First Call. Revenues grew to $8.3 billion from $7.8 billion, up 6 percent thanks to a boost from the weak dollar.