IBC: lays off 1.300 workers, quits South California market

Kansas City / MO. (ibc) Interstate Bakeries Corporation (IBC) will exit the bread market in Southern California, close four bakeries, eliminate about 325 routes, close 17 distribution centres and 19 outlet stores by October 29. The closings and consolidations are expected to affect approximately 1.300 employees. In a release the Kansas City based maker of Hostess Twinkies and Wonder Bread says that it expects to take charges of about 29,2 million USD for the named actions.

IBC announces its customers in Southern California can expect to continue receiving delivery of its bread products through October 20. The company will continue to bake, sell and deliver snack cakes and donuts in Southern California. «Because of its impact on employees and their families, exiting a market is probably the most difficult decision a company can make», IBC CEO Craig Jung says. «At the same time, our primary consideration has to be the company´s long-term survival and financial health. While IBC has made marked progress in several problem markets over the past six months, bread operations in Southern California continue to be unprofitable».

Barriers to profitability in Southern California include «the incursion of lower-cost, non-union competitors; an irrational competitive pricing environment; and changing market and customer demands», the company explains: «This is compounded by a high fixed-cost structure, excessive workers´ compensation costs and a confrontational relationship with one of the company´s major unions», the release says.

IBC filed for bankruptcy protection on September 22, 2004. The bankruptcy court requires it to file monthly operating reports, which are preliminary and subject to material change. On August 16, the company reported a loss of 112,8 million USD for the year that ended June 02. That was a twelve percent improvement from a loss of 128,3 million USD for the prior fiscal year. Revenue for the year was 2,92 billion USD; down 4,7 percent from 3,06 billion USD the prior year.

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