THE owner of Hovis said today that it is to close two bakeries and cut 900 jobs as part of plans to overhaul the struggling bread business.
Premier Foods revealed the biggest impact will be felt in Birmingham, where 511 jobs are to be lost with the closure of a factory and distribution operation.
Hovis operations at Greenford, west London, will also close, costing 196 jobs, while Premier is also preparing to shut distribution sites at Plymouth and Mendlesham, Suffolk, resulting in the loss of 95 jobs in total.
However, a spokeswoman said its Manor Bakeries plant at Moreton, which employs about 300 staff, is unaffected.
She told The Post: “Moreton is not part of our bread division, it is part of our grocery business.”
The closures within the bread division are subject to consultation with employees but are scheduled to take place during the course of 2013.
St Albans-based Premier, which also makes Mr Kipling cakes and Bisto gravy, has seen its Hovis division hit by intense competition in the bread market and a surge in wheat price inflation caused by poor weather.
And it is set to lose a £75m-a-year contract with the Co-op grocery chain from the middle of next year after Premier was unable to agree a new deal on sufficiently attractive terms.
It is cutting 130 distribution routes and closing the supply centres to take into account the expected reduction in volumes.
Premier chief executive Michael Clarke said: “We recognise the impact these actions will have for our employees at the sites affected.
“Decisions will not be taken lightly, but they are necessary if we are to build a strong and successful future for the bread division and those who remain with our business.”
Graham Jones and Damian McNeela, analysts at Liverpool stockbroker Panmure Gordon, commented: “Premier has today announced the proposed closure of a further two bakeries and four distribution centres, with a loss of 900 jobs and a cash cost of £28m.
“The cost savings from this exercise are expected to offset the margin pressure that would have come from the loss of £75m of sales, mostly branded we understand, from Premier’s exit from the Co-op.
“While in some respects the move can be seen as running to stand still – a £28m spend to effectively hold profits flat next year – in our view it is much better than the alternative of being more aggressive with pricing in order to regain lost volume which ultimately could damage margins further.”