Battle Creek chooses optimism on Kellogg, even as it explores what’s next

BATTLE CREEK—Even as Kellogg Co. lays out plans to split into three companies and shift the headquarters of its most profitable sector to Chicago, city officials sounded hopeful the company will remain vital to Battle Creek’s future.

“We are excited that (according to) the company, there will be no jobs lost,” City Manager Rebecca Fleury said at a press conference Wednesday outside city hall.

Related:

• Michigan icon Kellogg plans corporate spin-offs and move to Chicago
• As Kellogg moves headquarters to Chicago, what’s left in Battle Creek?

Kellogg executives briefed community leaders prior to the press conference in a closed session to update them on the potential impact to the area of the firm’s announcement this week.

“Battle Creek is passionate about having as many employees remain in Battle Creek as possible and the company has said they are willing to work with us in that particular area.” Fleury said.

But the move adds uncertainty to that jobs promise, as Kellogg plans to shift the headquarters of its snack division ─ which accounts for 80 percent of Kellogg revenue ─ to Chicago. It’s the most significant aspect of its plans to spin off into three separate companies focused on snacks, cereals and plant-based food.

Kellogg's had net sales of $14.2 billion in 2021, with $11.4 billion generated by its snack division, much of it overseas. Cereal accounted for $2.4 billion in sales last year while plant-based sales totaled around $340 million.

But for a firm famously built on corn flakes by founder W.K. Kellogg more than a century ago, it has seen a dispiriting decline in its core cereal business for years.

In September, Kellogg announced plans to cut 212 jobs at its Battle Creek cereal plant over the next two years, including 174 hourly jobs at a plant that then had 390 employees. At its peak in the early 1970's, the plant employed 4,000 people.

Fleury, the city manager, said the city is committed to an ongoing partnership with Kellogg, adding: “Of course we want people to live here, so what we are going to do is what we are already doing, making sure we have a talent pool for them to draw from.”

A 2019 economic analysis of Battle Creek by the Kalamazoo-based W.E. Upjohn Institute for Employment Research found its talent pool may be lacking, stating that “despite some recent improvements, the city of Battle Creek still faces substantial challenges in terms of its human capital. Overall, the city lacks residents with the education and skill levels needed to compete in a twenty-first-century workforce.”

The study noted that while 28.1 percent of individuals in the state of Michigan have a bachelor’s degree or higher, just 21.8 percent of Battle Creek residents do.

Fleury pointed to steps by Battle Creek Public Schools career academies “identifying early where the skills and talents of young people are, and then matching them up with employers. I think that’s a great way to start.”

She said Wednesday she was unsure what impact the company’s future plans will have on local tax revenues.

“There is a lot to learn about the tax implications,” she said.

She was also uncertain whether Kellogg’s new directions would have an impact on the Battle Creek-based W.K Kellogg Foundation and W.K. Kellogg Trust, which had combined assets of $7.8 billion in 2019.

Joe Sobieralski, CEO of Battle Creek Unlimited, an economic development agency, said the community must continue to develop an economic base beyond that of Kellogg.

“Our organization was spearheaded to diversity away from the cereal industry nearly 50 years ago,” he said.

He said the city’s industrial park is home to 85 companies “providing 13,000 jobs beyond what Kellogg does.

“Battle Creek is synonymous with Kellogg, but you have to realize there’s much more going on here beside Kellogg.”

State Rep. Matt Hall, R-Comstock, said it’s been evident for years Kellogg was disinvesting in Battle Creek, as it shifted parts of its operations to Grand Rapids, Chicago and elsewhere, and diversified its manufacturing locations.

“It will never be like it was,” Hall told Bridge Michigan, noting that auto parts maker DENSO now employs more local workers than Kellogg.

Hall said he was reassured in the company’s private meeting with local officials Wednesday morning that Kellogg will not desert the community.

“There won’t be any change in their job footprint. That’s their position,” Hall said. 

But Hall said the city of Battle Creek must do more as well, including development of its downtown waterfront.

“We have to do more to make Battle Creek a place where even more people want to live.”