BATTLE CREEK, MICH. — WK Kellogg Co. has unveiled a half-billion-dollar supply chain modernization plan aimed at hoisting margin growth into double digits by the end of 2026.

Under the plan, expected to cost $450 million to $500 million, WK Kellogg said it will invest in new infrastructure, equipment, technology and capabilities at its manufacturing plants in Battle Creek, Mich.; Lancaster, Pa.; and Belleville, Ont., with a goal of boosting production at those sites as well.

The supply chain strategy also includes consolidation of WK Kellogg’s manufacturing footprint. The company said it plans to close its plant in Omaha, Neb., in a phased production shutdown starting in late 2025, targeting full closure near the end of 2026. Production at WK Kellogg’s plant in Memphis, Tenn., also is slated to be reduced beginning in late 2025, a move the company said will lead to a “more focused, streamlined facility.”

Overall, WK Kellogg said, the changes are expected to result in about 550 job cuts, reflecting the headcount reductions from the Omaha plant closing and scaled-back Memphis facility production plus headcount additions at plants where production is being raised.

WK Kellogg outlined the supply chain optimization initiative on Aug. 6 in reporting increased net earnings but lower net sales for its fiscal 2024 second quarter and first half.

“Today’s announcement regarding modernizing our supply chain marks a significant step forward in executing our strategy and enhancing WK Kellogg Co’s long-term strength and resilience,” said Gary Pilnick, chairman and chief executive officer at Battle Creek-based WK Kellogg. “These actions will help transform our supply chain and will allow us to enhance our production across a more reliable, agile and cost-effective manufacturing network, supporting top-line delivery and driving margin expansion.”

The supply chain plan stems from financial targets that WK Kellogg announced in August 2023 at its Investor Day event in New York. The company said that, over the three-year time frame, it seeks adjusted EBITDA margin expansion of roughly 500 basis points, leading adjusted EBITDA margin to rise from about 9% to approximately 14% exiting 2026 – with supply chain modernization as “the centerpiece” of the margin growth strategy.

WK Kellogg said the up to $500 million price tag for the supply chain modernization includes capital expenditures of up to $390 million, along with one-time cash restructuring and non-restructuring costs of about $110 million. Besides investing in new technology and infrastructure and streamlining the network, the initiative aims to improve efficiency by shifting production from the oldest plants to other facilities, according to the company.

“Actions that impact our people and the communities where we operate are challenging and are made with thoughtful consideration,” Pilnick said. “We recognize and appreciate the tremendous contributions of our WK teams in Omaha and Memphis, and we are committed to providing them support throughout this transition.”

In late 2023, WK Kellogg decided to forgo a 2021 plan to shift ready-to-eat cereal production from Battle Creek to the Belleville plant. With the decision, and job creation and technology investment plans for the Battle Creek facility, the company gained local incentives and support. Other progress thus far in supply chain modernization, according to WK Kellogg, includes improvements in overall equipment effectiveness, expansion of the Belleville plant, and consolidation of Mini Wheat shred platform production from three lines at three separate facilities to two lines at two lower-cost facilities.