Schoolkids are heading into the Sno-White Drive-In for an after-school snack. It’s nearly 3 in the afternoon, but the air here near Lodi Lake smells faintly of breakfast. The reason becomes abundantly clear after Turner Road bends and the well-manicured subdivisions surrender to the snowy white towers of General Mills.
In 1948, when the cereal maker opened this plant, it was on the outskirts of Lodi. The community has since enveloped it, and generations of Lodi residents have grown up debating whether the scents from the factory are a good or bad thing. If the 80-acre site is shuttered next year, as General Mills announced Thursday, the company’s departure will have a lingering impact on this city of roughly 62,000 residents.
“General Mills occupies a very hallowed place in Lodi,” said Pat Patrick, chief executive of the Lodi Chamber of Commerce. “They run a United Way campaign that raises hundreds of thousands of dollars. ... The Salvation Army has a food bank, and whenever there’s a mistake on boxes – they got sealed wrong or printed incorrectly – a truckload of cake mix or brownie mix or cereals would show up at the food bank.”
Similarly, the Kiwanis Club of Greater Lodi always could count on General Mills to donate pancake mix for their breakfast, said Randal Heinitz, owner of Randall’s Fine Clothing & Gifts and a Kiwanis Club member. Even as far away as Sacramento, the food processor made its generosity felt. It supplied breakfast products for the celebrity cereal-eating contest at the annual fundraiser for Roberts Family Development Center in north Sacramento.
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“They have been a part of our Suits & Slippers event from the beginning,” said Derrell Roberts, the nonprofit’s chief executive. “Next year is our 10th event.”
General Mills blamed the plant closure on declining cereal sales, saying the trend was behind a 25 percent drop in its most recent quarterly profits. Research group Euromonitor estimated that U.S. cereal sales were a $13.9 billion market in 2000 but dropped to $10 billion by 2013 and could go as low as $9.7 billion this year. Increasingly, Americans are looking for healthy, portable breakfast items that require little preparation, spurring cereal industry analysts to coin a new term, “snackfast,” to describe breakfast.
This week General Mills announced that, pending negotiations with its union, it will shutter two plants – the one in Lodi and a yogurt-manufacturing facility in Massachusetts – as part of cost-cutting moves. Roughly 430 people will lose their jobs at the Lodi plant, but as my colleague Dale Kasler reported Friday, economist Jeff Michael of the University of the Pacific estimates that more than 1,200 jobs total could be lost.
The local spending by Minneapolis-based General Mills is all money that comes from outside the state, Patrick said, and the jobs it provides are generally higher-paying. “New money creates other jobs,” he said.
For instance, dozens of businesses in Lodi and surrounding areas have contracts with General Mills. Delta Physical Therapy regularly sends an athletic trainer to supervise workouts at the cereal plant’s gym. Over at Frank C. Alegre Trucking, owner Tony Alegre estimated that his company will lose about 2 percent of its annual revenue because of the closure, but that’s not his greatest concern.
“We haul product to General Mills, a lot of their bulk shipping like sugar going into the facility and some of their specialty goods like oat bran,” he said. “It’s not only going to affect our business, but it’s also going to affect my family. My son-in-law works for General Mills. I have a vested interest in his welfare and my daughter’s. I’m more concerned about that than the trucking revenue.”
Every Lodi resident could be affected by General Mills’ departure, Alegre said, because the city will not collect as much revenue for taxes, utilities and other fees. Consequently, he’s predicting that tax or rate increases will likely have to offset the difference.
Randall said he hopes that General Mills will change its mind, but as a Lodi native, he also is trying to take the long view. The city, he said, has lost other big employers – swimwear maker Catalina, meat processor Victor Fine Foods and manufacturer Super Mold – but has steamed ahead.
Lodi is now home to 95 wineries that draw tourists from all over the world, Patrick said. Visitors don’t just stop at buying wine, he added, but they also frequent local hotels, boutiques and eateries.
Still, Patrick said, it will be difficult for Lodi if a buyer isn’t found quickly for the 80 acres that General Mills occupies. Lodi has a bigger interest in seeing that site repurposed than General Mills does, he said.
“I’m a believer that when one door shuts, another opens somewhere,” Patrick said. “What a unique opportunity to say, ‘Hey, we have 80 acres in the middle of a really cute little community that’s surrounded by vineyards.’”