In a matter of days, California has been rocked by the loss of not, one even two, but three factories, all operated by storied companies with deep pockets and longtime ties to the state.
There’s no sugar-coating it, this is bad news for the state and for the hundreds of affected workers who now have to find a new job in an increasingly tight economy.
And that is, of course, a big piece of why this is happening:
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We’ve got a confluence of several different factors at play here:
– Obviously there’s huge macroeconomic uncertainty related to tariffs – and while there’s certainly been lots of talk about bringing jobs back to America…retaliatory tariffs from other countries encourage companies to shift more of their production capacity overseas. It’s a push-pull that makes things harder on everyone.
– There are also some warning signs in the American economy, with slumping consumer confidence, lots of layoffs happening, and just general concern that people may start reducing their spending. If that happens, it’s often food and beverage companies like the three I’m highlighting today that suffer and have to cut costs.
– Of course, as prices increase due to a combination of tariffs and inflation – companies need to find ways to trim costs and boost efficiencies. Cutting personnel is a painful (yet sometimes very effective) way to do that.
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There are also likely plenty of specific issues at play in each of these – every business has localities it prefers to partner with over others, and many factories (especially older ones – one of the factories I’m highlighting is 55 years old!) aren’t set up ideally for the automation and efficiencies of the 21st century.
Regardless, this is tough news for lots of people in California. Let’s dive right in:
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Blue Diamond, the beloved almond company, just announced that it’s closing its manufacturing plant in Sacramento, at the cost of 600 good jobs.
They’re shifting operations to two other factories in the state, and some of the laid-off workers will have the opportunity to move to a different location.
For a California co-op that’s been in business for more than a century…this is rough news.
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Blue Diamond noted in its announcement that the plant was just too expensive to operate.
Given that it’s shifting operations to other plants within California, this doesn’t look like a “California” problem – perhaps this was in some way related to business regulations or tax policy within Sacramento, or perhaps it was just a matter of how the plant was set up and inefficiencies in the processes / dated equipment.
Those are just some educated guesses. They’re up for debate!
But what’s NOT up for debate is that this is a heartbreaking loss for hundreds of workers.
And the pain in California doesn’t stop there…
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Frito-Lay, which is a division of Pepsi, closed its Rancho Cucamonga manufacturing plant earlier this week, after 50 years of operation.
The facility was a mainstay of the community and made Cheetos, Doritos, Funyuns, and Tostitos.
Although Frito-Lay didn’t share how many people it had laid off, reportedly the job losses number in the hundreds – so this is a big impact in a small community.
On the plus side, Pepsi said it’s providing workers with severance, although we don’t know how generous the terms were.
And of course…
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While the company only announced this to workers on Monday, I’m confident they had plans in train for a while and have built up capacity elsewhere to ensure no shortages of these beloved snacks.
This plant also had warehouse, transportation, and distribution groups – which are continuing to operate. So it’s not like the whole campus is just an empty shell now, there’s still plenty of work being done.
Best wishes to the laid-off workers, I hope things go well from here, even with all the other layoffs in California right now.
And speaking of which…
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Coca-Cola recently announced plans to close its plant at 1201 Commerce Boulevard in American Canyon.
That’s coming at the cost of 135 good-paying jobs, almost all of which will be liquidated by June 30th when the plant itself closes.
(A handful of people will stay on to handle transitions through August.)
This is part of a long-running strategy of Coca-Cola’s…
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Namely, Coke is working to outsource a great deal of the production and logistics related to its products to third-party companies.
That should help Coke slim down operations and more closely align its efforts around things like R&D, marketing, PR, and pricing – so it doesn’t have to specialize so much in logistics, production, and distribution.
(Of course, as I mentioned earlier, tariffs are certainly part of the issue here as well – they want to keep their supply chains more local.)
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I want to highlight here that no one has communicated about any issue with California on the whole – no issues with the state’s business climate or regulatory or taxation regimes.
These appear to be three unique cases that aren’t tied to a broader business exodus from the state – especially given that, in many cases, they’re shifting production capacity to other factories in California.
Still, it’s tough news for the state to see these jobs going away!
For more on these stories…
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• For fun lists, healthy living tips, and bar conversation topics, make sure to follow The Coconut Mama. Click here to access The Coconut Mama’s profile page and be sure to hit the Follow button here or at the top of this article!
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