Two Minnesota employers announced job cuts in the Twin Cities today.
General Mills says it is cutting 425 jobs. Medtronic said previously announced job cuts will grow by 30.
A General Mills spokeswoman says the Twin Cities job cuts will amount to about half of 850 layoffs planned company-wide. The job cuts are mostly administrative and support positions.
General Mills is not attributing to any sales, profit or other performance issue as the reason for the layoffs. But the maker of Wheaties cereal, Yoplait yogurt and dozens of other iconic foods is feeling significant pressure on its finances.
In a recent presentation to investors, Chief Financial Officer Don Mulligan said rising supply costs have been eating into profit margins.
"Gross margin as a percent of sales will be below year-ago levels reflecting sharply higher year-over-year input cost, up 10 percent to 11 percent for us," Mulligan said.
For the first three-quarters of its current fiscal year, the Golden Valley-based company's net income was down 15 percent, even though sales rose 12 percent.
Food industry analyst Erin Lash with Morningstar says General Mills' isn't suffering alone.
"This is reflection of the challenging environment plaguing firms throughout the packaged food space, rising food costs as well as well as aggressive competitive pressures," Lash said.
Lash said General Mills, like its rivals, has seen prices of wheat, corn, oil and other commodities rise over the past few years. She said the company has tried to compensate by raising prices for its products but consumers have resisted, choosing to buy less, stretch what food they have and switch to lower-priced store and generic brands.
"Consumers have still maintained a tight grip on their expenses, especially when it comes to the food space," she said.
General Mills' strategy is to increase productivity to offset rising costs. In part, that means doing more with fewer people. The company has about 5,500 employees in Minnesota and 35,000 worldwide.
The company also plans to use savings from the job cuts to fund growth initiatives and speed up its global development.
Lash expects Yoplait will be important to those plans.
"Yogurt is a key growth area," she said. "Following their purchase of their stake in the international Yoplait brand just over a year ago, they're hoping to expand that brand further into faster-growing and emerging and developing markets like China and India."
Fridley-based Medtronic is also pushing people and resources into fast-growing markets. Worldwide, Medtronic plans to add at least 1,500 jobs. However the medical device maker says it will be letting go of about 1,000 employees in its current fiscal year. In the Twin Cities, the cuts will grow to 250.
In all, Medtronic plans a net gain of 500 or more jobs, mostly outside the U.S. Medtronic has about 8,000 employees in Minnesota and 45,000 worldwide.
Overall, Medtronic's employment in the Twin Cities is expected to be down slightly and U.S. employment, flat to slightly up.
A company spokeswoman said the moves are part of an ongoing effort to ensure the company is as efficient as possible and responsive to opportunities.
Almost half of Medtronic's sales are abroad.