SAN JOSE — Amy’s Kitchen, jolted by an array of economic shockwaves, will close its San Jose production center for frozen pizzas, a shutdown that will wipe out hundreds of jobs, the company disclosed Monday.
An estimated 300 jobs will be lost when the San Jose factory shuts down by sometime in September, although the plant is slated to cease pizza production within days. Founded in 1987, Amy’s Kitchen is a successful producer of organic and healthy frozen foods.
“It’s very sad to have to do this, it’s brutal,” said Fred Scarpulla, acting chief operating officer with Amy’s Kitchen. “This is very emotional. I was very invested in the San Jose plant and I really wanted it to succeed.” Scarpulla also is the company’s chief culinary officer.
Inflation, skyrocketing materials costs, labor shortages and disruptions in the worldwide supply chain coalesced to doom the plant after slightly more than a year of operations. Located at 1885 Las Plumas Ave. in San Jose, the Amy’s Kitchen plant began production in March 2021.
Boxes of frozen pizza are set up outside on the day of a grand opening celebration in August 2021 of the Amy’s Kitchen production center at 1885 Las Plumas Ave. in San Jose. (George Avalos/Bay Area News Group)
“With the inflation that’s going on, we had a huge increase in costs,” Scarpulla said. “We had supply chain disruptions, we experienced a lot of staff turnover and labor shortages. A lot of things disrupted production and created startup problems.”
Brutal bouts of inflation alone forced expenses at the plant to jump by 20%, Scarpulla estimated.
Capital expenses, primarily fast-rising costs for building materials and equipment, were double what the company originally anticipated it would pay at the factory.
Logistics costs, mainly fuel, soared higher by 74%, the company estimated. Wheat prices, part of the collateral damage arising from Russia’s invasion of Ukraine that wiped out much of the production of the staple grain in the European country, skyrocketed by 60%. Vegetable oil prices surged to a 90% increase.
For the last six to eight months, the San Jose production center has been losing about $1 million a month, he estimated.
Production center for Amy’s Kitchen, an organic frozen food maker, located at 1885 Las Plumas Ave. in San Jose. (George Avalos/Bay Area News Group)
“It really became obvious as sales results came in that continuing in San Jose wouldn’t be possible,” Scarpulla said.
The persistent hiccups in the startup process meant the production center …read more
Source:: The Mercury News