Ralcorp plans $10 million upgrade

Ralcorp Holdings is seeking state financial assistance for a $10 million upgrade at its 111-year-old northeast Cedar Rapids cereal manufacturing plant.

The Cedar Rapids City Council on Tuesday will consider sponsoring an application to the Iowa Economic Development Authority for $450,000 in investment tax credits, $30,000 of sales, service and use tax refunds and $50,000 of job training funds.

Ralcorp is pledging to retain 130 jobs in Cedar Rapids. It plans to add automation, upgrade its packaging system, and purchase and install new vertical pouching machines.

The city would not have to provide any matching incentives for the Ralcorp project.

Ralcorp's Cedar Rapids plant, which dates back to 1904, manufactures private label cereals sold alongside name brand cereals in supermarkets.

In January 2013, ConAgra paid $4.95 billion to buy St. Louis-based Ralcorp. The acquisition was expected to generate $18 billion in annual sales for the combined company and make ConAgra the largest private brand packaged food business in North America.

But the private label cereal business has struggled along with the majority of the ready-to-eat cereal market. Omaha-based ConAgra has taken a $605 million writedown for the private label cereal business.

The landmark Ralcorp plant was known as National Oats until April 1994, when it became part of Ralston Foods. It produces oatmeal - instant and regular - sold under store brands, such as Hy-Vee, Publix and Safeway, as well as Grits, Farina and Bran.