Dive Brief:
- Heinz has offered buyouts to 775 employees in its hometown of Pittsburgh in an effort to clear the company of workers who are not adjusting to a new culture at the ketchup company.
- The move comes after private investors, including Warren Buffett, saddled the company with billions in debt and then instituted cost-cutting initiatives.
- Amounts of the buyout offers vary according to length of service, but anyone who accepts the offer will get a payment equal to six months pay.
Dive Insight:
The private equity team that turned Heinz from a cash-generating institution into a wounded giant with $14 billion debt and $720 million a year in payments to Buffett, sees nothing wrong with its strategy. Rather, in a letter company leaders told Pittsburgh workers that some of them probably wont make it in the new era, saying that the, "new dynamic and results-driven culture, focused on efficiency and meritocracy, may not be the perfect fit for every employee.”
Many industry watchers have said repeatedly that the Heinz purchase was one of the most poorly thought-out moves in business history. Heinz was already a famously frugal company, and there simply isn't enough room to cut to make the debt payments. The attempts to do so have led to desperate moves aimed at reducing costs led by a never-ending parade of executives coming in and out of the company.
But, as we noted in January when we offered three predictions about Heinz for 2014, there aren't many jobs available in Pittsburgh for the hundreds of folks who no doubt are eager to leave the company. Perhaps the buyouts may be enough to push many of those people out the door. But it's unclear how that will help the ketchup maker. Even if Heinz recruits a slew of new "dynamic and results-driven" people to replace the veterans, we can't imagine what's left to cut at Heinz.