Dive Brief:
- Kraft Heinz is requesting tax breaks from local Columbia, MO authorities on more than $100 million for technology upgrades to its Columbia Oscar Meyer hot dog plant.
- This could have mixed effects on the facility, particularly its 500-employee workforce, as about one in five jobs could be eliminated due to the upgrades. However, of the jobs not cut, the tax breaks would ensure those jobs remain in Columbia. Also, the city's tax base would see benefits over time.
- As for how the arrangement would work, "Between 2017 and 2027, the Oscar Mayer factory would only pay 25 percent of the personal property tax and real estate tax on its agreed-upon new equipment and work space; Boone County would help secure bonds to pay for the upgrades; and over the next 10 years, Kraft Heinz would make the annual payments on the bonds. Until the company pays off the bonds, the new assets would belong to the county," the Missourian explained.
Dive Insight:
Instead of being voted on by the public, representatives for each of the tax entities involved in the tax breaks arrangement, including Columbia Public Schools, the Boone County Library District, Boone County Family Resources, Boone County Road and Bridge, the city of Columbia and the state, will cast their votes Friday.
Following its merger with H.J. Heinz Co., it's now expected Kraft will likely see the same job cuts Heinz did after it too was acquired by 3G Capital in 2013 under its zero-based budgeting approach. Several Kraft executives have already been removed from their offices, replaced instead by Heinz executives. Other Kraft employees could face further problems if they are laid off, as many other companies in the food industry are seeing similar cutbacks and may not have the space to absorb many of Kraft's former employees.