Dive Brief:
- The Kraft Heinz Co. said it would be eliminating 2,600 jobs and shuttering seven factories: Fullerton, CA; San Leandro, CA; Federalsburg, MD; St. Marys, Ontario, Canada; Campbell, NY; Lehigh Valley, PA; and Madison, WI.
- Production from these factories will move to facilities across North America, according to Michael Mullen, SVP of corporate and government affairs, in a statement. Mullen said it was a "difficult but necessary" decision. He added the company is investing "hundreds of millions of dollars in improving capacity utilization and modernizing many of our facilities with the installation of state-of-the-art production lines."
- The company also said it would shift its Oscar Mayer and U.S. meats business to Chicago's Aon Center. The company announced it would move headquarters there early next year.
Dive Insight:
Also on Wednesday, the company and New York made a deal to have three upstate plants (Avon, Walton, and Lowville) stay open, in turn keeping close to 1,000 jobs off the chopping block.
The Campbell plant in New York is one of the seven announced closings, though the Associated Press reports the company will, while looking for a buyer, delay closing it for as many as 2 years.
Kraft Heinz job cuts have been expected, considering 3G Capital's cost-cutting history, particularly its use of zero-based budgeting. 3G Capital slashed 7,000 jobs within 2 years of acquiring Heinz — translating to a 35% profit.
The combined company announced 2,500 non-factory job cuts in August.
3G Capital worked with Warren Buffett's Berkshire Hathaway to combine the two companies, officially merged in July.
This strategy is one food companies are now implementing, including Campbell Soup, Kellogg, and Mondelez, in an effort to boost bottom lines.
3G Capital's job cut history also includes involvement at Anheuser-Busch and Burger King.