- Kraft Heinz has backtracked on its plans to close a plant in Fullerton, CA, that manufactures Lunchables, saving about 360 jobs, according to a report in the Los Angeles Times.
- This was one of seven plants that the company announced would close last year, but company officials started talking to the employees' Teamsters union about keeping it open in August. Officials said they may be faced with an undersupply of the convenient lunch products if the plant was shuttered.
- After negotiations between the company and the union, workers at the plant will receive raises, but there have been changes made to the health care plans that will lower costs for Kraft Heinz.
Since Kraft Heinz merged in 2015, cutting costs and slashing jobs have been at the heart of its fiscal strategy. The closure of the Fullerton, CA plant, as well as six other factories across the country, was announced last November. Company officials had targeted all seven plants to be shuttered by the end of 2017, and a total of about 2,600 jobs were going to be cut. At the time, officials said that the production would be relocated to other facilities.
The two companies wanted to eliminate $1.5 billion in costs by the end of 2017 post merger. In their most recent earnings report, pro forma net income attributable to the company hit $770 million. Pro forma net revenue fell 4.7% to $6.8 billion, including a 1.9% dip in U.S. sales.
This change shows the mega-company's desire to continue working with a popular product, but also recognition of the importance of convenience food. Consumers are looking for more convenient ways to get a meal, spending more than a quarter of their food budgets on items that are convenient to eat as meals or snacks, according to the USDA. And Lunchables are popular with children, who influence 95% of parents' food purchases, according to a report from the Food Marketing Institute and Rodale.
So far, this is the only plant on the chopping block that was spared closure. A plant in Lehigh Valley, PA where Grey Poupon mustard, A-1 steak sauce and Keurig coffee was made shuttered in July, affecting 341 workers.