Kraft Heinz to Eliminate 2500 North American Jobs

Aug. 12, 2015
Equal to 5 percent of workforce; Kraft headquarters to be hit hard.

The new Kraft Heinz Co. will cut 2,500 jobs in North America – more than 5% of its global workforce – with a big chunk of the cuts coming from the former Kraft headquarters in suburban Chicago. All of the layoffs appear destined to be salaried employees.

It's a part of a corporate promise to investors to cut $1.5 billion in costs by the end of 2017.

Simultaneously, the unified company revealed sales decreases of 4-5 percent among the second quarter results for Kraft Foods Group Inc. and H.J. Heinz Holding Corp. for the periods ended June 27 and June 28, respectively. Kraft had sales of $4.5 billion and Heinz hit $2.6 billion. Those will be the final reports for the separate companies, as the merger was finalized on July 2.

Several media quoted a Kraft Heinz spokesperson as saying 700 of the job cuts will come as employees are moved from the former Kraft campus in Northfield, Ill., to a Chicago office. The downtown office is said to be one-quarter the size of the former one. The company has a second headquarters in Pittsburgh.

Kraft said it had roughly 2,300 employees at the Northfield campus when it announced plans to merge with Heinz in March, according to the Wall Street Journal, but the latest head count there already was down to 1,900.

The company did not say where the remaining 1,800 jobs cuts are coming from, but said they are all salaried employees. “This new structure eliminates duplication to enable faster decision-making, increased accountability and accelerated growth,” the spokesman was quoted in the Journal.

Kraft Foods Group and H.J. Heinz Co. merged in a deal orchestrated by Heinz owners 3G Capital Partners LP and Berkshire Hathaway Inc. They claim it's the fifth-largest food company in the world by sales. 3G Capital, in particular, is known for being an aggressive cost-cutter. While those two investment firms own the majority, 49 percent of the new company is publicly traded stock.

"The company remains confident in its ability to deliver against its initial financial expectations for the merger of Kraft and Heinz, including its expectation to generate aggressive, run-rate cost savings of $1.5 billion by the end of 2017, inclusive of savings from productivity and cost savings initiatives contemplated prior to the merger," the company said in its Aug. 10 financial filing.

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