Kraft Heinz to Trim 2,600 More Jobs in Cost-Cutting Push

  • Oscar Mayer unit to move to Chicago from Madison, Wisconsin
  • Move follows 2,500 job cuts the foodmaker announced in August

Kraft Heinz Co., the food company that counts Warren Buffett’s Berkshire Hathaway Inc. as its largest shareholder, plans to eliminate about 2,600 jobs and close seven factories as management works to cut costs.

The moves, which are in addition to the 2,500 job cuts the company announced in August, will occur in stages over the next 12 to 24 months, Michael Mullen, a spokesman, said in an e-mailed statement. Kraft Heinz also said it will move its Oscar Mayer unit to Chicago from Madison, Wisconsin, next year.

Kraft Heinz, the third-largest food and beverage maker in North America, faces declining sales, underscoring the importance of its planned cost cuts. The company has said it will cut $1.5 billion in annual expenses by the end of 2017, following a playbook used by 3G Capital to produce industry-leading margins at Heinz after Buffett and 3G teamed up to take the ketchup maker private in 2013.

In August, Kraft Heinz said it was cutting 2,500 jobs in the U.S. and Canada, including 700 in Northfield, Illinois, the longtime home of Kraft Foods. The company had previously announced plans to relocate the headquarters of Kraft to downtown Chicago.

Extensive Review

The decision to cut the additional jobs and shut six factories in the U.S. and one in Canada came after an “extensive review" of Kraft Heinz’s North American supply chain and capacity use, Mullen said Wednesday. He added that the company plans to invest “hundreds of millions of dollars" in improving capacity use and modernizing facilities.

Kraft Heinz is scheduled to report earnings for the first time as a combined company on Thursday. In August, it released second-quarter sales numbers for Heinz and Kraft Foods Group. The results showed a decline in revenue at each of the businesses.

Kraft Heinz Chief Executive Officer Bernardo Hees cut more than 7,000 jobs in 20 months after taking over at Heinz. Shortly after the merger was announced, Kraft Heinz implemented policies aimed at curbing expenses for travel, electricity and office supplies. The company also removed refrigerators at headquarters where employees could snack on free Kraft products like Jell-O and cheese sticks.

Berkshire Hathaway, the sprawling conglomerate Buffett has overseen for five decades, is poised to report record quarterly profit on Friday because of a $7 billion pretax gain on a stake in Kraft Heinz. Buffett helped finance the merger that created the food company, and Berkshire became its largest shareholder in July.

Berkshire Vice Chairman Charles Munger has endorsed job cutting by managers from 3G, saying such measures are essential to a productive capitalist system.

Kraft Heinz fell 0.8 percent to close at $75.82 in New York. The stock has gained 3.9 percent since it debuted in July.

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