Kraft Heinz to close 7 factories in United States, Canada in downsizing

Michael Mullen, senior vice president of corporate and government affairs for Kraft Heinz, said the closures will be done in phases over the next 12 to 24 months, with the affected production operations shifting to other factories.

The company also is planning to move production from its existing plant in Davenport, Iowa, to a new location in the Davenport area.

The company, known for kitchen staples like Heinz Tomato Ketchup, Philadelphia cream cheese and Maxwell House coffee, also reported a net loss of $303m after a preferred dividend payment, a move further into the red compared to last year’s net loss after preferred dividend of $8m.

Kraft Heinz announced earlier this week it was shutting down the Oscar Mayer plant and headquarters, which has employed hundreds of Wisconsinites for almost 100 years.

After the facilities close, Kraft Heinz will employ about 18,000 people at 41 North American plants.

REUTERS Kraft Heinz will close seven factories and lay off about 2 600 employees, a spokesman for the food company said.

On a conference call with analysts, Chief Executive Bernardo Hees said the company was in the process of rolling out zero-based budgeting, a tool where expenses are justified for each new period, across the newly combined company. Approximately 700 Oscar Mayer production jobs and 300 corporate positions in Madison will be eliminated. The two food moguls sealed the $46 billion deal in July, making them the third biggest food company in North America.

Leikness’ comments came shortly before it was revealed that Kraft Heinz was working with the state to look for a company to potentially buy the Madison facility.

Kraft Heinz had said that it expects to save about $1.5 billion in annual costs by the end of 2017.

“They could have leased out office space”, he said.

The construction of a new manufacturing plant in Davenport is considered a victory for Iowa officials, who competed with another state to secure a home for the new facility, according to the documents the board reviewed before approving the tax breaks. The Davenport workforce will go from 1,400 to 475 and the Columbia plant will drop from 500 to 350 employees. A larger Leamington, Ont. plant was closed in June 2014, costing its community 740 jobs.