By Annie Gasparro
Kraft Heinz Co. said it is cutting 2,500 jobs in North
America--more than 5% of its global workforce--as it aims to slash
at least $1.5 billion from the newly combined company's annual
budget.
Kraft Foods Group Inc. and H.J. Heinz Co. merged last month in a
deal orchestrated by Heinz owners 3G Capital Partners LP and
Berkshire Hathaway Inc.'s Warren Buffett.
Now that the integration is under way, a Kraft Heinz spokesman
said Wednesday that its new management team--led primarily by
legacy Heinz executives and 3G officials--has restructured the
company to simplify its operations and leverage its much larger
scale. "This new structure eliminates duplication to enable faster
decision-making, increased accountability and accelerated growth,"
the spokesman said.
As part of that process, the company, with about $28 billion in
annual revenue, will eliminate 2,500 jobs in the U.S. and Canada,
including 700 employees in its Chicago-area headquarters in
Northfield, Ill. The company has a second headquarters in
Pittsburgh.
Kraft said it had roughly 2,300 employees at the sprawling
corporate campus when it announced plans to merge with Heinz in
March, but the new company said Wednesday its latest head count
there was 1,900.
Kraft employees and others who follow the industry anticipated
significant job reductions and sweeping cost-cutting at the new
company. 3G, a Brazilian investment firm, is known for an
aggressive focus on costs and eliminated many jobs at Heinz after
it took over the ketchup maker in 2013.
The Kraft Heinz spokesman wouldn't say where the remaining 1,800
jobs cuts are coming from, but said they are all salaried
employees.
Kraft Heinz, like other big food companies, faces an uphill
battle to boost sales with conventional packaged foods that are
losing traction as U.S. consumers seek out fresher food with
simpler ingredients. The Kraft Heinz stable includes Velveeta
cheese, Jell-O desserts and frozen Bagel Bites.
For the quarter leading up to their merger, Kraft and Heinz each
reported sales declines, but the company didn't provide a further
outlook on the business, which is the fifth-largest food company in
the world by sales.
Wednesday's announced layoffs weren't the first time Kraft
employees have felt the impact of their new owners. Days before the
merger was completed, the predecessor companies announced that
Heinz executives would take over eight of the top 10 positions at
the combined company.
And last month, Kraft Heinz said it planned to move the Kraft
employees from the suburbs to a downtown Chicago office space that
is about one-fourth the size of the Northfield offices.
Write to Annie Gasparro at annie.gasparro@wsj.com
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