Canadian Manufacturing

Kraft Heinz to cut 2,500 workers in cost-cutting effort

Executives say they expect to save $1.5 billion in annual costs by 2017



NEW YORK—Kraft Heinz says it is cutting about 2,500 jobs as part of its plan to slash costs after the food companies combined.

Spokesman Michael Mullen says affected workers are in the U.S. and Canada and will be notified in person. About 700 of the cuts were coming at Kraft’s Northfield, Illinois, headquarters. The company would not specify where other cuts were taking place.

The Kraft Heinz Co. said it has a total of around 46,600 employees.

The job cuts are not surprising, given the reputation of the company’s management on Wall Street.

The combination of Pittsburgh-based Heinz and Kraft earlier this year was engineered by Warren Buffett’s Berkshire Hathaway and Brazilian investment firm 3G Capital, which has become known for its tight cost controls.

Bernardo Hees—a 3G partner—is CEO of the merged Kraft Heinz.

Hees had already overseen cost-cutting at Heinz since the ketchup maker was taken over in 2013 through a previous partnership between 3G and Berkshire. That means the cuts announced August 12 mostly affect people on the Kraft side of the business.

Together, the two U.S. food giants own brands including Jell-O, Heinz baked beans and Velveeta that are facing sales challenges amid changing tastes. Their combination was nevertheless seen as attractive because of the opportunity to save hundreds of millions of dollars a year by combining functions like manufacturing and distribution.

Executives say they expect to save $1.5 billion in annual costs by 2017.

In a statement, Mullen said the job cuts were part of the company’s process of integrating the two businesses and “designing our new organization.”

“This new structure eliminates duplication to enable faster decision-making, increased accountability and accelerated growth,” Mullen said. He said employees will be given severance benefits of at least six months.

Kraft Heinz had been belt-tightening in recent weeks.

In a memo to employees dated July 13, Hees outlined a variety of “provisional measures” the company was taking to avoid unnecessary spending. That included instructing workers to print on both sides of paper, reuse office supplies like binders and file folders, and turn off computers before leaving the office.

Corporate donations to charities also had to be approved, as did memberships in industry associations, the memo said.

At its office in Northfield, where Kraft was based, the company also stopped providing free Kraft snacks like Jell-O.

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