Kraft Heinz in 2016 will move its Oscar Mayer and U.S. Meats Business Unit headquarters from Madison, Wisconsin, to Chicago, the company announced on November 4.
In addition, the company is closing seven of its plants, following an extensive review of the Kraft Heinz North American supply chain footprint capabilities and capacity utiliations. Those facilities are in Fullerton, California; San Leandro, California; Federalsburg, Maryland; St. Marys, Ontario, Canada; Campbell, New York; Lehigh Valley, Pennsylvania; and Madison.
“In a staged process over the next 12-24 months, production in these locations will shift to other existing factories in North America,” said Michael Mullen, Kraft Heinz senior vice president of corporate and government affairs.
According to Mullen, the company is also planning to move production from its existing Davenport, Iowa, facility to a new, state-of-the-art location within the Davenport area; and move part of its cheese production from our Champaign, Illinois, facility to other factories within our network, which will create will make Champaign a center-of-excellence in dry and sauce production. Both moves will take up to two years to complete.
The decision to consolidate manufacturing across the Kraft Heinz North American network is a critical step in our plan to eliminate excess capacity and reduce operational redundancies for the new combined company. The merger between Kraft Food Groups and H.J. Heinz Holding Corporation was finalized in July.
With the changes, an estimated 2,600 positions within the company will be eliminated.
“We will treat our people with the utmost respect and dignity. At the appropriate time, affected employees will receive severance benefits, outplacement services and other support to help them pursue new job opportunities. Kraft Heinz fully appreciates and regrets the impact our decision will have on employees, their families and the communities in which these facilities are located,” said Mullen.
At the same time, Kraft-Heniz will invest hundreds of millions of dollars in improving capacity utilization and modernizing many of its facilities with the installation of state-of-the-art production lines, Mullen added.