Thanks, Uncle Warren.
The Kraft-Heinz merger engineered earlier this year by everyone’s favorite folksy octogenarian billionaire along with 3G will cost some 2,500 people their jobs, as the combined entity looks to cut costs.
CEO (and 3G partner) Bernardo Hees has already slashed jobs on the Heinz side of things, so now it’s apparently time for Kraft employees to do their part to facilitate merger "synergies."
Via AP [6]:
Spokesman Michael Mullen says affected workers are in the U.S. and Canada and were to 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.
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.
In a statement, Mullen said Wednesday 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.
More, from The Chicago Tribune [7]:
Kraft Heinz on Wednesday said it will lay off 700 workers at Kraft's corporate headquarters in north suburban Northfield, part of a cost-slashing plan that will cut the combined company's headcount in the U.S. and Canada by 2,500 jobs.
Employees affected by the cuts, which have been expected for months, will receive "generous" severance benefits that last at least six months and outplacement services, said Michael Mullin, Kraft Heinz's senior vice president of corporate and government affairs. The cuts take effect immediately.
"As we work to build something special at The Kraft Heinz Company, the leadership team has examined every aspect of our business to ensure we are operating as efficiently and effectively as possible," Mullin wrote in an email. "We have developed a new streamlined structure for our organization to simplify, strengthen and leverage the company's scale. This new structure eliminates duplication to enable faster decision-making, increased accountability and accelerated growth."
On Monday, Kraft Heinz affirmed its commitment to cut costs by $1.5 billion by the end of 2017. As part of its merger, the company said it expected to reduce its existing workforce.
The layoffs -which are a follow up effort to other new cost cutting initiatives such as a directive which requires employees to use both sides of the paper - will reportedly save the company a cool $1.5 billion over two years.
Sure beats spending $1.4 billion [8] on wage hikes.
