(BRK.A), (BRK.B)
As part of its ongoing belt-tightening aimed at wringing out $1.5 billion in annual savings, Kraft Heinz has announced that it will close seven factories in the U.S. and Canada.
The factories are in Fullerton, California; San Leandro, California; Federalsburg, Maryland; St. Marys, Ontario, Canada; Campbell, New York; Lehigh Valley, Pennsylvania; and Madison, Wisconsin.
The factories will close in 12-24 months with the product lines being moved to existing factories.
Kraft Heinz will also shutter its Davenport, Iowa, meat processing plant with its production to be taken over by a nearby facility that is under construction, and move some of its cheese-making operations away from Champaign, Illinois. Where they will be moved to has not been announced.
In total, 2,600 jobs will be eliminated.
In addition, the company will relocate Oscar Mayer and its U. S. meats from Madison, Wisconsin, to Chicago. The move caught local union officials by surprise.
Michael Mullen, Senior Vice President of Corporate & Government Affairs at The Kraft Heinz Company, released a statement about the plant closings:
”Our 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.”
“This will make Kraft Heinz more globally competitive and accelerate the company’s future growth,” he added. “We have reached this difficult but necessary decision after thoroughly exploring extensive alternatives and options.”
© 2015 David Mazor
Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.