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Buffett-Backed Kraft Heinz Cuts 2,500 Jobs as Hees Targets Costs

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Buffett-Backed Kraft Heinz Cuts 2,500 Jobs as Hees Targets Costs

Kraft Heinz, the food company that counts Warren Buffett’s Berkshire Hathaway as its largest shareholder, is eliminating about 2,500 jobs in the US and Canada under the new management.

The cuts include about 700 employees in Northfield, Illinois, the long-time home of the Kraftoperation, the company said in a statement Wednesday. Kraft Foods said last month it would move its headquarters, where it has roughly 1,900 employees, to a smaller space in a Chicago office tower.

Kraft Foods and H.J. Heinz merged in July in a deal orchestrated by Buffett and 3G Capital, which jointly controlled the ketchup company. 3G’s Bernardo Hees, who is now running the combined foodmaker, cut more than 7,000 jobs in 20 months after taking over at Heinz. Berkshire Vice Chairman Charles Munger has endorsed the job cuts, saying such measures are essential to a productive capitalist system.

The alternative to reducing staff is “what happened in Russia,” Munger said at Buffett’s annual meeting in May. “The whole damn economy didn’t work.”

Kraft had about 22,000 employees at the end of last year and had been targeting costs prior to the latest cuts, which were reported earlier Wednesday by the Associated Press. Last month, Kraft rolled out policies aimed at trimming expenses such as travel, electricity and office supplies. The company also halted the practice of giving free refrigerated snacks, such as cheese sticks, to staff at headquarters.

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“The thorough and detailed process of integrating our businesses and designing our new organisation is well under way,” Michael Mullen, a spokesman for Kraft Heinz, said in the statement. “We have developed a new streamlined structure for our organization to simplify, strengthen and leverage the company’s scale.”

Mullen said that Kraft Heinz regrets the impact of job cuts on employees and their families and is offering a minimum of six months of severance.

Bloomberg News, edited by ESM. To subscribe to ESM: The European Supermarket Magazine, click here.

 

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