Kraft Heinz to Close Seven Plants in North America; Chicago Gets Oscar Mayer HQ; New York Saves Three Plants

The impact of the merger of Kraft Foods and Heinz is landing hard on communities across the map in as the merged company eliminates excess capacity which it doesn’t need.

Oscar Mayer Wienermobile

Oscar Mayer Wienermobile (photo -Gregory Varnum)

As part of its third quarter update, Kraft Heinz announced a plan to cut costs by reducing the footprint of its North American operations through the closure of seven manufacturing plants and the consolidation of the Oscar Mayer headquarters to Chicago.

Over the next 12-24 months, Kraft Heinz will shut down manufacturing operations in Fullerton and San Leandro, CA; Lehigh Valley, PA; Madison, WI; Federalsburg, MD; Campbell, NY; and St. Mary’s in Ontario, Canada. This will result in the loss of some 2,600 jobs in total.

The company will also relocate the Oscar Mayer headquarters and jobs from its U.S. meats business to Chicago. Early next year, some 250 Oscar Mayer employees will relocate to the new Kraft Heinz co-headquarters at the AON Center in Chicago.

Earlier this year, Kraft Heinz itself made the move from its headquarters in Northfield, IL to Chicago, signing a long-term lease for five floors covering 170,000 square feet at the AON Center. No Chicago economic development incentives were provided for this relocation.

Chicago Mayor Rahm Emanuel said in a release that “Oscar Mayer’s decision to return to Chicago is a reflection of the talent of our workforce, the strength of our world-class transportation networks, and the certainty and confidence we have given businesses that invest in our city.”

Meanwhile, New York State apparently saved a lot more jobs than it may lose through the closure of the Campbell, NY plant. Kraft-Heinz has entered into an agreement, secured by Governor Andrew M. Cuomo and Senator Charles E. Schumer, which saves some 1,000 at-risk jobs at three Kraft-Heinz plants in Upstate New York, and reaffirms the company’s commitment with a new investment of at least $20 million.

As a start, the State will also invest $20 million. After five years, if Kraft-Heinz maintains its level of employment and has invested at least $25 million in its Upstate operations, then New York economic development agency Empire State Development will pitch in with another $5 million, bringing the total capital investment into Kraft-Heinz’s Upstate operations to at least $50 million.

The Kraft-Heinz Avon facility, which produces Lunchables and Cool Whip products, employs a total of 405 people and is the largest private sector employer in Livingston County, NY. The agreement reached will not only save the Avon plant and all 405 jobs for at least the next five years, but also includes a commitment from Kraft Heinz to potentially expand in Avon over the next five years and create new jobs.

The Kraft-Heinz Walton facility which employs 141 people and produces cottage cheese and sour cream has likewise been saved from closure and all the jobs protected for at least five years. The Kraft-Heinz Lowville Facility in Lewis County employs 340 people and produces Philadelphia Cream Cheese products. In addition to retaining the jobs in Lowville, Kraft Heinz will add at least 110 new jobs at the Lowville facility over the next five years.

Kraft-Heinz will also work with state, federal and local officials to find a strategic buyer for the Campbell facility before its closure, in order to keep the plant open and retain the 393 jobs. The company has also agreed to offer any employees leaving the Campbell facility first choice for the new positions at the Avon and Lowville plants.

Governor Cuomo said in a release that the prospect of these across the board closures was very real and not only would have been devastated these communities, but caused ripple effects in New York’s dairy industry and beyond. “This agreement reverses course and, saves hundreds of local jobs and commits Kraft-Heinz to invest millions of dollars in the Upstate economy, with the potential for job increases in the years to come,” added Gov. Cuomo.

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