DES MOINES | Iowa’s state economic development board on Thursday approved almost $5 million in financial assistance for Kraft Heinz, which is closing one food manufacturing plant in Davenport and building a new one there amidst a company-wide downsizing that will result in a net loss of 2,600 jobs across North America.
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The company will delay closure of its plant in Campbell, in Steuben county for 12 to 24 months.
All told, seven plants are slated for closure in California, Maryland, New York, Pennsylvania, Wisconsin and Canada.
The company said it also will shift meat production from its Oscar Mayer plant in Davenport, Iowa, to a planned $203 million plant to be built several miles away.
Kraft Heinz said it plans to move Madison operations to Chicago in 2016, bringing 250 jobs to the Chicago area.
The Kraft Heinz Co., the third biggest food and beverage manufacturer in North America, posted $6.36 billion in revenue, down 9% from a year ago, which took into account pro forma revenue. The State of Iowa offered Kraft Heinz an incentive package worth more than $10 million to replace an existing plant and remain in that city. This summer, 165 people at the corporate offices lost their jobs as part of layoffs nationwide.
Kraft Heinz formed from the merger of Kraft and Heinz earlier this year. Marys Mayor Al Strathdee said he has already started trying to assist workers who will find themselves unemployed.
Wednesday’s news was considerably worse for other cities, including Madison, Wis., where 700 production workers learned that their almost century-old Oscar Mayer plant will close. In August, it released second-quarter sales numbers for Heinz and Kraft Foods Group.
Under the agreement, Kraft-Heinz will continue operating the Avon, Walton and Lowville plants.
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On a conference call with analysts, Chief Executive Bernardo Hees said the company was in the process of rolling out zero-based budgeting, a tool where expenses are justified for each new period, across the newly combined company. Corporate representatives sent an email to 11 News, explaining, in part: “Kraft Heinz fully appreciates and regrets the impact our decision will have on employees, their families and the communities in which this facility is located”.
