Kraft Heinz job cuts fuel UK fears

Kraft Heinz has announced the closure of seven factories and the axing of about 2,600 manufacturing jobs in the US and Canada as part of cost-cutting efforts.

The mega merger of Kraft and Heinz to form the world’s fifth largest food and drink company in July also sparked concerns about job cuts in this country.

Analyst Julian Wild, head of the food team at Rollits solicitors, said: “I would say further job cuts are inevitable in the UK.

“This sort of mega merger is always about 2+2=5 and that is largely achieved by eliminating duplication and running more leanly.”  

At the time of the merger, Unite the union sought assurances over UK jobs and held urgent meetings with Heinz, which employed 2,500 people in this country and Ireland.

‘Ruthless’ cost-cutting fears

Unite national officer for the food sector Julia Long said: “We and our trade union colleagues in the food industry around the world know from experience that deals like this often involve job losses and ruthless cost-cutting, as global capital wants a quick return on its investment.” 

The cuts in North America are likely to have now intensified concerns over the job security of Unite members at sites in Hayes, Kendal, Leamington Spa, Luton, Norfolk, Telford and Dundalk in Ireland.

North American factories have been slated for closure in the Canadian province of Ontario and US states of California, New York, Pennsylvania and Wisconsin.

Kraft Heinz senior vice president of corporate and government affairs Michael Mullen said production at these factories will be transferred elsewhere over the next two years.

‘Eliminate excess capacity’

“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,” Mullen said.

“Kraft Heinz fully appreciates and regrets the impact our decision will have on employees, their families and the communities in which these facilities are located.”

The mega merger was masterminded by Heinz’s owners, the Brazilian investment firm 3G Capital and maverick billionaire investor Warren Buffett’s Berkshire Hathaway.

Earlier this year analysts warned that the mega merger was likely to lead to cost cutting on a large scale.

Euromonitor packaged foods research analyst Raphael Moreau said: “The priority for the group is not synergies but, instead, to cut costs.”

Food Strategy Associates Robert Lawson added: “The jobs at risk are all in USA for now where there is both an opportunity for Kraft to normalise its SG&A costs [selling, general and administrative expenses] (as Heinz has done).”