PITTSBURGH – It’s not scheduled to close until 2017, but Kraft Heinz already is on the lookout for a buyer for its production facility in Madison, Wis.
In a statement, Michael Mullin, senior vice president of corporate and government affairs, said the company is working with Wisconsin officials to find a buyer that could keep the facility open. Mullen said Kraft Heinz announced its plans to sell the Madison plant to give employees time to make their plans. The Madison plant closure is one of seven the company announced as part of an effort to consolidate its manufacturing and eliminate excess production capacity brought on by the Kraft Foods Group-HJ Heinz Co. merger.
“We did not reach out, or engage in conversations with, officials in Wisconsin prior to the announcement, as the decision to close Madison was based entirely on the need to reduce operational redundancies and eliminate excess capacity within our North American network,” Mullen said. “Our Beaver Dam and Wassau factories are important to our North American supply chain and remain fully operational. The Madison facility will not close until sometime in 2017.”
About 700 Oscar Mayer production jobs will be eliminated due to the plant closure, while 300 corporate jobs will be affected by the headquarters’ move to Chicago. Paulo Brasilio, co-CFO of Kraft Heinz, said the consolidation process will take up to two years to complete.
“It will eliminate excess capacity and reduce operational redundancies, making us more competitive and improving our ability to drive profitable growth for many years to come,” he said during an earnings call with analysts. “On the numbers side, we remain confident in our ability to deliver against our initial financial expectations for the merger. This includes our aggressive cost-savings target of $1.5 billion, which we now expect to deliver fully in 2017.”
Production at the Madison plant will shift to other facilities. The company also is planning to move production from its existing plant in Davenport, Iowa, to a new location in the Davenport area.
“We will also invest heavily in modernizing many of our facilities with installation of a state-of-the-art production lines and this should facilitate further product quality improvements and innovation,” Bernardo Hees, co-CEO of Kraft Heinz, said during the earnings presentation.