Kraft Heinz cutting 2,500 jobs, 700 in Northfield

Kraft Heinz Co. said Wednesday it is cutting about 2,500 jobs, including 700 in Northfield, as part of its plan to slash costs after the food companies combined.

Affected workers in the United States and Canada are being told in person on Wednesday and Thursday, said company spokesman Michael Mullen.

Mullen said the salaried job cuts were "across all functions." None of the job cuts involved factory workers, he said. Kraft Heinz had about 46,600 employees, including 1,900 in Northfield, before the cuts.

The job cuts are not surprising, given the reputation of the company's management on Wall Street. The combination of Pittsburgh-based Heinz and Kraft earlier this year was engineered by Warren Buffett's Berkshire Hathaway Inc. and Brazilian investment firm 3G Capital, which has become known for its tight cost controls.

Bernardo Hees, a 3G partner, is CEO of the merged Kraft Heinz. Hees had already overseen cost-cutting at Heinz since the ketchup maker was taken over in 2013 in a prior partnership between 3G and Berkshire. That means the cuts announced Wednesday mostly affect people on the Kraft side of the business.

Together, the two U.S. food giants own brands including Jell-O, Heinz baked beans and Velveeta that are facing sales challenges amid changing tastes. Their combination was nevertheless seen as attractive because of the opportunity to combine functions like manufacturing and distribution.

Executives said they expect to save $1.5 billion in annual costs by 2017.

Mullen said the job cuts are part of the company's process of integrating the two businesses and "designing our new organization."

"This new structure eliminates duplication to enable faster decision-making, increased accountability and accelerated growth," Mullen said. He said the savings will free up money to be invested back into the company's products.

Affected employees, who worked in jobs such as sales, marketing and finance, will be given severance benefits of at least six months, Mullen said.

Kraft Heinz is also getting ready to move its operations out of Northfield and into a new Chicago office by early 2016. The Northfield office will then be subleased, said Mullen.

Already, Kraft Heinz had been belt-tightening in recent weeks.

In a memo to employees dated July 13, Hees outlined a variety of "provisional measures" the company was taking to avoid unnecessary spending. That included instructing workers to print on both sides of paper, reuse office supplies like binders and file folders, and turn off computers before leaving the office.

Corporate donations to charities also had to be approved, as did memberships in industry associations, the memo said.

At its office in Northfield, the company also stopped providing free Kraft snacks like Jell-O.

•Daily Herald Business Writer Anna Marie Kukec contributed to this report.