Kraft Heinz will close seven plants in the U.S. and Canada over the next two years as part of a downsizing that will eliminate 2,600 jobs, or roughly 14 percent of its North American factory workforce, the newly-merged food company announced Wednesday, according to USA Today.
The company said it would close manufacturing facilities in Fullerton and San Leandro, Calif.; Federalsburg, Md.; St. Marys, Ontario, Canada; Campbell, N.Y.; Lehigh Valley, Penn.; and Madison, Wis. The closures will occur over the next 12 to 24 months.
The company said it also will close its existing lunch-meat processing plant in Davenport, Iowa, and move production to a new state-of-the-art plant to be built several miles away within two years. Part of the company's cheese production will also be moved away from Champaign, Ill.
After the facilities close, Kraft Heinz will have 41 plants in North America that employ about 18,000 people.
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Editors Insight: This round of layoffs follows August’s announcement of 2,500 mostly white collar jobs. The cuts are part of an effort to reduce overhead and consolidate operations. The Wall Street Journal notes that the company wants to invest hundreds of millions in plant modernization with state-of-the-art production lines.
Kraft Heinz actions reflect a shift taking place throughout the food industry. Companies are introducing new technology to increase productivity and less cost, but in order to invest in the technology, they first need to cut costs.
The takeaway for supply chain service providers is that they, too, need to invest in the newest technologies to allow their customers to increase productivity and profitability. 11-5-15 By Elliot Maras