The merged food giant Kraft Heinz Co. said Wednesday it plans to cut 2,500 positions from its North American workforce, or more than 10 per cent, as part of an effort to shave billions in annual expenses.
The axe will cut deep in the United States, where much of Kraft Heinz’s operations reside. But Canadian white-collar workers face layoffs, too, while remaining factory positions will be spared for now, a spokesperson said.
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Canada has yet to hit Peak Tim Hortons, execs say
Heinz-Kraft merger by the numbers
The move mirrors recent cuts at other large food companies that have been acquired or merged together under the direction of 3G Capital, including Tim Hortons late last year.
3G, a Brazil-based investment firm, completed the merger of Kraft and Heinz last month in partnership with Berkshire Hathaway, Warren Buffett’s investment company.
Company filings show the newly formed packaged food behemoth operated 36 food processing plants in North America as of the end of last year. Two are located in Canada.
Kraft Heinz also owns or leases 36 distribution centres, three of which are located north of the border. Kraft Canada’s head office is located in northeast Toronto.
Of the 22,100 employees in North America, approximately 2,000 work in Canada, company documents filed with securities regulators on Aug. 10 said.
Kraft Heinz spokesman Michael Mullen said affected workers in U.S. and Canada were to be notified in person. About 700 of the cuts, or 28 per cent, were coming in Northfield, Illinois, where Kraft had been headquartered.
The company would not specify where other cuts were taking place but said that all the jobs were salaried.
It said none of the job cuts involved factory workers.
As it’s taken control of an increasing number of companies, 3G has become infamous for its belt-tightening tactics, such as its “zero-based” budgeting approach. The financial firm, which installs its own executives to run the companies it acquires, also hasn’t hesitated to cut costs by closing facilities outright.
In mid-2014, 3G shuttered Heinz’s iconic ketchup and food processing factory in Leamington, Ont., after acquiring the company in 2013, affecting approximately 800 jobs.
In total, Heinz’s new owners have culled 1,600 positions and closed five facilities in North America.
3G is also the majority owner of Restaurant Brands International, which merged Burger King with Tim Hortons last year. The company cut about 350 white collar jobs in January.
MORE: Tim Hortons’ new owners done cutting ‘at this time’
More to come?
Analysts have recently suggested Restaurant Brands — which won approval for the merger from federal authorities by committing to maintain minimum employment levels – is likely looking at ways to further trim costs at the Canadian coffee chain.
“[Restaurant Brands] is probably not done with cost cutting at Tim Hortons,” CIBC analysts said in July 27 research note. Tims’ distribution network, which includes five distribution centres located across the country, is a likely target, they said.
“The next big step is probably the distribution system, which we expect to see RBI make some move to re-structure either later this year or in 2016 at the latest,” the CIBC analysts said.
“That restructuring will probably take the form of a sale of all or part of the system to a third-party operator.”
WATCH: The merger of Kraft and Heinz will create a North American food giant that owns many of the brands found in Canadian kitchens today.
— With files from The Associated Press