Kraft Heinz Plant Closures 2015: 7 Factories Closing; 2,600 Positions Out

Food giant Kraft Heinz Co, the manufacturer of many popular consumer brands, has revealed on Wednesday that it is set to lay off nearly 6 percent of its existing workforce in North America. Specifically, 2,600 positions will be cut. The company is closing down 7 factories as well.

According to a report on CNBC, Michael Mullen, the SVP of corporate affairs, the ones that will be closed down are the manufacturing plants located in New York, Maryland, Madison, Lehigh Valley, Pennsylvania; California, Wisconsin and Ontario, Canada.

The drastic move to reduce the number of workers and factories are in line with the company's effort to cut on costs. With the cuts, by the last quarter of 2017, the company is expected to save up to $1.5 billion in annual costs.

Nevertheless, this decision was made just a little over two months after H.J. Heinz Co merged with Kraft Foods Group. The two food moguls sealed the $46 billion deal in July, making them the third biggest food company in North America.

Likewise, the decision to shut down of 7 factories came "after an extensive review of the Kraft Heinz North American supply chain footprint, capabilities and capacity utilization," according to Mullen.

The production works at the shutting factories will be transferred to Oscar Mayer processed meats in Chicago. Kraft Heinz is also discontinuing the use of meat processing plant in Davenport, Iowa and it will be moved to a new facility that is yet to be built.

The SVP stated that the company will put in "hundreds of millions of dollars in improving capacity utilization and modernizing many of our facilities with the installation of state-of-the-art production lines."

The closing of the listed manufacturing plants will be implemented gradually and the operations are expected to be fully settled within two years.

As for the would-be displaced workers, the management of the company assured that they would be properly compensated with severance pay.

"We will treat our people with the utmost respect and dignity. At the appropriate time, affected employees will receive severance benefits, outplacement services and other support to help them pursue new job opportunities. 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," Mullen said in a statement, addressing the situation of the employees that will be laid off.