Kraft Foods Inc. said it will cut 1,600 positions in the U.S. and Canada as it prepares to split into two companies. The processed food maker employs 46,500 people worldwide, which means the layoffs will reduce headcount by 3.5 percent.
The Northfield, Illinois-based company will reorganize its domestic sales team, consolidate its U.S. management centers and trim the corporate and business units. About 40 percent of the cuts will be in sales, and about 20 percent will come from eliminating positions that already are vacant.
"When we announced our decision to create two world-class companies last August, we said both would be leaner, more competitive organizations," Kraft Chairman and CEO Irene Rosenfeld said in a statement. "For the past year, the North American team has been working to streamline operations to deliver sustainable top-tier performance and continue to invest in our iconic brands."
Kraft will cut its U.S. management offices from four locations to two once the North American grocery company is spun off later this year.
Kraft's Glenview management center will close by the end of 2013 and Kraft's 440-employee beverage business in Tarrytown, New York, and its Planters unit in East Hanover, New Jersey, will move to the Chicago area by December 2012. Employees of the two East Coast units will have the option to transfer to the future company headquarters.
Kraft has two facilities in Glenview, Illinois, the management center and a research and development complex; together they employ 1,378 people. Of those in Glenview, about 60 percent are in the management office and the rest are in the R&D center.
The headquarters of the global snack company will be based in the Chicago area at a site under consideration, the company said in the statement. The North American regional headquarters for the global snack company will be in the East Hanover campus.
Throughout the Chicago area, there are 5,129 employees, including in Northfield, Glenview, Chicago, Naperville and Woodstock.
"Having the majority of our business units together in one location will provide greater development opportunities for our people and will help us continue building our brands more efficiently and collaboratively," Tony Vernon, president of Kraft Foods North America and CEO of the future grocery company, said in a statement.
The company's Madison, Wisconsin, management center which has 1,542 employees will continue as the site for its Oscar Mayer unit. Kraft also will retain operations in the Toronto area where it employs 2,864 employees.
"We finished 2011 with strong business momentum in each of our geographies," Ms. Rosenfeld said in announcing financial results. "Our virtuous cycle of investment continues to pay off around the world, despite a difficult operating environment. We expect our 2011 results will place us solidly among the top-tier of our peer group, and we remain on track to launch two industry-leading companies in 2012."
Kraft's snack business will continue to use a direct store delivery model. The North American grocery company will contract local sales to Acosta Sales & Marketing for grocery and mass retail channels. Crossmark will continue to serve the grocery company in convenience stores.
Most of the U.S. retail sales employees will move to the North American region of the global snack company. The company expects to have both sales organizations complete by April 1.
"Our plan for a more nimble company, combined with the current economic and competitive pressures, led us to this point," Vernon said in the statement. "Taking the necessary steps now will enable us to continue investing in our beloved brands to drive growth."