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Heinz squeezes out 400 jobs
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November 10, 1998: 1:56 p.m. ET
Food processor sets layoffs and charge as it creates new frozen food unit
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NEW YORK (CNNfn) - H.J. Heinz Co. consolidated it's frozen food operations Tuesday and took a $150 million pretax charge for the third quarter under a restructuring plan that will result in the layoff of about 400 employees over the next few years.
Heinz, a leading food processor whose brands include its namesake ketchup, StarKist tuna fish and Bagel Bites, said it has combined the operations of its Ore-Ida Foods and Weight Watchers Gourmet Food Co. units. The new affiliate, Heinz Frozen Food Co., will be based in Pittsburgh, site of the parent company's headquarters.
Apart from the $150 million pretax charge for the fiscal third quarter, ending Jan. 27, 1999, Heinz said it will incur future costs of $15 million to implement initiatives in fiscal 1999 and 2000.
The company expects the initiatives to yield about $32 million in future ongoing savings that will be fully realized by fiscal 2001.
"We see this initiative as an essential step in our growth," Neil Harrison, president and chief executive officer of the newly created frozen foods affiliate, said Tuesday.
Harrison added, "We have investigated and evaluated every aspect of the business -- from product and packaging to distribution to advertising -- as part of this endeavor."
Harrison, who assumed responsibility for Ore-Ida and Weight Watchers on Oct. 1, will report to Richard Wamhoff, the executive vice president for global manufacturing, supply chain and frozen food.
Heinz said it already has taken several steps to enhance its marketing, including an upgrade of Smart Ones frozen entrees and the Budget Gourmet line. The initiatives, Heinz said, have boosted its frozen entree market share by 8 percent.
The restructuring entails closing a frozen-pasta factory in West Chester, Pa., and workforce reductions at a facility in Pocatello, Idaho, which will concentrate on producing frozen foods in a wide variety of packaging. Pasta production at West Chester will be transferred to the company's existing frozen food plant in Bloomsburg, Pa.
Heinz also said it has a warehousing agreement with AmeriCold Logistics under which AmeriCold will build a 150,000-square-foot warehouse adjacent to the Massillon, Ohio, factory.
Heinz will discontinue its pocket sandwich business and exit certain non-strategic frozen food business to focus on key frozen food brands.
For Heinz, whose annual sales approach $10 billion, Tuesday's actions are the latest in a string of streamlining measures.
In September, the company sold its bakery products division to Pillsbury Co.'s Bakeries and Foodservice unit for $178 million. Pillsbury is a Minneapolis-based subsidiary of UK-based Diageo PLC (DEO).
Shares of Heinz (HNZ) were trading down 3/16 at 58-3/8 Tuesday afternoon on the New York Stock Exchange.
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H. J. Heinz
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