Kraft/Heinz Merger Could Have Impact On Illinois

March 25, 2015
 
Kraft logo appears outside its headquarters in Northfield, Illinois Wednesday.

The Kraft logo appears outside of the headquarters on Wednesday, March 25, 2015, in Northfield, Ill. Some of the most familiar names in ketchup, pickles, cheese and hot dogs are set to come under the same roof after H.J. Heinz Co. announced plans to buy Kraft and create one of the world's largest food and beverage companies.

(AP Photo/Nam Y. Huh)

Wednesday morning's announcement of the pending merger between food giants Kraft and Heinz could have a future impact on Illinois. 

Kraft is headquartered in the Chicago suburb of Northfield, and its largest North American plant operates in downstate Champaign.

Heinz will technically own Kraft foods, but the new mega-company will be nearly a half-and-half partnership.

For now, the companies say they'll maintain their two separate headquarters in Northfield and Pittsburgh. Kraft's Champaign processing plant employs 1,200 workers, something Champaign County Chamber of Commerce president Laura Weis says has been a boon to the region's economy.

"Those individuals are being paid well above average so clearly it has an economic impact in terms of their payroll," she said. 

Though mergers can often mean immediate layoffs, University of Illinois College of Law professor Amitai Aviram says employees shouldn't be too worried, since the two companies don't have all that much product overlap.

"However, by reputation, 3G is known to keep tight control over costs," he said. "So there might be more pressure on them to do more with less money."

3G is the Brazilian company advising the Heinz company on the merger. 

Kraft's Northfield location, which employs 2,200 people, could be tightening its belt sooner than the Champaign plant.

"Maybe less hiring, maybe some terminations of jobs here and there," Aviran said. "But I don't expect just a wholesale termination of entire lines of operation and of many employees just because of this acquisition."

Bob Brackett, director of the Illinois Institute of Technology's Institute for Food Safety and Health, says the merger could be mutually beneficial.

He says Kraft's sales have been flat, due to what industry analysts call changing American taste. 

"Sort of a desire to go back to something that is what they call clean labels -- products that are more fresh-like, that have a perception of being more healthy and that have simpler labels with fewer ingredients," he said.

Story source: WILL