Kraft Slashes Staff to Keep North America Lean

Kraft Foods Inc. (NYSE:KFT) plans to cut about 1,600 jobs in North America this year as its splits into two companies.

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The 1,600 job cuts represent about 1.26 percent of the company’s total workforce of 127,000 employees, which includes about 46,500 in North America.

About 40 percent of the job cuts will come from the realigning of the company’s U.S. sales division, while 20 percent of the jobs being cut in the U.S. and Canada are currently open positions.

The planned job cuts, which will help boost 2011 profit more than previously forecast, do not include any cuts at manufacturing facilities. Kraft says it also expects 2011 net revenue to be up by about 10 percent. Kraft expects 2011 operating earnings per share of at least $2.28, up a penny from a previous forecast.

Kraft plans to spin off its North American grocery business, which has annual sales of $16 billion, with products like Velveeta cheese, Maxwell House coffee, and Capri Sun, after which it will cut its number of U.S. management center locations from four to two.

Its beverages division, currently in Tarrytown, New York, and Planters, currently in East Hanover, New Jersey, will be moved to the Chicago area by December 2012. Most employees will have the option to transfer. Kraft will close its Glenview, Illinois management center by the end of 2013.

The future global snacks company will also be based in the Chicago area, though its North American unit will be based in East Hanover. Kraft is still reviewing its manufacturing facilities to consider what will be best for the two companies.

The snacks business, responsible for products such as Oreo cookies, Trident gum, and Cadbury chocolates, will deliver products directly to stores, with most U.S. retail sales employees moving over to the North American region of the global snacks business, which is worth roughly $32 billion.

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To contact the reporter on this story: Emily Knapp at staff.writers@wallstcheatsheet.com

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