Heinz deal likely to put the squeeze on Kraft workers

Junk food titan Kraft is going on a diet.

Ketchup giant Heinz is likely to eliminate Kraft’s Northfield, Ill., headquarters and fire much of its staff after completing its takeover of the company, according to sources.

“I’d be amazed if Kraft maintained its own headquarters,” said one source close to Heinz.

Kraft operates 36 manufacturing and processing facilities and 36 distribution centers. The company has 22,100 workers.

While the newly combined company will be called Kraft Heinz, sources said Kraft will suffer most of the belt tightening.

“You have to think about the supply chain and customer base. There is a lot of redundancy,” the source said.

Heinz owners 3G Capital and Warren Buffett subscribe to a policy of “zero-based budgeting,” which means they do not increase spending on any part of the business unless there is a cut in another area.

During their two years of owning Heinz, they have reduced the workforce from 31,900 to 24,500 workers.

Kraft has also been shrinking. In 2012, it split into two companies. The domestic business retained the Kraft name, while the international operations were renamed Mondelez.

As recently as 2011, Kraft was the world’s third-largest food and beverage company with $54 billion in sales. Heinz was 34th with just $11.6 billion, according to Food Processing magazine.

The combined Kraft Heinz will have only $29 billion in sales.

Heinz will not only take over Kraft but also likely compete with or try to buy Mondelez’s grocery business, sources said.