Kraft Foods will eliminate 1,600 jobs within the next 12 months, about 40 percent in its North American sales operations. It also will close its Glenview management center by the end of 2013 as part of its preparations to split into two companies, the Northfield-based company announced Tuesday.
A Kraft spokesman said the restructuring will result in the Chicago area gaining jobs, however, because the Glenview management employees will stay in the Chicago area and a few dozen jobs will be added at a Glenview research and development center.
The 970 Glenview center employees, as well as 261 relocated jobs — 225 management and marketing employees from the Kraft beverages business unit in Tarrytown, N.Y., and 36 from the Planters brand plant in East Hanover, N.J. — will move to Kraft’s new grocery headquarters, which will be located in the Chicago area.
Indeed, both Kraft’s snacks and grocery businesses will keep their headquarters in the Chicago area, though no exact locations have been named. A decision on the two headquarters sites will be made by March 30, Kraft spokesman Michael Mitchell said.
Mitchell could not give details on the numbers to be employed at both headquarters.
The Glenview management center, located on 47 acres at the northwest corner of the Golf Road and Waukegan Road intersection, generates $1.9 million yearly in property taxes for the village.
“This was not a surprise, since Kraft officials have been communicating with us. We understand that businesses in these times are cutting costs,” said Don Owen, deputy village manager of Glenview, about 20 miles north of Chicago.
Owen said that the Kraft site is an excellent location and the village expects Kraft Foods to help sell or lease the property.
“Kraft officials have indicated they’d like the process to go as quickly and smoothly as possible,” Owen said.
Kraft also operates a research and development center less than a mile north of the management center, near the intersection of Dewes Street and Waukegan Road in Glenview, which will expand by adding test kitchens and about 24 jobs relocated from dessert research and development operations in Tarrytown. The research and development center now employs 470 and generates $780,000 in yearly property tax revenue.
Kraft employs 7,750 in Illinois, including 5,129 in the Chicago area, 1,349 in Northfield and 1,378 in Glenview, a Kraft spokesman said. The company employs 46,500 in North America and 127,000 worldwide.
Kraft announced in August it will split into two publicly traded companies — global snacks and North American grocery — in a move aimed at wringing as much value as possible from its stock. The split will create a $16 billion North American grocery business with brands such as Velveeta cheese, Cheez Whiz, Jell-O and Oscar Mayer meats, and a $32 billion global snacks company comprising names such as Oreo, Tang powdered drink and Trident chewing gum.
The 1.600 North American sales cuts are to be finished by April 1, and Kraft is still reviewing its manufacturing operations, the company said.
An Oscar Mayer management center will remain in Madison, Wis.
Kraft generated $49.2 billion in revenue last year, of which a majority came from outside of North America. Kraft announced Tuesday its fiscal 2011 revenues are expected to jump 10 percent from the prior year to stand at about $54.13 billion.
“When we announced our decision to create two world-class companies last August, we said both would be leaner, more competitive organizations,” said CEO Irene Rosenfeld, who will become CEO of the global snacks business. Rosenfeld created a stir in October when she joked to an Executives’ Club of Chicago luncheon that Kraft was talking with Mayor Rahm Emanuel’s office about joining a growing list of companies announcing opening offices in downtown Chicago rather than in the suburbs. The mayor’s office said no such talks had occurred.