60 jobs lost with Kraft plant closing

BENTONVILLE—A long-time fixture in Bentonville is shutting its doors in 2013, affecting 60 jobs.

Kraft Foods Group Inc. announced Tuesday (Aug. 28) it plans to close its Bentonville manufacturing plant during the second quarter of 2013. The 60 employees were also told about the decision Tuesday.

“This is not a reflection on our employees in Bentonville,” said Jim Durkin, vice president of operations for Kraft’s Cheese and Dairy business unit. “This is a strategic decision that has nothing to do with their performance, which has been excellent. We will be working with our employees to help them through this transition.”

Joyce Hodel, Kraft’s spokeswoman, said via email Tuesday evening that “Kraft will offer employees a separation package that includes severance pay based on years of service, financial assistance to help pay for medical insurance after the plant closure, and outplacement assistance. If employees are interested in jobs at other Kraft sites, they will be given priority for those positions.”

The 65,000-square foot plant, located at 507 SE E St., in Bentonville, has been in operation since 1947. It’s where Northfield, Ill.-based Kraft makes ingredient cheeses used by other Kraft plants, according to a press release.

The plant’s operations will be combined with “external partners.”

“After careful analysis and review, we identified some opportunities to combine production, gain efficiencies and reduce expenses in our Cheese and Dairy network,” Durkin said. “We’ll achieve greater efficiencies of scale by combining the majority of the plant’s production with external partners. Bentonville is a smaller plant and its size isn’t suitable for the scale the company needs going forward.”

Hodel said that the property will be placed for sale after it closes.

The Kraft sales office in Rogers will not be affected by this decision, according to the company.

MAYOR REACTION
Bentonville Mayor Bob McCaslin, a former 30-year Kraft employee, said his reaction to the news was of “sadness and great disappointment.”

“Sadness is driven by my compassion for the 60 employees and their families whose livelihood is dependent upon employment at this Bentonville institution. Kraft Foods has been a source of employment for area residents since 1947. Many area residents are retirees of the Bentonville Cheese Plant. My thoughts and prayers are with the affected families. It is my hope that affected employees promptly find alternative employment in our area,” McCaslin said in a statement.

He also noted the unknown impact on area dairy farmers who have supplied the plant now slated for closure.

“For more than 6 decades local dairy farmers have had a dependable market for their product. It is my hope that the market for locally produced milk will continue to exist within a reasonable distance from the affected farms,” McCaslin said.

Continuing, the Mayor noted: “It is appropriate to acknowledge and be grateful for the many contributions this 65 year old  plant made to our local economy. The plant was a steady source of employment through 11 presidents and numerous economic cycles, we will miss having Kraft as a part of our community.”

BUSINESS MOVES
Kraft Foods is working to spin off its North American grocery business — Kraft Foods Group — in a deal with shareholders expected to be completed by Oct. 1, 2012. The new business, according to Kraft, will be an independent, public company operating as Kraft Foods Group Inc., rather than a subsidiary of Kraft Foods Inc.

“On October 1, 2012, the spin-off company, Kraft Foods Group, Inc., will be a separate public company that will be one of the largest and most admired consumer packaged food and beverage companies in North America,” the company noted in an Aug. 17 letter to shareholders. “Also on that date, today’s Kraft Foods Inc. will change its name to Mondele ̄z International Inc., and proceed as a global business concentrating on snacks categories, such as biscuits, chocolate, gum and candy.”

Kraft Foods Group posted 2011 revenue of $18.655 billion, with net income of $1.839 billion.

During the first half of 2012, the company’s U.S. cheese business had net revenue of $1.845 billion, or almost 20% of total revenue for the period. Net income during the first half of 2012 for the cheese business was $323 million, or 19.8% of total income. The first half net income was also up 16.6% compared to the 2011 period.

Shares of Kraft Foods (NASDAQ: KFT) closed Tuesday at $41.86, up 13 cents. During the past 52 weeks the share price has ranged from a $41.90 high to a $31.88 low.