Kraft to Cut 90 Positions in New Ulm, Shift Production Mix

Kraft plans to move its Velveeta line of products and another production line out of New Ulm but boost production of processed cheese at that plant; the shifts will eliminate roughly 80 full-time equivalent hourly positions and 10 salaried positions next year.

Kraft Foods Group, Inc., plans to restructure three U.S. plants in 2013—a move that will result in the elimination of approximately 90 full-time equivalent positions at its New Ulm plant.
The New Ulm facility—which now employs approximately 555—currently produces Kraft’s Velveeta line of products, Handi-Snacks brand of on-the-go snacks, Deli Deluxe cheese slices, MilkBite milk and granola bars, and sliced and bulk processed cheese for foodservice customers.
Company spokeswoman Joyce Hodel told Twin Cities Business on Thursday that Kraft plans to move its Velveeta line to a plant in Champaign, Illinois, and the New Ulm plant will also lose the bar-production line that makes Kraft’s MilkBite product. Given that line’s small volume, “it is not effective for us to produce it internally,” Hodel said, adding that the company is investigating its options for that business.
The New Ulm plant will, however, increase production of processed cheese—and Kraft plans to invest about $25 million in new equipment and “related improvements and infrastructure” there in order to boost capacity, according to Hodel.
The shifts—which will occur throughout next year—will eliminate approximately 80 full-time equivalent hourly positions and roughly 10 salaried positions in New Ulm, according to Hodel. She said that the company believes that the elimination of salaried positions can be accomplished through natural attrition—and some of the cuts to the hourly positions may be able to be achieved that way as well. Employees learned about the cuts Wednesday, and over the next several months, Kraft will give the plant’s workers the option to voluntarily retire or resign in exchange for severance benefits.
“We’ll be talking with everyone in the coming months,” Hodel said.
Northfield, Illinois-based Kraft is a major employer in the south-central Minnesota city of New Ulm, which has a population of about 13,500 and is situated 95 miles from the Twin Cities. Several other major Minnesota companies—including 3M Company, Associated Milk Producers, Inc., and August Schell Brewing Company—also have operations within the city.
Hodel said the changes at Kraft’s New Ulm plant are part of a larger effort to consolidate the company’s products into fewer plants.
“It will enable greater efficiencies of scale across our network as we reduce redundant equipment,” she said. “And with these changes across the network, we can focus on our equipment and technology investments more appropriately.”
In addition to employing approximately 360 full-time hourly employees, 150 part-time workers, and 45 salaried employees at the plant in New Ulm, Kraft has an 80-worker plant in the Minnesota city of Albany, located about 25 miles northwest of St. Cloud. The two plants are among roughly 40 Kraft plants located in the United States and Canada.
Kraft, which reported $18.7 billion in 2011 revenue, employs about 25,000 in the United States and Canada.