Kraft to cut 1,600 jobs in US and Canada

Food giant Kraft Foods has announced plans to cut about 1,600 jobs throughout the US and Canada over the next 12 months, as part of its corporate split into two independent companies by the end of this year.

About 40% of the lay-offs will be made by reorganising the US sales team, another 40% will be a result of corporate staff cuts and the final 20% will come from not refilling vacancies. Kraft Foods, which employs 127,000 people worldwide, including 46,500 in North America, said there would be no job reductions at its manufacturing plants.

Kraft Foods North America executive vice-president and president Tony Vernon said the company’s plan for a more nimble company, combined with the current economic and competitive pressures, led to this decision. "Taking the necessary steps now will enable us to continue investing in our beloved brands to drive growth," Vernon added.

According to analysts, the cuts are expected to save Kraft about $50m and the job reductions, which represent 3.4% of the company’s North American workforce, will enable Kraft to move closer to its objective of splitting into two publicly traded companies.The spinoff will create a North American grocery business with $17bn in revenue and a global snack business with $31bn in revenue, with both companies based in the Chicago area.

Irene B Rosenfeld, current chairman and CEO of Kraft Foods, will be chairman and CEO of the global snacks company, while Tony Vernon will become the CEO of the North American grocery company.

Kraft Foods markets biscuits, confectionery, beverages, cheese, grocery products and convenient meals in approximately 170 countries, and its leading brands include Cadbury, Jacobs, Kraft, LU, Maxwell House, Milka, Nabisco, Oreo, Oscar Mayer, Philadelphia, Tang and Trident.