How will Kraft Heinz closure impact dairy farmers?

Stephen Borgna
The Kraft Heinz dairy plant in Campbell

Workers at the Kraft Heinz plant were notified last week that they could lose their jobs within approximately 90 days if the plant is unable to find a buyer.

The plant is one of seven facilities scheduled for closure in the U.S. and Canada in an effort to downsize. The closures are expected to eliminate more than 2,000 jobs, including the more than 300 jobs at the Campbell plant.

Skip Jensen, New York Farm Bureau Field Advisor for Yates County, says there are dairy farmers in the area who will be affected by the plant’s closure, but could not yet estimate the scale of the impact.

Bob Kelly of Kelly Farms Inc., a milk hauling company in Dundee, says none of the farms that supply the plant will be dropped by his company; the milk will be simply be taken to other plants in Cuba, N.Y. or even farther, but that will increase transportation costs. Jensen adds that the impact of increased trucking costs is ultimately borne by the dairy farmers.

“In November 2015, following an extensive review of our North American supply chain footprint, capabilities and capacity utilization, The Kraft Heinz Company made the difficult but necessary decision to announce the closure of seven manufacturing facilities in North America, including Campbell, within 18 to 24 months,” company spokesman Michael Mullen said in a statement.

Plant employees received a Federal Worker Adjustment and Retraining Notification Act “WARN Notice” letter Feb. 21, notifying them of possible termination.

The letter stated that the facility’s closure will occur in phases, and employee separations are scheduled to begin on May 26 if a buyer cannot be found.

“If no agreement can be reached before the first date of separation on May 26, we will offer severance benefits and other support to help workers in Campbell pursue new opportunities,” Mullen said. “Future separations are expected to continue in phases through the end of July, 2017. As always, we remain committed to treating our people with the utmost respect and dignity.”

By law, the plant is required to give a 90-day heads-up to its employees regarding possible layoffs.

“I know they sent out their 90 day ‘WARN’ notice, which is not a big surprise,” said Jamie Johnson, executive director of the Steuben County Industrial Development Agency. “They’re just following state law in preparation for something happening.”

The letter went on to state that affected employees may be eligible for job retraining, re-employment services, and unemployment insurance benefits.

It’s been previously reported that state and local officials have been negotiating with the company to try and sell the plant in an effort to save its jobs.

“Hopefully they come up with a decision on a potential buyer,” International Brotherhood of Teamsters Local 529 President Rich Dexter said, which represents the plant’s union employees.

But according to Mullen, an agreement is not in place at the moment.

“Since the announcement, Kraft Heinz has worked with prospective buyers, along with federal, state and local officials, to find a viable solution for the Campbell factory,” he said. “We have placed a high priority on finding prospective operators that would maintain jobs in Campbell. However, since no agreement has been reached at this time, we are obligated to provide 330 hourly employees in Campbell with a 90-day notice of separation in compliance with New York State Worker Adjustment and Retraining Notification (WARN) Act.”

In the event that the company cannot come to a deal with a buyer, the facility will close. An exact closure date isn’t known.

“There is no word from (Kraft Heinz) on the closure date,” Johnson said. “We remain engaged with the company and others to get the facility repurposed. We’re still hopeful we’ll be able to do that.”

However, he added that the facility is expected to close by the end of the year if negotiations do go south.

“If (Kraft Heinz) can’t strike a deal with anyone by the end of 2017, the facility will be closed,” Johnson said. “That’s the current plan.”

In February 2016, Rep. Tom Reed stated he was “cautiously optimistic” that positive news could emerge soon regarding the plant, and Three Rivers Development Co. offered its help to the Steuben County IDA in July 2016 to help sell the facility.

In the time since, little news has emerged regarding the plant’s potential sale.

“It is companies like Heinz/Kraft that take advantage of our broken tax code of picking winners and losers over the years and yet throws our local workers aside as collateral damage to their manipulation of the system... I will fight tirelessly to make sure those workers I care so deeply about are never forgotten,” Reed said in a statement last week.

Includes reporting by John Christensen

Why it matters

The Issue: Employees at the Campbell Kraft plant have received WARN letters. 

Local Impact: If a new buyer for the facility cannot be found, 330 hourly employees may lose their jobs in 90 days and local dairy farmers will have to pay more to ship their milk to market. 

Why it matters