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Oscar Mayer closing Madison plant by 2017

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The writing may have been on the wall when the newly combined Kraft Heinz cut 165 jobs from Madison’s Oscar Mayer corporate offices — and 2,500 total in the U.S. and Canada — in August, but it still came as a shock today when news broke that Kraft Heinz will close its Madison Oscar Mayer plant entirely by early 2017. According to the Quad Cities Times, Kraft Heinz is planning a new $203 million state-of-the-art food manufacturing plant in Davenport, Iowa. The company is considering a major expansion there involving “the retention of at least 475 full-time positions.”

Given the Madison facility has been the home of Oscar Mayer for nearly 100 years, the news still came as a body blow. "After the last round of layoffs, it would be foolish to say there wasn't some anticipation that there was going to be another follow-up announcement, but to have it happen this soon and to have it involve all of the employees was shocking," says Paul Jadin, president of the Madison Region Economic Partnership.

Madison Mayor Paul Soglin, who was informed of the decision by officers of Heinz Kraft at the close of business on Tuesday, said in a press conference Wednesday afternoon that the local plant will be shuttered over a 12- to 24-month period. According to a corporate officer he spoke with, Soglin said the decision affects 300 corporate officers, employees, and staff, many of whom will have an opportunity to relocate to Kraft Heinz's corporate offices in Chicago, and about 700 union workers. The Oscar Mayer brand will continue, but it will be managed out of Chicago.

Soglin, who was highly critical of Kraft Heinz's decision to close its most productive hot dog plant, says the company will be putting in place an extensive plan to help affected workers “continue in the world of employment.”

Impact in the hundreds of millions

Given all that goes into the operation and the service businesses patronized by Oscar Mayer employees, “the potential economic impact on the Madison area is in the hundreds of millions of dollars,” Soglin said. “Our main focus right now is the workers, their employees, and related businesses that are dependent upon the vitality of this operation, this plant. I don't know the number, but when you take the payroll, when you take the production, the packaging materials, all that goes into the operation at Oscar Mayer, which has been going for 100 years, and then extend that to the dry cleaners, the retailers, the supermarkets, the neighborhood groceries, the local dining spots, the kids' sporting activities, this is very significant.”

Fortunately, he added, Madison has a relatively healthy economy with a number of solid employers whose role now will be to make decisions to expand their workforce, where they have the resources, to help make the transition of affected Oscar Mayer employees to other employers as seamless as possible.

“There will be discussions about what's the role of our various governments,” Soglin added. “At this point, any speculation is premature. I'm not going to be proposing any amendments to the [city] budget that was adopted last week, but we will consult with the county, we will consult with the state, and if we find there are any adjustments we should make in terms of development or in terms of job placement, I'm confident that after the first of the year, we can adopt whatever budget amendments are necessary.”

Due to how well positioned Madison is to help workers transition to other jobs, Pat Schramm, executive director of the Workforce Development Board of South Central Wisconsin, asserted there has “never been a better time" in this community for this to happen. “People really need to know that,” Schramm stated. “We are very well positioned on the communications between the Chamber [of Commerce], the city, the county — all the people who can make a difference in helping people move into new jobs.”

(Continued)

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