Heinz offers buyout to majority of Pittsburgh-area workforce



The new management at H.J. Heinz Co. this month has acknowledged that the massive changes being made at the historic Pittsburgh company have not worked out for a lot of the workers that it inherited.

Heinz, which was acquired for more than $28 billion last June by Berkshire Hathaway and 3G Capital, has offered employees -- those who stayed around through the sale hoping that the new owners would be a good fit -- a second chance to leave.

Voluntary buyout offers were sent in letters to 775 employees in the Pittsburgh area last week, with deals that start at six months' severance pay and increase depending on years of service. Workers have until the day after Easter to make up their minds.

The deal was offered only to those who have been with the company at least a year.

Heinz continues to reiterate that it is not planning to abandon its hometown. Anyone who takes the buyout will be replaced, leaving the ketchup maker with the same size workforce in the region, according to the company.

"Heinz realizes that its new dynamic and results-driven culture, focused on efficiency and meritocracy, may not be the perfect fit for every employee," said Michael Mullen, senior vice president of corporate and government affairs.

"Consequently, we have decided to provide a generous opportunity for eligible employees to leave Heinz with enhanced severance benefits."

Certainly, after 10 months with new CEO Bernardo Hees in place, employees have had time to see how he operates.

The former Burger King chief executive quickly cleared out much of existing management to put in his own team and instituted -- as expected -- his style of open offices, long hours, fewer layers of management and zero-based budgeting, which requires that each year's financial plan start from scratch to justify every spending decision.

It was a change at a company founded in Sharpsburg in the 19th century, where many families had generations that worked for Heinz and employees came to expect certain perks.

Large piles of debt taken on in the acquisition were expected to fuel cost-cutting even if, as some analysts said when the sale was announced, Heinz wasn't a company in trouble that needed to be restructured.

Last summer, the newly private company that makes Smart Ones and Ore-Ida products in addition to its flagship ketchup and dozens of other products began shedding weight.

Six hundred office positions across the U.S. and Canada were cut, including 350 in the Pittsburgh region. That left the company that had about 1,200 workers in the region, including at a research and development center in Cranberry and two Downtown locations, with closer to 800 here.

As Mr. Hees' first year continued, the company announced plant closings in North America, the U.K. and Europe and thousands more job cuts. He also announced expansions at other plants that would pick up work being done at the closed locations, moves that Heinz believes will make it more efficient.

The new management has worked out compromises in some cases, such as at a more-than-century-old plant in Leamington, Ontario, which it agreed to sell to a Canadian co-packer that will make products for Heinz.

Hundreds of jobs will still be lost, but a few hundred also were saved in the arrangement.

Concern over how the new owners operate triggered a meeting in Pittsburgh last month by unions that represent Heinz workers around the world.

Twenty-five participants from countries including the U.S., Canada, Ukraine and Belgium discussed ways to counter the restructuring measures, according to a report posted to the website of the IUF, an international federation of unions representing food, beverage and restaurant workers.

Based on what has been done so far, the unions believe the company plans to close plants and also to "squeeze the number of workers in the existing plants by combining jobs and increasing workload of each employee."

Heinz has found other places to trim as well, with health contributions to some retirees cut and workers talking of limits on paper printouts and less funding of parking and transportation services.

Some employees have made their way to the website Glassdoor to post anonymous rants about Mr. Hees and his team's style.

In February, the website looked at ratings for Heinz over the second half of last year and found that Mr. Hees had a 9 percent approval rating from employees on the site, compared to 39 percent for former CEO Bill Johnson during the first half of the year. Mr. Hees started in early June. The average CEO approval rating on Glassdoor is 69 percent. Employees post voluntarily and there's no way to know how representative the comments are.

Mr. Hees scored a 58 percent approval rating in 2012 while he was chief executive at Burger King. That dropped to 48 percent in the first half of 2013, in the midst of which his planned departure was announced.

Among the comments from Pittsburgh-area Heinz employees posted on the site: "Stop following your book and make decisions based on your most valuable asset ... your employees!" wrote one.

Others offered a different view. "Good people work here. I love my department and the people I work with," said one.

Heinz may have been listening to some of the posters. One entry offered this advice, "Be as transparent as possible about upcoming changes."


Teresa F. Lindeman: 412-263-2018 or tlindeman@post-gazette.com First Published April 14, 2014 7:23 PM

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