Heinz valued in Pittsburgh more for history than impact
Family name a part of many city venues, even as jobs are cut
August 18, 2013 4:00 AM
Richard Drew/Associated Press
Last week, new Heinz CEO Bernardo Hees slashed at least 350 salaried office jobs from the company's 1,200-person southwestern Pennsylvania base, leaving Heinz with 800 local workers -- a sliver of its total 32,000 global employment and the company's smallest Pittsburgh workforce since the first part of the last century.
By Teresa F. Lindeman Pittsburgh Post-Gazette
The H.J. Heinz Co. was threatening to scale back operations in Pittsburgh.
The year was 1962 and a strike had kept its North Side plant closed for eight weeks. Management took out a full-page ad in The Pittsburgh Press newspaper arguing the local union leadership was not letting the membership vote on a fair offer.
"Because we started here, we have continually expanded our Pittsburgh plant and have tried to maintain operations at a high level," the ad said. "Recently we expanded our Meat Products operation in Pittsburgh.
"Have we made a mistake? Should we change our mind?"
A story in the newspaper a few days later indicated international union leadership had taken over the negotiations and quickly submitted a proposal to workers, who voted 948-543 to accept a contract.
Heinz would continue to manufacture products in its hometown for the next 40 years before finally selling off its North Side plant in 2002 as part of a deal crafted by then-CEO Bill Johnson. The sale handed off 1,200 local plant workers to another company, allowing Heinz to ease out of its historic role as a Pittsburgh manufacturer relatively gracefully.
Last week, new CEO Bernardo Hees didn't have such cover as he slashed at least 350 salaried office jobs from the company's 1,200-person southwestern Pennsylvania base, leaving Heinz with 800 local workers -- a sliver of its total 32,000 global employment and the company's smallest Pittsburgh workforce since the first part of the last century.
Politicians expressed disappointment and individuals used social media to express outrage.
It can be hard to tell sometimes because the Heinz name is connected to so many things in town -- from Heinz Field to Heinz Hall to the Heinz History Center to the Sarah Heinz House and Heinz Chapel and Carnegie Mellon University's H. John Heinz III College -- but the passionate loyalty that Pittsburghers give to the company's ketchup owes more to its history and its marketing than its current position as a local employer.
Consider that health provider UPMC employs almost 50,000 people in the Pittsburgh area, far outnumbering Heinz in issuing local paychecks.
That didn't make the pain any less last week when the news began to spread that hundreds of Pittsburgh Heinz workers were losing their jobs. One former employee quickly texted a friend at the company on Tuesday to see if that individual was still employed. The answer, "I'm OK."
Tension inside the company had been felt for months. Some workers began looking for new jobs as soon as the deal to sell the company was announced on Valentine's Day, convinced that either their work was likely to be eliminated in a business that would be switching from public to private or that the new owners -- 3G Capital and Berkshire Hathaway -- would be looking for places to cut.
Mr. Hees, a former Burger King CEO, had followed a similar strategy upon his arrival at his last job, eliminating hundreds of jobs at the fast-food company's Miami headquarters. The new owners took on debt to finance the $28.75 billion Heinz deal, and analysts expected trimming would be needed to justify that price tag.
The new owners agreed to stay in town. "Heinz will remain headquartered in Pittsburgh, demonstrating the company's commitment to the region. We look forward to continuing to call Pittsburgh our home, as it has been for 144 years," said Michael Mullen, senior vice president of corporate and government affairs.
It isn't entirely clear how long that promise is good for, and some employees speculate that after a respectable number of years, all bets could be off.
The atmosphere of uncertainty isn't unusual in a merger, but it is a new experience for Heinz.
The company traces it roots to 1869 and a smart young man from Sharpsburg who found a way to outmaneuver his packaged food competitors. The business was owned by Heinz family interests for decades and stayed independent for decades even after it went public.
Those years built a long, rich relationship with Pittsburgh. Like most relationships, this one hasn't been without its backbreaking work and its messes. Those who've worked for the company have interesting tales to tell, whether about traveling to plants around the world or cooking up recipes including Heinz products or getting involved in one of the myriad ways that the business has marketed itself -- with commercials, horses and football stadiums.
Pittsburghers these days don't experience Heinz the way that those of past generations may have: the grand unveiling of theaters and dining halls to be used by employees; the reports on a plant that would have to raise flood barriers to deal with the Allegheny River's intermittent challenges and in 1972 requested a waiver of smoke, particulate and sulfur emission limits for its coal-fired boilers; and even the stray smelly tomato truck.
In September 1955, The Pittsburgh Press published a short item in which an irate truck driver had abandoned his truck, trailer and cargo next to the Heinz company a week earlier when officials there told him they hadn't ordered the tomatoes he was delivering. The tomatoes sat in the sun until the police ordered that they be disposed of.
In that era, Pittsburgh was still the site of a lot of food product processing for Heinz, which meant the company needed workers. The summer of 1952, Bill Topolsky was a student at the University of Pittsburgh who'd landed a summer job there. He doesn't remember how he got the job, or even how he got there from his East Liberty home.
But some things made a big impression on the young laborer, who wouldn't find out his day's assignment until he showed up in the morning.
He recalls things like the smell of vinegar that he thought seemed powerful when he arrived for a stint in that department, but then quickly got used to. "You never smelled it the rest of the day," recalled Mr. Topolsky, who went off after college to work in the Bureau of Labor Statistics and now lives in Rockville, Md.
There was the cannery that was hard on the ears because of the constant noise. It also, he said, had big puddles of water that accumulated on the floor from the process of sterilizing cans. Some days he was sent to help on the soup line with its huge cooking vats and the canvas hampers used to transport big chunks of meat.
Mr. Topolsky remembered a time when someone dropped something in a vat and they had to throw out all the soup. Cleanliness was important at Heinz. "It was spotless," he recalled. "People were coming around, always checking."
The Heinz that he experienced was the result of decades of growth that started with a few employees making horseradish in Sharpsburg and then expanded to a steady workforce of 2,500 by 1901, according to "In Good Company," a 1994 book by Eleanor Foa Dienstag that the company backed and later handed out to reporters.
Even in 1901, some of those jobs were not in Pittsburgh, because the company had added operations in other markets. But its presence here was significant. The previous decade had seen the company put up 17 structures grouped along Progress Street on the North Side, according to the book, including a Vinegar Building connected directly to a rail line.
The founder had been convinced of the benefits of "paternalism" during his travels to German factories, deciding that doing things like offering wash facilities, dining rooms, an emergency hospital and roof gardens would reduce employee strife and promote loyalty, Ms. Dienstag said.
Marketing the consumer goods company was always an important theme, too.
People who didn't work at Heinz could tour the operation, and the book reported that by 1900, 20,000 visitors a year were trouping through. In 1965, a Pittsburgh Press story on the retirement of a longtime tour director reported that sometimes 8,000 visitors came through monthly. The tours ended in 1972, Ms. Dienstag said.
Meanwhile, on the business side, growth continued and in 1924, Heinz organized an event in which 10,000 employees and officers attended banquets at 62 locations in the U.S., Canada, England and Scotland -- with 3,000 at the Pittsburgh site -- where they listened to speakers, including President Calvin Coolidge, via radio hookup.
There weren't a lot of different CEOs over the decades -- Mr. Hees represents only the seventh person in that role and the fourth not to be named Heinz -- and each faced his own challenges.
Howard Covode Heinz, son of the founder, spent the 1920s getting the company out of debt, according to Ms. Dienstag, using a strategy of "cut costs but resist cutting wages so as not to 'ruin the spirit, the esprit de corps, the enthusiasm for the House of Heinz and its methods.' "
Later, when R. Burt Gookin became the first non-family CEO in the 1960s, his assignments included making Heinz U.S.A. more profitable -- like the divisions in other parts of the world. He was involved in acquisitions and restructuring, terms that have become familiar at the company in recent decades.
There were stories like the Post-Gazette article in September 1992 headlined, "Heinz Chairman Says Job Cutbacks at an End," which said a yearlong restructuring that cut 3,000 jobs worldwide was complete. That chairman was Anthony "Tony" J.F. O'Reilly, an Irish citizen who had become the fifth Heinz CEO in 1979.
One component of that restructuring program, which included selling off 24 plants and buying or opening 32 others, was a $116 million investment in overhauling the company's North Side plant.
It is hard to determine exactly when the peak of Heinz employment in Pittsburgh came, but Mr. Mullen said the highest point that his check of the records showed was approximately 2,600 people in the 1980s.
When Heinz moved its world headquarters to One PPG Place in 2008, the company reported 225 staff members would be using the 95,000-square-foot space that it had leased for 15 years. At the time, it also had 700 employees in its Heinz 57 Center on Sixth Avenue and more than 200 in its research center in Marshall.
The company confirmed last week it would be dramatically reducing its use of space at the Heinz 57 Center, moving most of its Pittsburgh-based employees into PPG Place to improve collaboration and speed up decision-making.
In fact, Mr. Mullen on Tuesday used the term "faster decision-making" twice in his explanation of changes being made under the new CEO.
As word about the layoffs spread, a few more details emerged about the kind of salaried office jobs that were eliminated. In response to a query, Mr. Mullen said on Friday, "As part of our transition to a more streamlined organizational structure, the company has reduced the number of administrative assistant and temporary office positions.
"Heinz sincerely thanks all employees for their years of service and many contributions to the business, and we are committed to treating all employees with the utmost respect and dignity as they transition to new opportunities outside the company."
He may also be hearing from Pittsburghers worried about the ketchup maker's commitment to its deal putting the company name on the football field where the city's beloved NFL team plays, because he took the time to reiterate Heinz is sticking with that relationship, too.
"Heinz is completely committed to our long-standing and successful partnership with the Pittsburgh Steelers and Heinz Field, further demonstrating our unwavering commitment to the region," Mr. Mullen said. "This is a winning partnership that joins two iconic Pittsburgh brands."