Kraft-Heinz announced it’s spending $3 billion to upgrade its U.S. factories to make the plants run more efficiently. The improvements will also allow the food maker to develop and sell new products quicker.
The company’s president of North America, Pedro Navio, told Reuters tariffs factored into their investment decision.
Kraft Heinz manufactures its market-leading Heinz ketchup, Kraft macaroni and cheese and Philadelphia cream cheese, among other products, at 30 plants across the United States. Kraft Heinz told Wall Street analysts last month that tariffs were adding to its costs and that consumers were buying less due to economic uncertainty.
But the company is moving forward and making the new investment now to defend its market share, Navio said.
“It goes beyond just efficiencies or dealing with the current tariff challenges,” he said, saying the investment allows Kraft Heinz to produce food for the long term.
The company is currently facing tariffs on imports such as coffee, after the United States last month implemented a 10% levy on all imported goods. Its imports from China, which faces higher tariffs, are negligible, a spokesperson said.
Kraft Heinz, which also roasts and sells Maxwell House coffee, asked suppliers for a 60-day notice before putting through price hikes.
Nearly all of what Kraft Heinz sells in the United States is made domestically, Navio said, adding that the company grows its own tomatoes in California and potatoes in Idaho, for example. It exports some of what it manufactures in the United States to Canada, Navio said. (CNBC)
The investment, which is the largest the company's made in its plants in a decade, will generate about 3,500 new construction jobs.
Kraft Heinz's announcement follows similar investment decisions from companies such as Anheuser-Busch, which will invest $300 million into its plants across the United States. Kimberly-Clark also said earlier this month that it will invest more than $2 billion over the next five years to expand its U.S. manufacturing capacity and modernize its supply chain.
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