Kraft Heinz will seek a buyer for the Madison headquarters of Oscar Mayer — a move that could possibly keep the facility operational, the company and Gov. Scott Walker’s office said Friday.
The revelation comes after Kraft Heinz said Wednesday that it would close the plant and put about 1,000 area workers out of a job, and amid questions about whether Walker’s administration and others did enough to keep the iconic brand in the Capitol city.
“The Madison facility will not close until sometime in 2017. We made this announcement now to give employees the time to make decisions that are right for them and their families,” said Kraft Heinz spokesman Michael Mullen. “We are now working with Wisconsin officials to find a buyer that could potentially keep the Madison site open.”
“This process is just beginning — we will keep our employees informed as it progresses,” he added.
But the facility could be a tough sell. Josh Rikkers, managing principal at Cresa Madison, a commercial real estate company that represents tenants, said the pool of potential buyers could be small.
“I could see where the land itself, because it’s in Madison, Wisconsin, is valuable,” said Rikkers. “Could the building be converted into some unique mix-use of office and retail? I don’t know — perhaps. From a current use perspective, I don’t know who needs a seven-floor hot dog manufacturing facility.”
Jocelyn Webster, a spokeswoman for Walker, said the governor’s office was told Friday about the company’s plans.
“In addition, Kraft Heinz tells us they have a history of finding success in selling facilities that the company previously operated,” Webster said.
The company cited examples in Florence, South Carolina, Pocatello, Idaho, Leamington, Ontario and in Phoenix, she said. In the past two years, facilities owned by Kraft or Heinz were sold to companies that operated the facilities with a similar purpose.
Mayor Paul Soglin said his first hope is that Kraft Heinz reconsiders closing and leaving Madison altogether. “But if they do close the plant, one of our highest priorities is the adaptive reuse of the building with an owner that shares our goals and values,” Soglin said in an interview. “The thing is we don’t want the building stripped and cannibalized and we want it controlled by those who are operating a business model compatible with our values.”
Mullen also said the company’s Beaver Dam and Wausau factories are “important to our North American supply chain and remain fully operational.”
On Thursday, Walker and his jobs agency, the Wisconsin Economic Development Corp., came under withering criticism for not doing more to persuade Kraft Heinz to keep Oscar Mayer in Madison.
WEDC didn’t contact Kraft Heinz as other states did in the months leading up to the decision to close the plant. By contrast, officials in Iowa and New York put together economic incentive packages to help retain or refocus plants there. It’s unclear whether inquiries by the state would have made a difference.
Mullen said Friday the company “did not reach out, or engage in conversations with, officials in Wisconsin prior to the announcement, as the decision to close Madison was based entirely on the need to reduce operational redundancies and eliminate excess capacity within our North American network.”
Walker’s office late Friday supplied the State Journal with emails between his scheduler and a Madison lobbyist representing Kraft Heinz. The lobbyist, Peter Christianson, said in an Oct. 2 email that Derek Crawford, the company’s U.S. government affairs director, “advises that he saw the Governor in Chicago over the summer and that they discussed sitting down when the smoke had cleared a bit.” Christianson suggests Crawford, Walker and possibly Oscar Mayer CEO Mark Magnesen meet.
Walker’s scheduler Mallory Wipperman responded that day to Christianson to set up a meeting, and followed up Oct. 14. Christianson responded to the second email saying Kraft Heinz no longer wanted to meet.
A union official told the State Journal on Thursday that the size and layout of the Madison plant could have been a factor.
Doug Leikness, president of United Food & Commercial Workers Union Local 538, also said Thursday he was told production employees wouldn’t lose jobs until at least July 2016.
About 250 office workers will have an opportunity to relocate to Chicago and work at Oscar Mayer’s new headquarters.
Leikness didn’t return a message seeking comment about the possible sale of the facility.
Walker fires back
Earlier Friday, Walker fired back at Democratic lawmakers who had criticized his administration for not contacting Kraft Heinz.
In a letter to Sen. Jon Erpenbach, D-Middleton, Walker said he would seek a meeting with Kraft Heinz officials and said the company’s decision means the affected workers “need our help and they need us to work together.”
A letter 14 Dane County Democrats sent him Thursday “appears to want to look for someone to blame,” he said.
The Democrats asked Walker’s administration to explain what steps WEDC took to keep the Madison plant competitive, especially because New York was able to retain three Kraft Heinz factories with $20 million in public assistance.
Walker also questioned why Soglin didn’t contact the state after telling Kraft Heinz city resources were available after the announcement of 165 layoffs at the plant in August.
“If Mayor Soglin was concerned about the possibility of losing jobs at Oscar Mayer after the August meeting, why did he not contact the state for help?” Walker wrote. “Local leaders across the state frequently contact my office and the staff of the Wisconsin Economic Development Corporation with requests for help with employers in their communities, and we work with them.”
In response, Soglin said, “They are the state economic development agency. They need to answer the question why they didn’t have the sensibility to understand what was going on.”
Erpenbach said Friday that Walker needs to examine the policies in place for handling potential layoffs of this size.
“If I’m Gov. Walker, obviously I do everything I can, but I would take a really close look at my policies and fix what isn’t working,” he said. “For Dane County, losing Oscar Mayer is like Green Bay losing the Packers ... To lose that without seeing any sort of lift from the state of Wisconsin as far as we know to say ‘OK Kraft, before you make a decision, let’s sit down and talk about this.’ ”
Erpenbach said he didn’t know if the state could have given Kraft Heinz the same deal they will see in Iowa, which includes $4.75 million in state incentives and $10 million in local incentives as the company downsizes its Davenport meat-processing operation from 1,400 to 475 jobs but builds a new facility.
“For Iowa, it’s a great deal. For the state of Wisconsin, I don’t know if it would have been a good deal or not,” Erpenbach said. “I don’t know if we could have competed with that kind of offer.”
Lt. Gov. Rebecca Kleefisch said in an emailed newsletter Friday that Kraft Heinz’s decision to shut down its plant in Madison represents a trend of less consumption of processed meat.
“There are active campaigns to encourage Americans to stop eating meat and studies say meat consumption is declining in the US. Couple that with last week’s declaration that processed meat causes cancer and you have a consumer trend that has dealt a huge blow to Oscar (Mayer),” she wrote. “No amount of Wisconsin Economic Development Corporation dollars could convince America to ignore the reports and reverse a course of declining demand to save this company’s Madison area facility overnight.”
Walker told reporters Thursday that WEDC had offered assistance to the company, which it later rejected. But a WEDC official later said the only state assistance offered was $194,800 in tax credits in 2013 to Kraft Food Group — before the merger with Heinz this year — for a $4 million investment in the Madison offices, which the company turned down in 2014.
U.S. Rep. Mark Pocan, D-Madison, said Friday he sought a meeting with Kraft Heinz officials in wake of the news, but was “turned down in just 77 minutes,” said spokesman David Kolovson.