Gov. Scott Walker’s economic development agency made no contact with Kraft Heinz as other states did in the months leading up to the company’s decision to close its Oscar Mayer headquarters in Madison.
But it’s unclear whether it would have done any good. A local economic development group made two contacts seeking to meet with the food conglomerate’s top executives after a merger between Kraft and Heinz was announced in March, but wasn’t able to schedule a meeting. And Madison Mayor Paul Soglin told local Oscar Mayer executives in August after 165 layoffs were announced that city resources were available, but the company never sought assistance.
“We were led to understand that there may be more corporate changes,” Soglin said in an interview Thursday. “It’s at that point that we said, ‘We are available. You contact us. You let us know what the company needs to be happy in Madison. I can’t give you a blank check … but we want you here. We need to know if there’s anything going on and if there’s anything we can do to make this the best place for Oscar Mayer.’”
Soglin said the city never sought help from the Wisconsin Economic Development Corp., the state agency Walker created to help create and retain jobs.
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.
By contrast, officials in Iowa and New York announced incentive packages this week to keep some Kraft Heinz production in their states.
The company announced Wednesday it is closing its Oscar Mayer headquarters on Madison’s East Side and cutting 1,000 jobs by early 2017, part of a nationwide restructuring that will cut 2,600 positions nationally.
It had previously announced it was laying off 165 non-union Madison employees in August, but Walker and local officials have expressed surprise at the decision to close the nearly 100-year-old plant.
Walker said his office learned about the closure plans Wednesday along with the city of Madison and Dane County.
“It has nothing to do with Wisconsin,” Walker said. “It has everything to do with a corporate decision that was made by the merger of those two companies.”
Soglin said he met with Oscar Mayer officials multiple times between 2011 and 2014 to discuss the company’s future, but the state could have done more after the merger and layoffs in August.
“I think all of the work I did or any of us did prior to 2015 was valuable, but once the merger took place there has to be another contact to make sure they know we want to be in the discussion,” Soglin said.
Fourteen Democrats who represent Dane County sent a letter to WEDC and Walker asking the administration to explain what steps WEDC took to keep the Madison plant competitive, especially in light of news Wednesday that New York was able to retain three Kraft Heinz factories with $20 million in public assistance.
“When an employer of this size chooses to leave a community, it has a significant impact,” the Democrats wrote. “Our constituents deserve to know that the state of Wisconsin did everything it could to prevent this from happening.”
The Madison region’s local economic development agency, which works with WEDC but is not directly tied to the quasi-public state agency, made two unsuccessful attempts to meet with Kraft Heinz leaders after the company’s merger and even appointed an Oscar Mayer executive to its board in an attempt to divine the fate of the company’s Madison operations, an official said.
But Kraft Heinz didn’t express interest in working with local officials to keep the Oscar Mayer headquarters on Madison’s East Side, according to Paul Jadin, executive director of the Madison Region Economic Partnership (MADRep).
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“Every major company knows they could approach a state and squeeze money out of them,” Jadin said. “But that’s not a dialogue that was entertained at any time (with MADRep).”
Jorge Cardona, the former Oscar Mayer executive who joined the MADRep board in June, said he never had a chance to speak with Kraft Heinz leaders before he was laid off in August.
“I don’t think wild horses could have kept Oscar Mayer in Madison, regardless of whether anyone spoke to them or not,” Cardona said.
In Iowa, meanwhile, Kraft Heinz is poised to receive $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, according to the Quad-City Times. The deal involves the construction of a new facility in Davenport.
Republican Gov. Terry Branstad and Iowa Economic Development Authority director Debi Durham met with Kraft Heinz executives in May, according to authority spokeswoman Tina Hoffman. Local Quad Cities economic development officials were also in communication with the company about plans for Davenport, and asked the state for assistance once it became clear what options were on the table.
“We’re kind of hitting it on all fronts, making sure companies are aware that we’re appreciative with their investment in our state and that we’re positioning ourselves for future growth,” she said. “We absolutely knew we were in competition with other locations for this.”
New York put together a $20 million incentive package to retain 1,000 jobs at three Kraft Heinz plants that were threatened with closure. Gov. Andrew Cuomo and Sen. Chuck Schumer, both Democrats, announced the deal Wednesday. Their offices didn’t respond to interview requests Thursday.
Spokesmen for Wisconsin Sens. Tammy Baldwin, D-Madison, and Ron Johnson, R-Oshkosh, said their offices hadn’t contacted Kraft Heinz prior to learning about the Oscar Mayer closure Wednesday.
WEDC first learned of the decision to close the facility Wednesday and Deputy Secretary Tricia Braun spoke to a company official that afternoon, WEDC spokesman Steven Michels said. “WEDC asked if anything could be done to reverse or delay this closure,” Michels said. “Kraft indicated their decision followed an in-depth analysis of their global operations and was final.”
Walker spokeswoman Laurel Patrick said Thursday that a representative of Kraft Heinz contacted the governor’s office in early October to request a meeting “and our office immediately responded to schedule that meeting.” But the company cancelled later that month, she said.
Going forward, she said, the governor is focused on “working with local officials and the Department of Workforce Development to connect affected workers with other potential employers as well as a variety of services that include job training and job search assistance.”
“The decision to close seven plants across the country (the majority of which are in states run by Democratic governors) and their decision about when to notify local officials is a question for the company,” Patrick wrote in an email.
Merger a tip off
Jadin, who formerly served as WEDC CEO, said the state typically relies on local communities and economic development agencies to be the “boots on the ground” when it comes to conducting regular business retention and expansion checks, and that MADRep did so with Oscar Mayer.
The announcement in March of the merger between Kraft and Heinz was the signal for his organization to make additional contact with the new company about Oscar Mayer, he said. The impression he got from the company was “don’t call us, we’ll call you,” Jadin said.
“This isn’t a situation where we’re camping out at their doorstep trying to get an audience,” Jadin said.
Scott Manley, vice president of government relations for Wisconsin Manufacturers & Commerce, said he wasn’t aware of any attempt by the state chamber of commerce to reach out to the company.
The Associated Press contributed to this report.