NEW ULM — After a restructuring and automation upgrade three years ago that cut 90 full-time employees at Kraft’s New Ulm facility, many were concerned about the plant’s future. When Heinz, backed by Warren Buffet, bought Kraft last year, there were more worries as the new owners looked to reduce the number of Kraft plants and employees.
So news that Kraft is set to invest $100 million in New Ulm, adding new production lines and products and an additional 50 employees, brought relief to the community of 13,200.
“Things are always changing and you never know how they’ll shake out, so to see Kraft make an investment like this feels really good,” said Audra Shaneman, executive director and president of the Chamber.
“Food manufacturing is a definite part of our economic base and a stable part of it. It provides good jobs and a great community presence. So we’re thrilled.”
Under a plan approved by the City Council this week, New Ulm will apply for state funding of $450,000 from the Department of Employment and Economic Development’s Minnesota Investment Fund to assist Kraft.
The city must come up with a match of $113,000. Plans are for the city to donate a four-acre piece of land that abuts the Kraft plant, giving it space for a small expansion of the building. The state will have to approve of whether the land donation will meet the city’s matching obligation.
Kraft hopes to have the five new production lines running by the end of 2017.
Brian Tohal, the city’s economic development coordinator, said the investment not only promises to add 50 new jobs but will save 90 existing jobs. “Kraft apparently lost a contract, so if nothing was done here, we’d lose 90 jobs. So it’s thrilling to see this kind of investment. We’re blessed.”
With 376 employees, Kraft is the city’s third largest employer after 3M and the medical center.
Tohal said Kraft officials have said they will be bringing back production of Velveeta to New Ulm. That production had been moved to another plant in the 2012 restructuring. “They’re also adding some new products to Kraft, but they haven’t identified those.”
Tohal said he believes Heinz-Kraft decided to invest in New Ulm while it was cutting in other communities was for one main reason. “Kraft has always said that this is a very efficient workforce here. Their cost to produce per unit is one of the lowest in the company. So I think it’s the employees that are the value.”
Beyond the expected state funds and land donation, the city will also use an existing program to provide $700 in cash to Kraft for each new employee they hire. “Very few communities do that. We think it gives us a competitive advantage,” Tohal said