OMAHA, NEBRASKA, U.S. — ConAgra Foods Chief Executive Officer Sean Connolly’s plan to reinvent the company continues to take shape. The company has announced plans to lay off 1,500 office-based employees around the world and move its headquarters from Omaha, Nebraska, U.S., to Chicago, Illinois, U.S. The restructuring effort will not affect manufacturing plant positions and is in addition to the changes that will take place when the company divests its Private Brands business unit.
The layoffs will include approximately 30% of ConAgra’s office-based workforce. The company said it will achieve an estimated $200 million from a combination of lower headcount and non-headcount costs, which will be achieved by using zero-based budgeting, simplifying the company’s organizational structure, and outsourcing technology and internal office functions to improve scalability. The company also said it expects to realize an estimated $100 million in efficiency benefits from improvements to its trade spend processes and tools.
Beginning in the summer of 2016, approximately 700 employees will be located to new offices in Chicago’s Merchandise Mart, including the company’s senior leadership team and certain functions of the Consumer Foods business, which are currently located in Omaha and Naperville, Illinois. The company will continue to maintain a presence in Omaha, including approximately 1,200 employees within administrative functions, as well as research and development and supply chain management.
“Today’s announcements are important milestones as we continue to execute against our strategic plan to build a focused, higher-margin, more contemporary and higher-performing company,” Connolly said. “We are making difficult, but necessary, decisions to enhance productivity, drive standardization and enhance flexibility to deliver improved profitability. And through our organization redesign, we will better harness the power of our front line by deploying our talent against our largest opportunities for future growth and value creation.”
Connolly added that moving ConAgra’s headquarters to Chicago will improve its ability to attract and retain “top talent with a focus on brand building and innovation.”
“Importantly, we will also retain a major presence in Omaha, where we have deep roots,” he said. “Together with our new efficiency plan, we believe this geographic rebalancing will serve as a catalyst for improved organic and inorganic growth, and ultimately, stronger value creation for our shareholders.”
The company expects the plan to provide a modest benefit to fiscal year 2016 earnings. More than half the savings are anticipated to be realized by the end of fiscal year 2017 with the balance achieved in fiscal year 2018. ConAgra estimates it will incur total non-recurring charges of approximately $345 million, substantially all of which are expected to be cash charges, over the next two to three years in connection with the restructuring.