Kraft Foods Group Inc (NASDAQ:KRFT), said to be the Mondelez International Inc (NASDAQ:MDLZ) kin, recently announced that it will merge with H.J. Heinz Company (NYSE:HNZ) for creating a new company. The announcement of this new company came as nervous news to the people of Chicago and Pittsburgh, since it shall be headquartered in one of these two regions.
Effect on jobs
In Pittsburgh, the deal will result in slashing the jobs of Heinz employees. The company has been condensing the local employment opportunities in this area since more than 20 years. After Heinz was acquired by Brazilian 3G Capital Partners LP in 2013, more than 350 office jobs were removed. This left approximately 800 people of this company in Pittsburgh without jobs.
While, it is still not known whether the headquarters of new company shall be formed in Pittsburgh or Chicago, by the plans of layoffs will not be discussed right now. However, it is most likely that the deal will create a tiff between Chicago and Pittsburgh for jobs. Kraft is headquartered at present in Chicago.
Chicago with an edge of being agro and food-based companies’ headquarter
Out of the two locations, Chicago clearly has an edge because of being located in the center. Also, it has more and better connectivity through air transport. Also, the newly formed company might choose this location because it is a hub of most of the agro-based and food-based companies. Mondelez International Inc is also situated in Chicago, apart from McDonald’s Corporation (NYSE:MCD). Apart from this, Archer Daniels Midland Company (NYSE:ADM) shifted its headquarters from Illinois to Chicago in 2014.
But, Pittsburgh comes with its own shares of advantages. It has lower housing costs, which in turn, creates an impact over the salaries and retention of the employees. The price of a medium home in Pittsburgh’s metro area is $125,000, in sharp contrast with Chicago’s $183,000.
The two companies forming the merged company however said that, the two areas will share responsibilities.