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ConAgra is moving HQ from Omaha, cutting 1,500 jobs

ConAgra is moving HQ from Omaha, cutting 1,500 jobs

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ConAgra on Thursday announced what Omaha leaders had feared: It is moving its headquarters to Chicago.

The producer of food brands including Chef Boyardee, Healthy Choice and Peter Pan said it will move the company's senior leadership team and certain functions of its consumer foods business from Omaha to Chicago next summer.

That likely will take some of the shine off of Omaha's corporate image, as ConAgra is one of five Fortune 500 companies that calls the city home and has had its headquarters in Omaha since 1922.

Civic and business leaders have acknowledged that the loss of ConAgra's headquarters will be a blow to the region. Gov. Pete Ricketts and Omaha Mayor Jean Stothert had been in talks with ConAgra about incentive packages to keep it in the city.

"I feel like we went to bat for them," Stothert said. "I'm very disappointed that they are leaving."

Illinois Gov. Bruce Rauner offered a package of tax incentives as well, but company officials and observers have said the move had nothing to do with taxes.

ConAgra CEO Sean Connolly said it "was solely based on the strategic needs of our business and was not a city-vs.-city exercise."

Connolly, who lives in the Chicago area and was hired in April to help turn ConAgra around, said the move will help the company attract and retain talent and also allow it to focus on innovation and building its brands.

Bigger than the loss of prestige for Omaha will be the loss of jobs.

ConAgra said it plans to cut 1,500 office-based positions, or 30 percent of its total corporate and administrative staff, worldwide. The jobs being eliminated are primarily redundant positions or jobs that will be outsourced, ConAgra said Thursday.

The company said about 1,000 of those job cuts will be in Omaha. The city also will lose another 300 or so jobs that are being moved to Chicago.

ConAgra said it will retain about 1,200 employees in Omaha doing administrative functions, research and development and supply chain management. About 1,800 people now work at the company's riverfront campus in Omaha, and another 1,200 or so work elsewhere in the Omaha area and in Lincoln.

The company said it will not cut jobs at any of its production plants, meaning the 100 or so workers at ConAgra-owned Lincoln Snacks should be safe for now. On Wednesday, ConAgra officials confirmed that plans for a food research facility at Nebraska Innovation Campus will move forward.

ConAgra has been under pressure to improve its profitability after its failed acquisition of Ralcorp, the private-label foods business it paid $5 billion for in 2012. In June, ConAgra said it will sell the business.

ConAgra reported a first-quarter loss of $1.2 billion last month.

The changes announced Thursday should create about $200 million in cost savings, with more than half of that realized by the end of fiscal 2017, according to ConAgra. The balance should be achieved in the following year. The company said the savings are in addition to approximately $150 million in cost cuts over the past two years. It anticipates the plans giving a "modest benefit" to fiscal 2016 earnings.

Connolly is trying to sculpt a leaner company that can develop new products to satisfy consumer tastes more quickly while generating healthier profits.

The American palate has shifted rapidly in recent years, with consumers seeking foods that are less processed and more healthy.

ConAgra was founded in 1919 and moved to Omaha in 1922. It developed its headquarters complex of five office buildings and parking along the Missouri River after threatening in 1986 to leave for Tennessee.

At that point, Nebraska approved a package of tax incentives and exemptions to keep ConAgra in Omaha, and the city demolished the historic Jobbers Canyon warehouse district to make way for the headquarters.

ConAgra plans to continue using its sprawling Omaha campus, but after the cuts are made some of the space might be leased to other businesses, company spokeswoman Lanie Friedman said.

The Associated Press contributed to this report.

Reach the writer at 402-473-2647 or molberding@journalstar.com.

On Twitter @LincolnBizBuzz.

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Business editor/reporter

Matt Olberding is a Lincoln native and University of Nebraska-Lincoln graduate who has been covering business for the Journal Star since 2005.

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