American legacy brand Kraft Heinz (KHC.O) is pouring $3 billion into improving its U.S. factories, marking the firm’s most significant investment in its manufacturing in a decade, according to Reuters.
The move comes weeks after President Donald Trump imposed sweeping tariffs on imports in early April. The upgrades aim to improve efficiency and reduce costs, a move that could help offset the impact of Trump’s tariffs, according to Pedro Navio, Kraft Heinz’s president of North America, who spoke with the outlet. The decision was announced as company execs say the firm is confronting slumping consumer confidence and it has slashed its sales and profits forecasts.
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The investment is expected to help Kraft Heinz bring new products to market faster, Navio said. The company operates 30 U.S. plants and produces staples like Heinz ketchup and Kraft mac and cheese. (RELATED: Chinese Companies Moving To Texas, Nevada To Avoid Trump’s Tariffs)
In March, Kraft Heinz told analysts that 10% tariffs on imports like coffee are driving up costs while economic uncertainty is dampening consumer demand. Trump’s tariffs imposed a 10% levy on imports the company uses, including coffee, but a spokesperson said the higher China tariffs have had a negligible impact on the firm.
The company said it North America unit saw revenue fall 7% to $4.5 billion for the period from January to March, according to The Associated Press. Despite these challenges, the company is moving forward with the $3 billion investment in U.S. plants, expected to create 3,500 new construction jobs, Reuters reported. Navio emphasized that the company doesn’t anticipate the need for additional staff beyond these new jobs.
He said Kraft Heinz is pushing forward with the investment to protect its market share. “It goes beyond just efficiencies or dealing with the current tariff challenges,” the president said, adding that the plan will allow the company to produce food over the long haul.
Almost all of Kraft Heinz’s products sold in the U.S. are produced domestically, with ingredients like tomatoes from California and potatoes from Idaho, according to Navio. He said the company also exports some U.S.-made goods to Canada. (RELATED: Business Giants, Foreign Countries Have Already Committed To Pouring Over $1 Trillion Into US Since Trump’s Return)
Kraft Heinz previously announced a $400 million investment into DeKalb, Illinois, for a new distribution center expected to create around 60 new jobs. The project is part of the broader $3 billion initiative, according to Reuters.
Kraft Heinz is one of several major companies looking to ramp up their American manufacturing. Kimberly-Clark, a facial tissue producer, and Anheuser-Busch InBev both announced significant investments May 12. Mars, a producer of candy and pet food, unveiled a new $450 million factory May 14 as a portion of a more than $6 billion infusion into U.S. production over the past five years.