Kraft refuses to discuss $114m Columbia expansion, with up to 150 job losses

09-Jul-2015 - Last updated on 10-Jul-2015 at 14:02 GMT

Picture credit: Columbia Missourian TAZ LOMBARDO/MISSOURIAN

Kraft Foods is allegedly seeking a 75% property tax break for 10 years on a $114m investment in equipment and infrastructure at its Columbia, Missouri, US, plant, downsizing from 500 to about 350 employees.

The Columbia Daily Tribune reported the Columbia Board of Education and Boone County Library Board met recently to approve their respective representatives on the Chapter 100 Taxing District Review Panel to approve Kraft's application for Chapter 100 bonds.

25,000-square-foot expansion

Chapter 100 of Missouri Revised Statutes is an economic development tool that allows counties, including Boone County, to issue bonds for business expansions but when FoodProductionDaily contacted Kraft to discuss the expansion, a spokesman said: ‘Kraft Heinz has no comment.’

According to the Tribune, the total proposed investment by Kraft is $113,800,000, which includes a 25,000-square-foot expansion of its plant, which makes Oscar Mayer hot dogs, the infrastructure and equipment.

Dave Griggs, chairman, Regional Economic Development Incentive Subcommittee, claims the project will be completed in 2017 and the 75% abatement would only apply to the real and personal property associated with the investment.

H. J. Heinz Co. recently bought Kraft Foods Group, and Kraft Heinz is allegedly asking local authorities for tax breaks on more than $100m in technology upgrades.

Kraft Heinz will make annual payments on the bonds

According to the Missourian newspaper, between 2017 and 2027, the Oscar Mayer factory will pay 25% of the personal property tax and real estate tax on its agreed-upon new equipment and work space.

Boone County will secure bonds to pay for the upgrades; and over the next 10 years, Kraft Heinz will make the annual payments on the bonds. Until the company pays off the bonds, the new assets will belong to the county.

The company's tax rate on existing facilities will not change.

It claims, the Oscar Mayer plant, officially called Columbia Foods, employs about 500 people across 400 full-time-equivalent positions, and according to Kraft Heinz it wants to install more automated machines, which would enable the plant to downsize.

The bonds, called chapter 100 bonds, are for industrial development and don't need to pass a public vote because they don't accrue public debt.

If the representatives agree to endorse the deal, two public hearings will be held. After that, the Boone County Commission will vote to finalize the proposal.