Things are going to get tougher at work, and people had just better get used to it.

“When innovation and the market system interact to produce efficiencies, many workers may be rendered unnecessary, their talents obsolete,” Berkshire Hathaway Chairman and Chief Executive Warren Buffett wrote Saturday in his much-anticipated annual letter to shareholders.

“Some can find decent employment elsewhere; for others, that is not an option.”

The Oracle of Omaha — the third-richest man in the world, renowned as a folksy yarn-spinner on all matters financial — wrote in the letter Saturday that cost-cutting and strict economies across corporate America are crucial to the economic well-being of the nation.

Buffett wrote that rooting out duplication and sloth are two of the main contributors to a standard of living that is six times greater than that of John D. Rockefeller — the richest man alive when Buffett was born in Omaha in 1930.

Despite his riches, Buffett wrote, Rockefeller could buy neither a flat-screen television nor a personal computer. (Of course, neither existed then — although Rockefeller presumably had at his disposal whatever entertainments he fancied.)

As for the rest of the world? They had better buckle down, said the letter, widely read throughout the worlds of corporate and government finance.

For about six pages out of the 30-page letter, Buffett extolled the virtues of productivity, singling out Brazilian investing partner 3G Capital, with which he teamed in 2013 to buy ketchup giant H.J. Heinz, which then closed seven plants and slashed 5,100 jobs.

“Their method, at which they have been extraordinarily successful, is to buy companies that offer an opportunity for eliminating many unnecessary costs and then — very promptly — to make the moves that will get the job done,” Buffett wrote of the leaders at 3G Capital. “Their actions significantly boost productivity, the all-important factor in America’s economic growth over the past 240 years.”

Such words ring true — and painful as a ball-peen hammer to the knee bone, to some — in Omaha. Zero-based budgeting, a favorite of 3G Capital that requires the re-justification of every expense every year, has been instituted at ConAgra Foods, the giant Omaha food manufacturer that last year said it was cutting 2,500 jobs — 1,000 in Omaha — and moving the headquarters to Chicago in a bid to better compete with Buffett’s Kraft Heinz and other big food companies, which also have adopted the tough 3G budgeting principles.

Buffett strongly advocated such efficiency-making and cost-cutting in the letter.

“Earlier, I told you how our partners at Kraft Heinz root out inefficiencies, thereby increasing output per hour of employment,” Buffett wrote. “That kind of improvement has been the secret sauce of America’s remarkable gains in living standards since the nation’s founding in 1776.”

Berkshire Hathaway joined forces with 3G Capital in 2013 to buy H.J. Heinz for $24 billion, with Buffett contributing half, leaving 3G to run the company, which later merged with Kraft Foods to form today’s Kraft Heinz. Berkshire owns 27 percent of the combined company.

But even before the combo, a very strict regimen was instituted at Heinz by Buffett partner 3G Capital.

An August 2013 memo obtained by Bloomberg News outlined the new procedures. Printing was limited to 200 pages a month per employee and color was reserved for only those pages to be seen by customers. The monthly office supplies allowance was set at $15 per head and mini-refrigerators at workers’ desks were banned.

That year, fiscal 2013, Heinz had a profit of $1 billion. Still, the company is trying to wring out another $1.5 billion of costs by the end of next year.

Saturday, at the same time he praised his new Brazilian investing partners, he also contrasted his methods with theirs.

“Jorge Paulo and his associates could not be better partners. We share with them a passion to buy, build and hold large businesses that satisfy basic needs and desires,” Buffett wrote of the leaders at 3G Capital, which also owns Canadian dining chain Tim Horton’s. “We follow different paths, however, in pursuing this goal.”

He said when Berkshire buys companies itself — as opposed to the joint venture it’s embarked upon with 3G — it looks for those that already are well-managed and running lean; it doesn’t need to come in and make massive cuts, it just needs to sit back and let good managers do their thing.

Andy Kilpatrick, a Berkshire shareholder and author of the multivolume Berkshire corporate biography “Of Permanent Value,” said that in singing 3G’s praises in his Saturday letter, Buffett seems to be saying, “I don’t think this is the way to do it, but it is OK if someone else does it.”

David Kass, a business professor at the University of Maryland and a Berkshire Class B shareholder, said 3G and Berkshire have clearly different business models but share one trait: They buy and plan to hold long term, as opposed to private equity firms, which enact wholesale changes to wring out profits and then sell quickly at top dollar.

“Berkshire does things differently than 3G,” Kass said. “But Buffett is saying that he is proud to be their financing partner.”

Buffett said 3G is set to have a wide-open smorgasbord of American companies with which to work its particular form of magic.

“Without more output of desired goods and services per working hour — that’s the measure of productivity gains — an economy inevitably stagnates,” Buffett wrote. “At much of corporate America, truly major gains in productivity are possible, a fact offering opportunities to Jorge Paulo and his associates.”

Berkshire, Buffett wrote, plans to be front and center when 3G calls, “either as a financing partner ... or as a combined equity-and-financing partner.”

Still, all the productivity engendered by 3G-style belt-tightening does produce losers, Buffett acknowledged in the letter. And in recent years, he said, gains in productivity have “largely” benefited the wealthy. Workers, meanwhile, can pay a “terrible price,” he said.

That doesn’t mean enhanced productivity isn’t good or necessary, he said. It means “a variety of safety nets” must be in place. He said he favors expanding the earned income tax credit.

In the end, there is a dichotomy in free-market economics, said Ted Bridges, principal at Omaha’s Bridges Investment Management, whose $1.8 billion under supervision includes Berkshire shares.

“Capitalism doesn’t have equal results,” Bridges said, referring to anyone’s individual job, income or social status. “But it does lift everyone’s standard of living.”

Berkshire Hathaway Inc. owns the Omaha World-Herald

Contact the writer: 402-444-3197,

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