ConAgra Foods Chief Executive Sean Connolly said that employees of the company would be informed next week about major changes — possibly including job cuts and Omaha’s status as the firm’s headquarters.
Connolly did not specify exactly when next week he would make his announcement of serious changes. But speaking at the Omaha-based company’s annual meeting Friday morning, Connolly said the answer is “likely yes” that there will be jobs lost, that some departments will be moved to other parts of the country and that there will be a greater concentration of workers in Illinois.
Suburban Chicago is where a big portion of ConAgra’s consumer foods division already works administering the unit responsible for brands such as Peter Pan and Reddi-wip. Connolly also lives in Chicago. He was named chief executive of the company in April.
ConAgra employs about 3,000 people between Omaha, Lincoln and Council Bluffs. How many of them will still be employed next week is the question now looming over them and their families.
Some solace: Connolly said Omaha “absolutely” will remain a sizable part of the company, and a “significant presence” will continue here. He didn’t say whether the headquarters would remain in the city. Omaha has been the company’s headquarters since 1922.
It is clear Connolly is trying to remake the company to amp up shareholder value by reducing costs. While good for stock owners, it will be the source of tension, headache and frank family discussion at the kitchen tables of ConAgra workers for the next week or so.
“I want to acknowledge the uncertainty about our future, particularly here in Omaha,” Connolly said at the annual meeting at the Joslyn Art Museum, speaking to an audience of about 100 people. “Change is often not welcome. But we are going to make this company into a winner, and that will require meaningful change.”
He continued by posing a series of questions to himself: Will there be job reductions? Will parts of the company shift to Illinois? Will there be a “geographic reshuffling” of departments?
“Likely yes,” was his answer in each case.
About Illinois, Connolly said: “Illinois is an important part of our history and will continue to be an important part of our journey. It is likely there will be some increase there.”
ConAgra employs about 400 people in the Chicago suburb of Naperville. It has been scouting for new offices in downtown Chicago capable of accommodating many more employees than that, according to news outlets in the area.
Any drama affecting Omaha occurs as part of a script written on Wall Street. ConAgra, with about $16 billion in annual revenue and almost 31,500 employees worldwide, has been seen as an underperformer in the packaged foods industry, with lagging profit margins, high expenses and stale brands.
Connolly, who has a history of turnarounds that include job cuts and the selling of entire companies, was brought in by the board this year to shape things up.
Part of that shape-up, he has said, is a comprehensive review of all departments and expenses. Connolly has said everything is on the table, including the designation of Omaha as the Fortune 500 company’s headquarters. Company products, which include Chef Boyardee canned pasta and Slim Jim meat snacks, also will be ruthlessly reviewed, he said Friday.
Omaha Mayor Jean Stothert has spoken with a ConAgra vice president twice about the company’s future in the city.
Stothert said on The World-Herald’s 10 Minutes with the Mayor that she’s heard “very little” from company officials amid a shakeup of its business. Stothert said company officials told her no decisions have been made; the last conversation came Tuesday.
“As far as I know, they have no plans to leave Omaha,” Stothert said.
When asked if she’s worried the company might leave Omaha, the mayor said: “I’m always concerned with every business in Omaha. I want every business to do well.”
Stothert said her role as mayor is to ensure that the city is attractive to businesses. That includes issues such as public safety, infrastructure and tax rates.
“Once a private business is here and established, of course we want them to do well,” she said. “But as far as the city or government’s involvement in a private business, you know, we don’t go in and tell the private business what to do.”
When it comes to the company overhaul, ConAgra CEO Connolly said brands that are laggards will either be fixed or sold, reflecting “the need to move on from them” if they aren’t up to snuff.
Connolly has wielded the pruning knife before. A consumer goods lifer, he has breathed new life into old brands at Sara Lee, Campbell Soup and Hillshire Brands. CEO of Hillshire was his last job before ConAgra, and in two years at the maker of Ball Park Franks he cut 1,100 jobs, closed a plant in Alabama and then engineered the sale of the entire company to Tyson Foods.
“I think he’s the real McCoy,” said shareholder Paul Burke, who traveled to Omaha from St. Louis for the meeting. “He’s sincere and articulate, and I think he can do it.”
Shares of ConAgra, which have risen about 17 percent so far this year, were up about 70 cents in late Friday morning trading, to about $41.76.