State awards $4.75 million to downsizing Kraft Heinz

DES MOINES - Iowa's state economic development board on Thursday approved nearly $5 million in financial assistance for Kraft Heinz, which is closing one food manufacturing plant in Davenport and building a new one there amidst a company-wide downsizing that will result in a net loss of 2,600 jobs across North America.

The Iowa Economic Development Board approved the state incentives Thursday at a special meeting.

Kraft Heinz announced Wednesday its plans to move operations to a new $203 million facility in the Eastern Iowa Industrial Park in north Davenport.

Roughly 1,400 workers are employed at the current facility, according to a January company estimate.

The company expects to retain a minimum of 475 jobs at the new facility, although state economic development officials said that number could increase to more than 500.

The state assistance package includes:

' A $3 million forgivable loan for demolishing the old plant and preparing the site for future development.

' A $1 million tax refund toward building the new facility.

' A $750,000 research and development tax credit.

The city of Davenport is contributing an estimated $10 million over 15 years through tax increment financing.

Debi Durham, executive director of the Iowa Economic Development Authority, said it was her understanding that Kraft Heinz also had been considering Missouri for its new plant and the incentives were needed to keep Kraft Heinz operations in Iowa.

Durham said maintaining at least the 475 jobs was 'better than nothing.”

'Will I take this deal any day? You bet,” Durham said. 'This is a future play. This is a legacy play. And I feel good about what we did here today.”

Durham said when Kraft Heinz merged, her office contacted the company to work on keeping it in Iowa.

'They made it very clear that they were going to close the facility in Davenport,” Durham said. 'They made it very clear that they're going to build a new facility. It was not clear that that would be Iowa or in Davenport.”

Durham said she is aware of the potential negative perception of providing state-funded financial assistance to a company that is downsizing its workforce both in Iowa and nationally.

'The optics are not lost on us, and believe me, the sensitivity is not lost on us. We care about people,” Durham said. 'So we do the plays that we believe give us the greatest opportunity for the future, and I think that was what you saw here today.”

Durham said offering financial assistance to a company that is downsizing is not unique and could become more common as more large companies merge.

'We're going to see more of this,” Durham said. 'You're seeing large mergers going on at a very high level between equals. And any time that happens and we have facilities, that's something to watch for us.”

Representatives of the city of Davenport and Quad-Cities Chamber of Commerce attended Thursday's meeting and supported the state incentives.

'You worry about the loss (of jobs), but hopefully, that can be minimized,” said Bruce Berger, director of community planning and economic development for the city. 'But we're excited about the opportunity.”