Tags: warren buffett | berkshire hathaway | 3g | job cuts

Buffett Defends 3G Job-Cutting Approach as 'Part of Capitalism'

Wednesday, 01 Apr 2015 06:55 AM

Billionaire investor Warren Buffett defended the job reductions that his partners at 3G Capital have taken when they buy businesses including ketchup maker H.J. Heinz Co.

“It’s certainly a part of capitalism that if you have excess employees — or excess costs of any kind — that you don’t perpetuate those,” Buffett said Tuesday in an interview on CNBC. “Having excess costs is not a recipe for success in any business, unless you have a monopoly, and you certainly don’t have it in food.”

3G, co-founded by Brazilian billionaire Jorge Paulo Lemann, eliminated more than 7,000 positions in 20 months after taking over Heinz with Buffett’s Berkshire Hathaway Inc. The cuts extended from the management ranks to the factory floor, as the ketchup maker announced plans to shut five plants and offered buyouts to staff in its hometown of Pittsburgh.

Heinz said last week that it was merging with Northfield, Illinois-based Kraft Foods Group Inc. with backing from 3G and Berkshire. The combined company will seek to cut costs by $1.5 billion annually by 2017. Berkshire provided capital for the deals and 3G manages operations.

Buffett said the 3G model differed from private equity, because Lemann’s firm is much more long-term. 3G intends to expand businesses over time, he said.

“They buy to keep,” Buffett told the business-news network. “They are all about building businesses, but they’re also about building efficient businesses.”


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Billionaire investor Warren Buffett defended the job reductions that his partners at 3G Capital have taken when they buy businesses including ketchup maker H.J. Heinz Co.
warren buffett, berkshire hathaway, 3g, job cuts
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2015-55-01
Wednesday, 01 Apr 2015 06:55 AM
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