Exit of ConAgra HQ more than a hit to Omaha civic pride

Oct. 2, 2015, 5:44 a.m. ·

ConAgra will move its headquarters from Omaha to Chicago. The move will cost Omaha more than 1,000 jobs. (Photo courtesy Flickr/Tyrone)

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The announcement that ConAgra will leave its longtime headquarters in Omaha and move to Chicago is a jolt to the state’s business scene. The company is known for popular brands like Hunt’s ketchup, Chef Boyardee, and Peter Pan Peanut Butter. It will begin moving its main office this summer.

More than a thousand ConAgra workers will soon be looking for new jobs, and Omaha will be looking for new businesses to move into the company’s riverfront campus.

A major deal ConAgra made in 2012 appears to have been a turning point for the company. ConAgra paid $6.7 billion for Ralcorp, a company that makes store brand foods, with the idea that they could sell their labelled and generic brands to grocers like Target or Walmart at the same time. Phani Tej Adidam, a professor of marketing and management at the University of Nebraska Omaha, said the benefits executives imagined never materialized.

“If they’re lucky, they might get $1.5-$1.8 billion for the sale,” Adidam said.

ConAgra has plans to sell Ralcorp and move its headquarters to Chicago in a bid to make the company more profitable.

For Omaha, it’s a loss of one of the city’s five Fortune 500 companies, a list that also includes Berkshire Hathaway, Union Pacific, Kiewit, and Mutual of Omaha.

“These are high paying jobs that are leaving Omaha,” Adidam said. Considering the city’s low unemployment rate – around 3 percent – freeing up ConAgra workers could help fill some open positions in the short term. The question, Adidam said, is how many jobs will fit the skills of the laid off employees, and how their new jobs will compare in salary and benefits. That will help determine how much the cuts hurt the overall Omaha economy.

Helping force some of the big changes at ConAgra are a group of activist investors from Jana Partners. The investment firm bought a stake in ConAgra and last summer was able to put two members on the company board. Both, Adidam said, were both former executives in the food industry.

“They want to see more value created for the shareholder, and I will never begrudge them that,” Adidam said. “Some activist investors also care for the other stakeholders, but most of them only care for themselves.”

The new board members pushed cost-cutting, in part to keep up with competing food companies like Kraft where investors were also pushing for mergers and cuts.

“So these activist investors, it is not part of their role to look at the social impact of what they’re doing,” Adidam said. “They’re mostly focused on the value impact on the shareholders.”