Additionally, about 1,400 employees will be furloughed.
The announcement was made just weeks after Blue Bell Creameries announced that it would be closing all three of its creameries in Texas, Oklahoma and Alabama for intensive cleaning and employee training in response to listeria illnesses linked to its ice cream.
Kruse said Friday that cleaning and improving Blue Bell's production plants would take longer than was originally expected, particularly at the Brenham plant.
Employees "who are essential to ongoing operations and cleaning and repair efforts" will still work, but at a reduced pay rate. Employees placed on a partially-paid furlough will receive part of their current pay and will be expected to continue working when production begins again.
"The agonizing decision to lay off hundreds of our great workers and reduce hours and pay for others was the most difficult one I have had to make in my time as Blue Bell's CEO and President," Kruse said in a statement on Blue Bell's website. "At Blue Bell, our employees are part of our family, and we did everything we could to keep people on our payroll for as long as possible. At the same time, we have an obligation to do what is necessary to bring Blue Bell back and ensure its viability in the future. This is a sad day for all of us at Blue Bell, and for me personally."
The company will also stop operations and lay off employees at distribution centers in Phoenix and Tucson; Denver; Indianapolis, Indiana; Kansas City and Wichita, Kansas; Louisville, Kentucky; Albuquerque, New Mexico; Las Vegas, Nevada; Raleigh and Charlotte, North Carolina; Columbia, South Carolina; and, Richmond, Virginia.
The layoffs will be 37 percent of Blue Bell's total number of 3,900 employees.
Kruse said there is no estimated time as to when Blue Bell production will begin production again.
The Associated Press contributed to this report.