Theodore's World: Jalapeno chocloate, anyone?

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June 10, 2007

Jalapeno chocloate, anyone?




Hershey's Move To Mexico

OAKDALE, Calif.

On a warm May weekend in this Central Valley town, the irony was thick.

As usual, the annual Chocolate Festival was drawing hordes of fun-seekers. But Hershey Co., Oakdale's biggest employer and the nation's biggest candy company, is closing its plant here, eliminating all 575 jobs. The company will open a factory in Monterrey, Mexico, to handle the production.

One man at the festival wore a T-shirt that said on the front: "Where did 'the great American candy bar' go?" Asked for the answer, he whirled around to display the back: "Mexico!"

For Hershey workers in Oakdale, globalization is no longer an abstraction.

Like many Americans, they suddenly face questions as immediate as how to make a living and as far-reaching as whether 20th-century manufacturing skills will count for much. Production at the plant here is to be phased out by the end of the year.

When she heard the news, Mabel McNaught, a school custodian, wondered how her family would recover. Her husband, Philip, 50, is a forklift driver at the plant, and she figures that finding another job nearby with similar pay and benefits won't be easy. "I was devastated," she said. "I just started crying."

The 113-year-old company has described the plant shutdown as part of a "global supply-chain transformation." Overall, about 3,000 of Hershey's 13,000 workers will lose their jobs, including as many as 900 in the company's hometown of Hershey, Pa. By 2010, Hershey says, the moves will save shareholders as much as $190 million annually.

"The financials are compelling," chief executive officer Richard H. Lenny told a meeting of market analysts in February, saying labor costs in Mexico are 10 percent less than in the United States.
Asked about the negative publicity that would come with the plant closures, he said the decisions were "gut-wrenchingly difficult - but in the best interests of the business."

Hershey has been an Oakdale fixture since 1965. Over the years, the plant on the edge of town has churned out nut-studded chocolate bars and uncounted millions of chocolate Kisses.

At times, the community of 18,000 is infused with the scent of chocolate, although it competes with the aroma of tomato sauce from the ConAgra processing plant down the road.

This month, the company lowered its projected 2007 earnings, citing high dairy prices. And, like other domestic candy companies, Hershey complains about government agricultural supports keeping the price of sugar at least double the level in foreign markets.

"The candy business has been laboring under this burden for a number of years," said Ray Jones, a director at Dechert-Hampe, a marketing consultant specializing in candy and confections.

In addition, Hershey has old plants that are tough to overhaul - "inefficient legacy infrastructure," in the words of Lenny, the chief executive. The company sees lucrative markets in places such as China, where it has introduced green-tea-flavored Kisses, and in Mexico, where it plans to feature "locally relevant nut flavors" in its Reese's Peanut Butter Cups.

"None of that is good news for Oakdale", said Jones, the marketing consultant.



Wild Thing's comment...........

Another American “institution” down the drain. Mexico isnt known as the cleanest place in the world. I dont want a Chocolate bar from there. If they keep on sending jobs to Mexico why do we still get the illegals from Mexico?!?!?

I have been opposed to NAFTA and all the similar crap for years and years;not that ANY of the politicians cared.

Posted by Wild Thing at June 10, 2007 12:50 AM


Comments

What's wrong with green chocolate bars? Chocolate covered...worms too? - Boycott Mexico!

Posted by: darthcrUSAderworldtour07 at June 10, 2007 06:25 AM


I know they want to save money, but the workers are here illegally. Do they want us to run the border to get the jobs back?
But companies have been doing this for years! Moving companies to countries to get cheap labor.
I guess I'll have to boycott hershey's. And I love their Special Dark candy bar!

Posted by: Lynn at June 10, 2007 06:38 AM


All our industries are going to Mexico but for some reasons, Mexicans are coming here to work. How do you figure that?

Visit any auto parts store and ask them to take you on a tour of "hard parts". Those are the parts you must have to make your car go: brakes, rotors, suspension, alternators, starters, radiators, water pumps, batteries, internal engine, ignition, etc. You will see that approximately 85% of these parts come from Mexico. The other 15% come from China. With all these parts being produced by workers making top dollar of $5.00 per hour, you would think these parts would be dirt cheap but they're not.

Posted by: BobF at June 10, 2007 09:34 AM


I am confused about this article. Here in ,Deliverence, Pennsylvania, I live about 70 minutes from Hersey Pennsylvania, we took the Mother-in-Law to visit the plant last year.

The plant is still functioning, and they have added new buildings, and the Amusement park is still going strong.

We visited the same plant about 30 years ago and took the tour, and when done each kid and adult were given a huge bag of chocolate bars and other goodies. This time however, we each got a 'Kiss' and that was it.

So something sure has changed. I didn't know there was even a Hersy's in California, and they are moving ?

What we should do is make California part of Mexico, afterall that is what LaRaza wants, is to re-acquire the southwest back to Mexico and they can hire all the Illegals they want and pay them third world wages. That way the elites can see what it is really like with Bush's Browns living 5 families in a single family dwelling.

This is nuts.

Posted by: Mark at June 10, 2007 10:37 AM


Boycott if ya want, but remember, "No chocoloate, pretty soon die."

Posted by: Rick at June 10, 2007 11:51 AM


"The financials are compelling," chief executive officer Richard H. Lenny told a meeting of market analysts in February, saying labor costs in Mexico are 10 percent less than in the United States. By 2010, Hershey says, the moves will save shareholders as much as $190 million annually." Great press hype that only addresses the labor costs.

Labor costs are always of concern, 10%, lets get realistic. Did I mention trade union demands? Lets' also look at environmental constraints, onerous taxation, and the litiginous society of the NIMBY's that doesn't allow for any growth or expansion. The truth is, like industry in Washington State, the Socialists have driven it offshore, the goose that lays the golden egg has flown away, not so much from corporate greed than the incessant greed of Socialism and its strangling demands on industry and business.

Most folks don't stop to think that businesses that large are rarely privately owned, but in the hands of stockholders. Those shareholder's don't care if you're making chocolate chips or sheepshit, as long as they make a profit, a company's quality assurance, product or employee loyalty are meaningless (I've been downsized twice) and there is precious little you can do about it.

It's all about short term profits and share dividends in the stock market. Something to think about when you block a business expansion, boycott a Wal-Mart, rail against that refinery, bash the oil company or demand they supply your public utilities, they'll simply leave your ass holding the bag for greener pastures.

Boeing relocated because Seattle's King County was too restrictive, I-5 too crowded and the Port too costly for Boeing to transport and build it's jumbo jets in an environment that was unfriendly to business, Olympia Brewery walked away from it's brewery in Olympia, Wa. after it's operating permit was squeezed to upgrade the city's water and sewer system along with that of the ajacent city of Lacey.

Smart moves on the part of the Socialists, major losses to their tax bases and local jobs. We are fast becoming a debtor nation without any industrial base or natural resources, we'll be like Japan was before WWII, except we won't be able to afford even a paper house.

When you shop do you look at the origin of the product you purchase? I do, and it worries me.

Posted by: Jack at June 10, 2007 02:21 PM


I really like Jack's explanation. Trade unions did as much as anything to kill the American steel business and textiles. Environmental and tax policies by American municipalities also contribute to business relocation.

It bothers me. I hate to buy non American. However almost everything now seems foreign manufactured, mostly Chinese made. I recently had to buy bandages for a wound. So I bought some Curity and Johnson-Johnson. All were made in China. My Sony laptop, made in China. My Kodak camera, Chinese made. My Chevy truck assembeled in Mexico, my Ford truck made in Canada. What does an American do??

But my stock portfolio is lighting up like a shuttle launch with profits and dividends.

Posted by: TomR at June 10, 2007 04:54 PM


Jack's hit the nail on the head with a hydraulic sledgehammer.

Do the Socialists in Washington State really care if business relocate elsewhere? Probably not. These lost businesses will be paying taxes someplace else and the Socialists will demand big brother Federal Government make up for their lost revenue.

TomR, it's hard to find anything anymore that's made in Japan. All China or Mexico with some Korean thrown in.

Posted by: BobF at June 10, 2007 07:08 PM


Darth oh ick. haha

The poor chocolate. haha

Posted by: Wild Thing at June 11, 2007 12:04 AM


Lynn, your right about cheap labor, I just wish it was not happening. waaaa

Thank goodness there are lots of other chocolate companies around. giggle

Posted by: Wild Thing at June 11, 2007 12:05 AM


Bob, it is sad to see things changing like this.

Posted by: Wild Thing at June 11, 2007 12:07 AM


Mark I was very surprised. I have been the one in Pennsylvania. That is neat that you took your Mother-in-Law there.
Mark I don't get it either. It seems they have more then one plant or something. But my question then is why isn't this coming from the main one and what is this one in Calif. Maybe a branch of the main company that makes only certain kinds of their chocolate items or something. Very odd for sure.

Posted by: Wild Thing at June 11, 2007 12:10 AM


Rick, LOL, well not that is a good point. I can always switch to another brand or something. hahaahahhaa

Posted by: Wild Thing at June 11, 2007 12:12 AM


Jack I have been looking a lot at where products come from, I guess for about the last two years. It is shocking how many come from anywhere but the USA.

You are absolutely right what you said, thank you so much Jack.

Posted by: Wild Thing at June 11, 2007 12:15 AM


Tom it sure is like that. Almost everything is from somewhere else.

Posted by: Wild Thing at June 11, 2007 12:17 AM


"The financials are compelling," chief executive officer Richard H. Lenny told a meeting of market analysts in February, saying labor costs in Mexico are 10 percent less than in the United States.

Only 10% less? I am, well, I wouldn't say exactly pleasantly surprised, but I am surprised. I guess we have nearly bottomed out and can't go any lower. :-(

Sadly, I really did support NAFTA at first. I had watched real wages in landscaping jobs drop off, which relatively speaking used to be a great way for college kids who didn't mind busting their tails all summer to make money for school in the fall. (And frankly, I think I learned more real world skills keeping things looking neat at the tract homesites and office parks than I did in many of my "classes" at Berkeley).

I figured that even if all American industries took their less skilled manufacturing work south of the border, at least the illegal alien invasion (which was driving wages down in a lot of kinds of work already) would stop.

I also figured "better made in Mexico than made in Red China", that if there were items Americans just couldn't make cheaply enough anymore, we might as well pick the country that would make them, more suitable to our interests.

But that doesn't seem to have happened.

When in dollar terms the USA is now a net IMPORTER of food products, per Victor Davis Hanson, something is wrong.

It is also heartbreaking to watch the Oakdale plant close. That was such a great little roadside stop-off when I was a little kid, as it was on the way to and from visits to Yosemite National Park. Free yummy treat samples....sigh.

Posted by: Nick Byram at June 11, 2007 03:15 PM


I've bought my last Hershey's product. From this day on, I will carefully examine each chocolate to make sure it's not Hershey's.

I also have no confidence in their food safety in Mexico. I doubt their cows are inspected for TB, let alone mad cow disease. The recent E. coli outbreaks give evidence that Mexican food safety isn't all that good.

Posted by: Linda F at June 12, 2007 09:51 AM