Posted on 02/25/2007 3:13:21 PM PST by Diana in Wisconsin
HERSHEY, PA — If Calvin Smith Jr. is going to lose his job, he’d like to know about it.
Smith and his fellow workers at The Hershey Co. already know the company plans to reduce its workforce by 1,500 jobs during the next three years and eliminate a third of its production lines. And when employees for a new plant to be built in Monterrey, Mexico, are factored in, the actual number of job losses at the company’s U.S. and Canadian plants could total 3,000.
But what Smith and his co-workers don’t know is when the ax will drop.
“Any human being with a soul has a fear of the unknown,” said Smith, who lives in Jonestown and serves as branch president of Local 464 of the Chocolate Workers of America. “We don’t know what our future is...We don’t want the great American chocolate factory to become the great Mexican chocolate factory.”
As workers left Hershey’s plant at 19 E. Chocolate Ave. on a recent workday, they expressed varying degrees of fear and resignation toward the future.
“It’s a sign of the times in America,” one man said.
“Since (Richard) Lenny’s taken over (as company president and CEO), all he does is cut jobs,” a woman said. “That’s not the answer.”
The bogeymen cometh
In Smith’s eyes, there is plenty of blame to spread around for what is happening. Among the bogeymen are the federal government, which has encouraged free trade through the North American Free Trade Agreement; the company’s management; and the Hershey Trust, which has a controlling interest in the company.
David Rudd, chairman of Lebanon Valley College’s Business Department, said Hershey’s decision was inevitable — and probably overdue.
“When you’ve got plants operating at 62 percent capacity (as Lenny reported Tuesday), that’s nonviable in any industry,” Rudd said. “Some of their plants are single-product. Companies just don’t do that. Flexible manufacturing has been the rage for 10 or 15 years.”
By combining plants, “you can have one plant at 92 percent,” he said, noting that most companies try to operate at 85 to 90 percent capacity.
Hershey runs 20 plants: three in Derry Township; three elsewhere in Pennsylvania (Lancaster, Hazleton and Reading); three in Canada; one in Mexico; one in Brazil; and the rest scattered from Connecticut to Hawaii.
Although Hershey’s employees are frustrated by the lack of clarity in the company’s Feb. 16 announcement to reduce its workforce, Rudd said the company was compassionate compared to some others.
When Otis Elevator decided to leave New Haven, Conn., to move its manufacturing to the Caribbean, it did so with no advance warning, he explained.
“Here, people get a chance to adjust,” Rudd said. “It’s more brutal to go to work one day and have someone say, ‘Here are your last two paychecks.’”
We’re No. 43
David N. Taylor, executive director of the Pennsylvania Manufacturers Association, said he’s having difficulty trying to analyze the Hershey situation.
“We don’t know exactly how all this is going to manifest itself,” he said.
Taylor points a finger at the “bizarre and antiquated” U.S. sugar subsidy, which inflates the price of sugar to “two or three times the price on the world market.”
By shifting production to Mexico, Hershey can buy sugar at the world price, which in turn can make its product pricing more competitive with its international competitors, Cadbury-Schweppes of Great Britain and Nestle of Switzerland.
Production costs in Mexico are about 10 percent of those in the United States and Canada, Lenny said. The goal is to increase Hershey’s product volume outside the States and Canada from its current 6 percent to about 20 percent in 2010.
Taylor said Pennsylvania’s overall business climate is “not good.”
While a national manufacturing recession began in 2000 and ended in July 2003, Pennsylvania’s slump has continued, with a net loss of more than 200,000 jobs since July 2000.
“Pennsylvania manufacturers need the state government to wise up,” Taylor said. “Fiscal discipline is the first and most necessary step.”
That means limiting government spending, which has increased 28 percent during Gov. Ed Rendell’s tenure, he said, adding that limits on lawsuit abuse are also needed.
Forbes magazine recently ranked Pennsylvania as the 43rd most business-friendly state.
“Virginia was number one, and North Carolina was number three,” Taylor said. “Those are our competitors. ... We should be asking, ‘When will it be smart for businesses to decide to operate and expand in Pennsylvania?’”
Only rumors
All of the analysis is small comfort to the men and women whose families could be affected by the company’s downsizing.
“The only thing I know is what has been in the paper,” said Bruce Hummel, the business agent for Local 464, which represents 2,500 workers in Hershey and Reading. “We’re hearing rumors. We’re hearing the plant in Canada (Smiths Falls, Ontario) is going to shut down. I really don’t know.”
The reason for the workers’ lack of information is simple, Hummel said. Hershey’s administration “is out for the stockholders.”
The lowest-paid union-scale plant job pays $15.20 an hour, he said. An average wage is $18.78 an hour.
“We have high-paid jobs thanks to the negotiations of the union,” he said. “Reese (nonunion) workers are getting union-scaled wages to keep the union out.”
Although the main plant at 19 E. Chocolate Ave. is the oldest of the company’s 20 plants, it “is held to high standards and produces a quality product,” Hummel said.
Half of Hershey’s 13,000 employees work at the companies’ six Pennsylvania plants (Hershey, West Hershey, Reese, Lancaster, Hazleton and Reading), company spokesman Kirk Saville said.
But, according to one union spokesman, the problem is even closer to home.
“I believe half (of our members), at least half, live in Lebanon County,” said Melvin Myers, president of Local 464 and an employee at the West Hershey plant.
Myers, who lives in Campbelltown, started working at the main plant on East Chocolate Avenue 38 years ago, right after his discharge from the Marine Corps.
“Hershey has not been telling us a lot,” he said. “They have been downsizing some departments a little at a time.”
Battle of attrition
Myers could have retired in November, but he decided to keep working because he has another year left in his term. He plans to run for re-election next year.
“If I win I will stay,” he said. “If I lose, I’ll retire. My joy comes from the union work I do.”
Attrition could play a limited role in force reduction, Hummel explained. Between 40 and 50 workers usually retire each year.
LVC’s Rudd said the line employees won’t be the only ones affected in the event of layoffs.
“It could also be painful for managers,” he said. “As a manager, you know changes are coming way before the other people do. You’re carrying that around in your heart. It’s sort of like cut-down day in the NFL. There’s pain for people in the middle, the middle managers. And some of them are next in line to go.”
Hummel remembered the last great trauma for the company’s employees, when the Wrigley Co. attempted to buy Hershey in 2002.
“Back then we thought the trucks were heading to Chicago,” he said. “Now I guess they’re heading to Mexico.”
And if the bulk of the job cuts come in Dauphin County, Hummel said, “It could be devastating to central Pennsylvania.”
Even so, Rudd said, the region’s economy is “still quite robust.” There is more diversity here than in many places, with agriculture, health care, government, education and transportation among the strong components.
“There are not that many monster employers,” he said. “It’s much more diverse here than in other areas.”
Anxiety and fear
While that is encouraging news, it doesn’t mitigate the immediate wave of fear going through Hershey’s employee ranks.
“We have a lot of people afraid,” said Myers, whose wife, Joyce, has worked for 24 years at 19 E. Chocolate Ave. “They don’t know what to expect. We don’t know how to encourage them or console them. You’re anxious to find something out, but you’re kind of afraid.”
Although Myers understands market forces are at work, “it’s just shocking,” he said. “I never, never thought we would see this day.”
For Smith, this is the second time he is looking at a possible job loss.
“I grew up in Lebanon,” he said. “I worked at Textile Printing on 25th Street for years.”
When that company closed, it led to his career at Hershey, “the best thing that ever happened to me,” Smith said. “Hershey had better benefits and better pay.”
Smith’s wife, Kristi, also works for the company, so they are looking at the potential loss of two jobs.
“There are a lot of families there,” Smith said. “We consider all of the people family up there. We treat them like family. It’s a nice place to work, and I hope we can continue to work there. There are a lot of dedicated people.”
ewww.... Well I needed a reason to give up chocolate anyway.
Everyone's giving away Clinton's secrets.
The Coca Cola Plants in Mexico use sugar cane. USA Cocoa Cola Plants don't.
Do you really think there is only one manufacturing plant??
No.
Not fertilizer manufacturers, either.
Try sugar processors.
D'OH!
I'm sorry but I don't believe for a minute pricing is going to be "more competitive". Companies that go for cheap labor are only going for greater profit margins, not so they can lower prices.
I looked it up on the web. Actually, it is British, as I had guessed by virtue of the word "Cadbury" that sure sounded British to me. It' probably marketed by Hershey's but it is a British milk chocolate, and now I know why it tastes so good; it has more milk products and less wax:
Cadbury's have been making chocolate since 1824, when John Cadbury opened his first shop. Cadbury Dairy Milk; first launched in 1905, is still the market leader in the UK today.
British chocolate has a more creamy taste than American, it has more milk products and less wax. All our Cadbury candy is imported from England.
"The main question is, is Cadbury cheaper? I haven't found them to be cheaper, have you?"
Nope, but that's probably why it tastes better too, and therefore a bit more expensive. One doesn't always want to take the lowest bid; the quality of product may not always be the better one.
Sorry to hear it. I figured that was part of the problem as well. Our 'Rat Governor is intent on driving business out of our state, too.
What is their problem? What part of 'Business Tax Base' don't they understand? They can only get so much blood from we Turnips! 'Rats are such economic retards.
oneamericanvoice, your assessment is probably right on. Agreed, and maybe it's my paranoia, but there is also something I can't quite put my finger on driving it, like it's the "in" thing for people to live here . . . same thing that brought Europeans here in past centuries. Some made it, some didn't do so well. Some excelled at crime although they could have chosen honest work. Now some of the descendants of those noble European castoff "riffraff", yes I'll call them noble even though they supposedly "stole" the land and committed genocide, immigrants aren't doing so well either. Some are.
kaylee, I've always liked Cadbury's, it was first made in England, have always liked the way Europeans processed their chocolate. I don't have the ambition to tackle making candies like I once did. Didn't even make that marshmallow creme fudge this year. That requires chocolate chips. Who makes those? Hershey's are the best for it. But I have found a wonderful substitute, Aldi's 12-oz at $.99 a pkg. Maybe they are Hershey's and relabelled . . .
The bottom line is I don't like any of our business operations relocating to Mexico unless aimed at their market. That is not the case here. I don't feel as comfortable eating their food products, but I do some, tried some custard that wasn't too bad from a Mexican grocery store, figured if it had germs, cooking it would kill them, but not other contaminants. If it looks good, I just take my chances. Gotten sick on enough American food over the years or maybe it was just my turn to get a bug :-(
There WILL be a day of reckoning for all this uncontrolled immigration, and it ain't going to be pretty. That is my prognostication. We cannot take in so many different cultural groups at the rate we have been doing without eventually paying a very high price . . .our children and grandchildren will have to suffer the consequences if they can't afford to escape to a gated community with armed security guards . . .
Locally we have thugs coming from Chicago because the rents are cheaper here. What happens the other day? A carjacking right on the main drag I drive all the time, two blocks from my granddaughter's place, not that bad a part of town - yet. They block the car behind them, drag the people out of the car and hit them with baseball bats . . .I drive an older stick shift, don't know if that makes me safer or not . . .it's getting scary. The cultural group doing these crimes tends generally not to be Hispanic. I don't know if they've caught all the perps or not, we are building a new jail, it still won't be enough for what I see looming. Turnstyle justice.
Years ago the ex wife used to have a friend who was a Cadbury sales rep. Her job was to pull the old candy and restock with new. She was supposed to trash the old candy bars but instead she'd drive to inner city neighbohrood play grounds and open up the trunk and let the kids go wild.
Mmmm...Fannie Mae peanut brittle! It's great, but I only see it in our stores around Christmas time.
And yet the Mexicans are coming here?
I can see the gringo americans illegally invading mexico, chasing after this factory.
I don't know if we have her recipe or not. I know she used raw peanuts, light karo syrup and sugar (I think), skins rubbed off, turned golden brown when done, and it's best made in the winter when the humidity in the house is low.
She made heavenly divinity, too. I finally did learn to make that, really nice, rich and creamy, but it won't work in high humidity either.
We visited the Hershey museum in 1990 with our oldest two kids, and really enjoyed the experience. Hope we can do so with the younger two.
Is the museum still in operation?
Yet the majority stockholder is an orphanage.
You better stock up on chocolate, just in case :-)
No kidding, LOL! Luckily there's a wonderful shop nearby that stocks the Swiss and German brands. If I have to make that sacrifice and not buy American made chocolate, I will. :)
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