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.”
"P.S. I love Hershey bars with almond."
Yuuuummmmmmm, that's my fav too. Although lately, I've been addicted to Cadbury dairy milk chocolate bars, don't know why. They are very suckable (take that nicely). They melt slowly and linger on your tongue and leave a great aftertaste. What country makes Cadbury's. Is it British? Anyone know?
More American companies exploiting Mexican slave labor. Why am I not surprised?
"...before the European Spanish killed them all..."
Not all the Incas or Mayas were killed. They are still around. Desimation doesn't mean extinction. It is only the governments that state that there has to be a certain number of any group operating in a tribal system in order to be counted. We have Indian groups and individuals here that aren't recognized.
I won't be buying Hershey's chocolate if it's made in Mexico.
You think those rats running rampant in the Greenwich Village Taco Bell were bad? Can you just picture a Mexican chocolate factory?
After Hershey moves to Mexico:
"Ummm...hey...I got six extra almonds in my Hershey bar."
"Er...are you sure those are almonds?"
"I don't like this. Maytag. Fannie May. "
Phew. For a second there I thought you were talking about FNMA, but that's Fannie Mae. (It would explain a lot IMHO though...)
*iterate procedure until everything is taxed more to prop up artificially high wages in more sectors (we are all gunna me rich)*
Daayam, where did that inflation come from? Basic economics? Impossible, must be Jewish bankers or chicoms or maybe the fed needs to fiddle some more. Maybe we can chop some zeros off the standing currency and everything will be cheap again (ala Chavez). I guess we can go back to the "good ol' days" when a refrigerator cost 25% of the average yearly salary. But hey, at least the wage disparity between the guy who staples fabric onto cardboard and a medical doctor will be lower.
/sarcasm
No kidding moron.
You forgot Lifesavers. They went to Canada, even though they were offered alot of discounts. I found out that Jeerzee, the sweatshirt maker is operating out of Mexico.
Here's a question. If alot of the jobs are going south, then why are the illegals coming north...
"Er...are you sure those are almonds?"
LOL! Good point. I'll be watching the labeling, too!
Here's a question. If alot of the jobs are going south, then why are the illegals coming north...
Again, because they lost jobs to China.
> Here's a question. If alot of the jobs are going south,
> then why are the illegals coming north...
Because in the factories that have gone south, they would be lucky to make $10 per day, and in the US they can make $10/hour.
I know my wife and kids like Cadbury eggs. Hey Easter's coming up!
I'm not sure, never been there. Corruption, no money for many in spite of jobs moving there. If you HAVE a job in Mexico, the cost of living is less, they're used to the heat and don't have high utility bills, medical care in the outposts, forget it. Maybe you have the answers. I don't see how life here is that much better for illegals, at least initially. The ones here legally have/have had pretty decent jobs, and are moving up the economic ladder to become part of the vanishing middle class.
"They can come over here and take our jobs, OR they can stay in Mexico and still take our jobs.'
We're supposedly fighting terrorists in the ME so we won't have to fight them over here. So we should, by the same logic, welcome outsourcing to Latin America. Every job we send there keeps one jobholder from coming here.
LOL
It was a rhetorical question. I live in Los Angeles or as the illegal activists call is Mexifornia. Ten dollars can buy alot in Mexico, but there is a better standard of life here. This is very perplexing for me, since if Mexico were as great as all those that left say it is, then whey aren't they back there? Next to soccer, waxing poetic about the homeland is the national sport in Mexico.
> Ten dollars can buy alot in Mexico, but there is a better
> standard of life here.
I think you'll find the vast majority of illegal aliens are in the US alone, not as families, and sending quite a bit of dinero "back home".
If somebody offered you 8-10X your current salary for breaking some country's laws you didn't give a damn about (let's say India or Turkey), would you take it?
Let's not pretend their decisions aren't rational. That just makes solving the problem harder.
" I don't see how life here is that much better for illegals, at least initially. The ones here legally have/have had pretty decent jobs, and are moving up the economic ladder to become part of the vanishing middle class."
You have to be kidding. Life here is far better than anything they had back home. Plumbing just across the border can be hit and miss. Some don't have running water. And the water is polluted. Corruption and crime are rampant. You have to pay for medical care, so it is much easier to go to America and get the freebies. I would encourage you to take a trip to El Paso, TX for instance. Drive along the US interstate, and look across into Mexico. The differences are really evident.
Do you mean Fannie Farmer?
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