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.”
Thanks for the link.
Fanny Farmer is an American candy manufacturer and retailer. Fanny Farmer was started in Rochester, New York by Frank O'Connor in 1919. The company was named in honor of culinary expert Fannie Farmer, who had died four years earlier. In 1992 the Archibald Candy Company acquired the brand (and its 200 retail stores in the northeastern United States) as a sister brand to its own Fannie May candies (sold primarily in the Midwest and mid-Atlantic United States).[1] Alpine Confections purchased both brands in 2004 after Archibald filed for bankruptcy.
And of course, all of the blockheads who voted for the clown have themselves to thank. Yes, I'd bet even many of those union workers voted for the crook. Too bad the US loses jobs, but union members usually vote democratic. Our governor's performance in office has been beyond dismal, he's a complete failure.
Since 1934 the U.S. government has assisted the sugar industry, which has a powerful lobby. Until the late twentieth century, sugar growers had access to extremely lowpaid, non-unionized immigrant workers through a federal "guest worker" program for the industry.
In the early twenty-first century, the sugar industry was receiving $1.6 billion from the U.S. government. Rather than making direct payments to growers, as the Agriculture Department does in other industries, the department gives sugar processors short-term loans, and maintains high domestic prices by strictly limiting imports.
Critics of this policy note that sugar consumers pay two to three times the world market price.
In fiscal year 2000, domestic growers grew more than the government-set limit, and the government had to spend $465 million to buy their excess sugar and cover the cost of processors' loan forfeitures.
According to the Center for Responsive Politics, which tracks political campaign contributions, the sugar industry contributes more than one-third of the money that crop production and food processing interests spend on political campaigns. The industry has a growing U.S. market; sugar consumption has practically doubled in the past century, from 86 pounds per U.S. citizen to nearly 160. However, the fortunes of the U.S. sugar industry may change in the wake of the North American Free Trade Agreement, as Mexican imports are likely to flood the U.S. market beginning in fiscal 2004.
Sugar growers, textile manufacturers and labor unions have teamed up with congressional Democrats, seeking to derail a proposed trade agreement with Central America. Failure to ratify that measure could undermine more ambitious efforts to enact broader free trade initiatives encompassing all of the Western Hemisphere and the entire world, experts warn.
Opponents of these free trade initiatives say their opposition stems mostly from wanting to ensure a level playing field or to protect worker rights.
Democrat Governor Ed Rendell is in the pocket of the "jackpot justice" trial lawyers, so tort reform ain't happening. And he's begging for tax increases, so rule out a better business climate or an improving economy. But hey, killing the economy is a major part of the Democrat game plan anyway.
When the economy tanks and people lose their jobs, homes, and savings, they become dependent on government handouts and eventually become addicted to government. And, like drug addicts keep going back to their dealers for a fix, government addicts will likewise keep going back to THEIR dealers. That would be Democrat politicians.
Sabotaging the economy is not suicidal for the Democrats - - it's what they strive for. It's job security.
This ain't rocket surgery.....
How do sugar makers get away with charging that much for sugar? They make sure the government keeps the world’s sugar out of the United States. The U.S. government allows each country’s sugar growers to sell only a certain amount of sugar into the United States. These quotas artificially limit the supply of sugar Americans can buy. This drives up not only the price of a bag of sugar but also of candy bars, soda, and any other food that contains sugar. From 1998 until 2004, American consumers have paid an average of about $1.8 billion more for food annually because of these import quotas. The General Accounting Office (GAO) also estimated that almost half that money goes to large sugar growers, such as the Fanjuls.
The family, through its company Flo-Sun, Inc., and many related companies such as Florida Crystals, controls about one-third of Florida’s sugar production. The Fanjuls, together with their elder in the sugar industry, U.S. Sugar, own a majority of the cane fields in south Florida. These massive corporations might not exist–indeed there might be no sugar cane industry in Florida at all–were it not for corporate welfare.
Enter the next government program from which the Fanjul’s benefit: the U.S. Department of Agriculture (USDA). The USDA loans all sugar growers 18 cents for every pound of cane sugar they grow, and beet sugar farmers get about 23 cents a pound. In recent years, these loans have averaged more than $8 billion annually, with the Fanjuls’ receiving an estimated $65 million.
http://tinyurl.com/2mg3ja
I don't find these chocolates cheaper. Do you? Someone is justifying cheap labor.
Good post. I was thinking the same thing - - that most of the union people who are on the verge of losing their jobs at Hershey taped "kick me" signs to their own backs and voted Democrat. Oh well. Adios.
Welfare and free medical is your answer. The Mexicans have never had it so good off the American dollar.
Thank ADM - they bought a bunch of congresscreatures, to ensure that corn syrup is cheaper.
(I am allergic to corn syrup.)
The main question is, is Cadbury cheaper? I haven't found them to be cheaper, have you?
Mary Landrieu:
As it is currently written, this trade agreement
would have a serious and harmful affect on sugar producers in my state.
The sugar industry of Louisiana is not only the economic life blood of
many communities, it is a way of life and a part of who we are.
Mr. Chairman, many of my concerns over this proposed trade
agreement were summed up in a recent letter from Louisiana Governor
Kathleen Blanco to President Bush. Governor Blanco urged the
President to withdraw the trade deal for one simple reason:
CAFTA will
equal job loss and financial despair for 27,000 Louisiana sugar workers
and farmers.
“The economic impact of CAFTA and other bi-lateral trade
agreements on the state will be disastrous. Louisiana stands to lose $750
million in direct sugar sales, as well as $2 billion in industry-related
revenue each year.”
Blanco's-sugar farmers see a massive subsidy in their future. They would have little reason to shop for another candidate when their Governor provided them with the greatest agricultural subsidy since the New Deal.
I work at Chocolate World and want to tell you that the free Tour Ride to see how chocolate is made was just redone and is outstanding. They also have a new 3D movie and an area where kids can go to work on a kisses production line.
I actually don't work for Hershey. I work for the company that takes your picture on the ride and at two other areas. We also have 27 cameras in Hershey Park. Hershey may make great candy but they don't know anything about picture taking.
Now smile, that will be $10.55 please.
Not only that but Big Corn as well. Why do you think High-fructose corn syrup has become the main sweetener in nearly everything?
Welcome to the real corporate world. Like the profits for these companies don't already do well. I believe it to be discrimination beyond belief. It is also destroying the middle class. I have heard some of the companies will pay managers bonuses per person they get rid of. That's insane.
$9.95 at the Bronx Zoo Carousel and the Air Force One exhibit at the Reagan Library.
Wasn't that guy Nagin saying that New Orleans was gonna be a choclate city? Wonder if that has anything to do with this.
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