Bitter chocolate: Hershey’s candy closes a plant

HERSHEY, Pa. (PAI) – The next time you buy a package of Hershey’s candy kisses, take a good look at where they’re made before you put your money down.

Chances are, the answer is Mexico, not Hershey, Pennsylvania.

That’s because the iconic candy company closed its historic Hershey’s East plant in its namesake Pennsylvania town, idling some 600 Bakery Workers (BCTGM) members. There’s still another Hershey’s plant there, BCTGM researcher Matthew Clark, who tracks the candy company, told Press Associates.

“But the exodus from Hershey has been going on for a long time,” he adds.

Hershey’s departure from Hershey – a company town dominated by the candy firm and Hershey Park – is a symbol of the increasing trend of the outsourcing and offshoring of U.S. factory jobs. That trend has been increasing in the last decade, according to a new report, Outsourced: Sending America’s Jobs Overseas, published last month by Working America, the community affiliate of the AFL-CIO.

“They want to outsource, build plants in Mexico, shut down American factories and move stuff around,” Chocolate Workers Local 464 Business Manager Dennis Bomberger told a British newspaper, quoted in the report.

The irony of the candy company’s plan to move operations from its Hershey’s East plant to Mexico, while still keeping the Hershey’s West plant open – and even pumping money in to modernize it, Clark says – is that candy isn’t the most-outsourced or offshored manufacturing sector in the U.S.

That title, the report says, goes to furniture. Where workers in the Carolinas used to make our tables and chairs, by 2007 93.5 percent of furniture came from overseas, says the U.S. Business and Industrial Council, four times as much as a decade before.

And in 2007, more than 70 percent of nine other manufactured products came from overseas, USBIC added. They included some very technologically sophisticated goods, such as medicinals (86 percent), industrial valves (78 percent) and machine tools (77 percent). Also imported: Two-thirds of the nation’s computers.

In some cases, multi-national firms first outsource jobs to other manufacturers – who then offshore the jobs to take advantage of cheap labor abroad, the report adds.

The outsourcing and offshoring situation is getting worse and it’s hitting more than just factories, the report notes. It even hits state and local government workers.

The Government Accountability Office reported in 2006 that 43 states had offshored some jobs, such as running food stamp programs. And sometimes when they didn’t, the firms they outsourced the jobs to did.

For example, Ohio got stimulus law funds for the EnergyStar program, encouraging people to retrofit appliances to make them energy efficient. Then-Governor Ted Strickland, Democrat, banned use of such money for jobs offshore. But Ohio selected a Texas firm, Parago, Inc., to handle calls from consumers about EnergyStar rebate checks – and Parago subcontracted that task to a call center in El Salvador.

“As the Great Recession has worn on, outsourcing American jobs to foreign locations generated enormous corporate revenues,” the Working America report points out. “Between 2007 and 2009, off-shoring yielded $30 billion in revenues worldwide and grew by 25 percent, according to data compiled by IDC, a market intelligence firm.

“Many large multinational corporations remain committed to shifting production overseas. A 2008 survey of 66 large multinationals by Watson Wyatt found 42 percent were likely to offshore their production to low-cost countries, in addition to reducing their human resources head count in their headquarters (26 percent) and chopping the cost of administering employee benefits through outsourcing (22 percent),” the report added.

“Back-office jobs in finance, information technology, human resources and procurement are increasingly popular targets for off-shoring by global companies. After surveying the largest Global 1000 corporations, the Hackett Group predicted in 2009 that companies would shift more than 350,000 back-office positions overseas at the same time as those firms acted to limit new employment and dismiss domestic workers.

“By 2010, acceleration in off-shoring would bring the total number of such back-office jobs to 800,000 and allow companies to save nearly $30 million per year. By 2010, Hackett expected one in four IT jobs in global corporations to be offshore.”

Hackett Chief Research Officer Michael Janssen added, “For most companies, if and when they do start to restaff in IT, finance and other functions coming out of this recession, the large majority of the jobs they create will be in India and other low-cost labor markets.” (The report can be found on Working America’s “Job Tracker.”)

That’s already happened in Hershey, which saw the jobs at Hershey East move to Mexico, while the company’s CEO raked in $4.7 million in salary. Overall, the BCTGM’s Hershey local has lost more than 1,000 members’ jobs, says Clark.

And Hershey, which BCTGM’s predecessor unions first organized during World War II, now has only two unionized plants in the U.S., one in Hershey and the other, in Hazelton, Penn., with the United Food and Commercial Workers. There’s even a non-union Hershey’s plant in Hershey, making Reese’s peanut butter cups. “But at least at that plant, they kept wages at par with wages in our plants,” Clark adds.

BCTGM, like other unions, has fought back against Hershey’s outsourcing and offshoring. Its tools include publicity and raising quality questions with federal officials. Clark noted the union disclosed “a fly-by-night chocolate operation in New Jersey” to which Hershey’s subcontracted work – until a worker, at a plant lacking proper safety guards, fell into a vat of chocolate and died.

The report points out that Hershey’s move of its Hershey’s East operations to Monterrey, Mexico, hasn’t exactly helped the company, either: the Food and Drug Administration had to seize shipments of Monterrey-made Hershey’s Kisses. They were contaminated with salmonella.

With few exceptions, politicians have generally ignored the outsourcing and offshoring issues, the report adds. Sen. John Kerry, D-Mass., tried to push through legislation yanking U.S. tax subsidies for firms that shift jobs overseas, but he lost to a GOP filibuster. Other lawmakers say China manipulates its currency and encourages firms to offshore U.S. jobs there, which is why they pushed legislation against China’s tactic.

“With public officials stung by incidents such as Ohio’s accidental allocation of public funds to offshoring and the continued slow ‘jobless’ recovery from the Great Recession, controversy over offshoring may be expected to continue,” the report adds.

“While government action and tax policies will have some effect on the extent of offshoring in the future, the future of this business practice may ultimately depend on the strategies adopted by corporate leaders and their willingness to recommit themselves to retaining jobs in their U.S. facilities. In this regard, there are glimmers of hope, with some corporations announcing plans to maintain U.S. production.”

Ironically, one glimmer is in Hershey. It’s investing $200 million to modernize the BCTGM-represented remaining Hershey West plant. And in one move to raise visibility of the issue, the union ran a campaign during Halloween urging parents to check where the chocolates they were buying came from.

It’s also lobbying the FDA, after the salmonella was found in the candy from Monterrey, for country-of-origin and plant-of-origin labels on candy.

Still, those moves are after the fact. For the residents of Hershey, a classic company town, the job cuts of past years were “very devastating,” says Clark.

Image: Ernie Bello // CC BY-NC-SA 2.0



Mark Gruenberg
Mark Gruenberg

Award-winning journalist Mark Gruenberg is head of the Washington, D.C., bureau of People's World. He is also the editor of the union news service Press Associates Inc. (PAI). Known for his reporting skills, sharp wit, and voluminous knowledge of history, Mark is a compassionate interviewer but tough when going after big corporations and their billionaire owners.