gordon.dewis.ca - Random musings from Gordon


Impending closure of the Hershey’s plant in Smiths Falls

March 03, 2007 @ 10:50 By: gordon Category: Current affairs

This image from the CBC says it all.  Note the flag at half-mast.If you’re from eastern Ontario, chances are fair that you’ve heard that the Hershey’s plant in Smiths Falls is going to be closed by the parent company, which is based in Hershey, Pennsylvania. Besides making chocolates and candies in Smiths Falls, the Hershey’s plant is the second largest employer in town, employing 500 people. Not only will the closure of the plant result in the loss of these jobs, there will be secondary loses felt by the local companies that supply ingredients, packaging and transportation services to the plant. And then there’s the tourism benefit to the town. Over the years, I have visited the factory on a number of occasions to buy things from the factory store. Usually, I’ll stop in town to buy gas or something to eat, too. With the closure of the factory, trips like mine will be lost so the tourism revenues will be decreased.

As happens often in towns with large employers there are some families that derive 100% of their income from the factory. In Smiths Falls, 54 couples will find themselves without a source of income as a result of the plant closure. Thus, another result of the closure will probably be an increase in the use of welfare services. Some people might even have to leave town altogether to find work elsewhere.

The closure will be particularly hard on Smiths Falls because it’s going to be followed up by the largest employer in Smiths Falls, Rideau Regional Centre, who employees 800 people, closing its doors sometime in 2008. And, of course, there are some families of Hershey workers who have family members that work for Rideau Regional, so the town is going to be devasted over the next few years.

Dairy Farmers of Ontario, the marketing group representing Ontario dairy farmers, reported recently that they supply 39 million litres of milk (1.5% of the 2.6 billion litres produced in Ontario every year) to the factory in Smiths Falls. The factory pays a highly discounted rate of 30 cents/litre and apparently have never raised cost as an issue with the DFO. If they move some of the operations to Mexico, as some people think will happen, it’s unlikely that they’ll get a better milk price. Because DFO pools all the milk produced by its members, the losses will be distributed evenly to all the milk producers so no local farmers will suddenly find themselves with milk they can’t sell.

The Premier of Ontario has apparently spoken to the CEO of Hershey’s to see if there’s anything the province can do to convince the company to leave the plant open. From what was reported on CBC radio, the discussion doesn’t appear to have made a difference.

It’s puzzling that the factory will close given that it does turn a profit. According to CBC, the closure is part of a global restructuring program that will see the loss of 1500 jobs worldwide.

An online petition has been set up to try to convince the company to change its mind. It can be found at http://www.petitiononline.com/hershsf/petition.html. I encourage you to sign it, if for no other reason than the one a co-worker who lives in Smiths Falls put forward: “who doesn’t like cheap chocolate?”

7 Responses to “Impending closure of the Hershey’s plant in Smiths Falls”

  1. As a business person in Smiths Falls I have felt the effect of the lay offs and closures in lost sales over the last few months and it is not going to get better.

    That said I urge those in Smiths Falls and surrounding area both business and individual to not panic instead sit down and think what you can do proactively to help yourself and your situation.

    I urge all those involved in chocolate making big and small businesses or individuals to seriously concider whether Hershey’s decision has opened a door for you to start a business venture in Smiths Falls the Chocolate Capital of Ontario. Maybe instead of one big Chocolate Company we can be known as the town of many Chocolate Companies both big and small.

    Secondly with the up coming 175th anniversary of the Rideau Canal and its new designation as a heritage site lets get the parks along the canal ready for the onslot of tourist that are comming to town for its other attributes.

    Our trail, park, streets and businesses should be in pristein shape to welcome those visitors. Our parks should be busseling with activities this summer (get out and plan that company picnic or baseball tournament) show our town spirit.

    Show off our towns history with walking tours and visitors guides.

    Smiths Falls is more than just Hershey’s and there is lots of oportunity for income for those with the spirit to try something new.

    I have lived in this town for 42years and I am proud to say Smiths Falls never gives up.

  2. Mike says:

    When I look up Hershey’s stock information at finance.yahoo.com I see an earnings per share value of 2.34, which means they’re profitable, not?

    So if they’re profitable and still want to move jobs to low labor places like Mexico, then they choose to abandon our society. Our society should then boycott all Hershey products. People need to tell other people that Hershey is a bad company, and not to support them. Especially on days like Halloween and Valentines day, we should be very careful to buy anything, to ensure we don’t buy Hershey products. We need to learn how to identify Hershey products, so we don’t end up in a rush checking out in Zellers with a quick heart shaped box from Hershey.

    Hershey needs to understand that in today’s modern day of age, people can talk to other people and ban together. I think we can shave off at least as much money from their profits, as they’ll save in operating costs by moving to Mexico.

    Governments should introduce point systems, where companies get tax credits depending how well they play in society. When companies move away to other countries, the point rating goes down, and they’ll get less tax credits. To some degree it already works like this (look at the auto industry), but make it more clear cut. And in an open way, so the media can publish the ratings.

    Hershey needs to think more creatively. Make products that are less bad for your health. I’m imagining pure chocolate sweetened with natural licorice extract. Hmmm, chocolate… But if they sour the pot by hurting our communities, then screw it, we can’t support them any longer.
    I really wish Hershey would rethink their “restructuring” plan. Try a new line of products, advertise the hell out of it. “bad stuff, but not so bad”, “too good not bad”, whatever.

  3. PXB says:

    First let me make this absolutely clear, I live in Smiths Falls and I am very disappointed at Hershey’s decision to close the Smiths Falls facility. My family as many in Smiths Falls is directly impacted by this decision, as my son will soon be looking for work, most likely somewhere other then locally.
    I myself worked for Hershey in Smiths Falls (office work) and I retired in 2002.
    My point of writing? It is just the frustration of the overwhelming one sided blame against Hershey for the plant closure. It seems that people are just unable or unwilling to face the fact that the employees bare a great amount of responsibility in contributing to there own demise.
    Here are employees that make approximately $ 15.00 and up an hour (this could be on the low side) now add to that UI, CCP, Hershey Pension cost, Medical/dental/glasses, shoe allowance, uniforms, performance allowance and much more. If you add all the cost, $ $ 30.00 to $ 40.00 and up an hour would not be unreasonable.
    Yet these same employees went on strike 3 years ago.
    Again this year employees voted to give there union the mandate to strike again. It is sad that only after the closure announcement was the union willing to contemplate the proposed two tier wage structure.
    Given the above hourly cost and the never ending union demands, can you really blame Hershey for making this move? The above high labour costs make it virtually impossible for this plant or Hershey to compete in the market place.
    Yes it is a sad time for employees of Hershey, Smiths Falls and for many others in the surrounding vicinity that will be impacted by this closure.
    I hope that this town will not only survive but flourish in the future without Hershey.

  4. gordon says:

    From what I’ve read, which includes things Hershey’s has said, the plant in Smiths Falls is profitable. Almost every large employer spends similar amounts, propoportionally, on things like UI, CPP (which come are deducted from an employee’s wages) and the other things you mentioned. Hershey’s financial reports for 2005 indicate they paid dividends of $0.98/share for common stock, up 11.4% from 2004, which works out to roughly $221.2 million. The net income in 2005 was $493,244,000 with net sales of $4.84 billion. All of those are in US dollars. The quick searching I did didn’t reveal a breakdown by plant, but they have indicated the Smiths Falls plant is profitable, I believe.

    If a company wants an employee to spend their whole career working for them, which is a good thing because it promotes stability and continuity in terms of knowledge, then they should expect to pay more than a company that doesn’t care if there’s high turnover in their labour force. It’s cheaper in the long run because you don’t have to train as many new employees. I’ve gone on the tour a number of times and the work being done by the employees on the floor is skilled and carries a high level of responsibility. Thus, it warrants a higher rate of pay.

    Yes, the union probably did contribute to the decision being made. Sooner or later, management will tire of perpertual threats of strikes, but to put the blame solely on the employees isn’t fair.

    Hopefully, the quality of Hershey’s product will not suffer as a result of being moved to Mexico. And, hopefully, Smiths Falls won’t crash, though it’s going to be hard to avoid given the closure of the two largest employers within two years.

  5. Mike says:

    Looks like the boycotts are starting already.

    “Loyalist College in Belleville boycotts Hershey”


    Myself I will run a perpetual awareness campaign and reign it into people’s head that buying Hershey products is analogous to drinking and driving – something you really just not ought to do.

    Message to Hershey: You *will* lose at least as much profit as the amount you think you’ll save by moving to Mexico. Canadians may seem docile, but watch out – we’ll hit your with our wallets.

  6. Trashy says:

    Re: Message to Hershey: You *will* lose at least as much profit as the amount you think you’ll save by moving to Mexico. Canadians may seem docile, but watch out – we’ll hit your with our wallets.

    I completely agree – however, I suggest that we boycott the products AFTER the plant closes and not before. An organised and effective boycott at this time may have the opposite effect and hasten the closing. After the inevitable has occurred, I will be encouraging this boycott to my family, friends and on my blog.

    I would also like to address the comment on the high wages and job actions by the employees.

    I truly cannot believe that a profitable (as GD as pointed out) establishment such as the SF plant can be mothballed simply because of a moderately militant workforce. 15 smackers an hour is not a king’s ransom in this day and age and clearly the higher wages have benefited the corp in terms of productivity… not a solid linkage there, but likely a contributing factor.

    The real reason for the move is simply this: it is far easier from a political perspective to can a plant in Canuckistan than in the US of A. Simple as that. The bonus for Hershey’s is that they move to Mexico with its LDC wages levels – but unfortunately for the shareholders, they will also find a LDC style workforce. Nothing against Mexican workers, but the productivity level differentials will not be offset by the rates for the labour inputs.

    I wish the best for those in SF – my family and I were there today and as a result I will be spending an extra hour on the bike tomorrow… but it will be worth it, cuz once it shuts, so will my wallet to Hershey products.

  7. David says:

    Well, it has been several years now since Hershey left Smiths Falls. Other big employers have left as well. Hershey is still selling chocolate bars and the vastly uneducated staff from Hershey’s were provided free/subsidized retraining. So to the people of Smiths Falls who received this, as a tax paying Canadian, you are welcome. You see I paid for my own retraining and education. I stayed focused in school and got it done.
    I blame the union for this shutdown, boycott the union not Hershey chocolate. You were well paid working for Hershey, great benefits. If you do not think you were, there are many who will tell you that you are wrong. The job at Hershey was a minimum wage job, that required a grade 10 education. Yet, you were paid double to triple that with great perks.
    You better smarten up Smiths Falls before the rest of the large employers leave

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