Thursday, February 15, 2007

The Not-So Great American Chocolate Bar

The layoffs continue at American companies, and the workers pay the price. Yesterday, it was Daimler-Chrysler announcing 13,000 workers at the Chrysler division will lose their jobs. Today, a less than sweet announcement from Hershey, Pennsylvania.

Hershey Foods, maker of what they once called “The Great American Chocolate Bar”, as well as a number of other confectionary treats they have absorbed over the years, is cutting 1,500 jobs from the payroll. Their market share has dropped, while the fortunes of rival Mars, Inc., maker of M&Ms and Snickers, have risen. This amounts to approximately a 12% reduction in staff for the Pennsylvania-based chocolatier. Interesting that it is announced on the day after Valentine's Day, one of the biggest chocolate-giving days on the calendar.

Hershey says it will also open a new, “cost-efficient” production plant in Monterrey, Nuevo León, Mexico. By cost-efficient, they certainly mean “cheaper labor”, with which the American worker cannot compete and maintain a middle-class lifestyle. The plan is to move ten percent of their U.S. production to the new plant, but I would look for that number to increase over time, perhaps even by the time the facility comes on line.

I understand we live in a global economy, and labor is one of the factors of production that are important to international trade. I even favor doing things to pump up the Mexican economy by creating opportunities within our southern neighbor's borders. Only when there is not such a disparity between the two country's economies will the rate of people entering the country illegally slow down. Still, we need to keep some good jobs here, as I really don't want the only jobs left to be the executives making millions for sending our jobs away; leaving the rest of us limited to employment where the only requisite skill is the ability to say, "Welcome to Wal-Mart!".

I suspect part of Hershey’s problems have less to do with competition than with quality. My wife and I both have noticed the taste and consistency of Hershey’s chocolate has changed over the years, and not for the better. It has a more waxy consistency than what I remember in years past, and the flavor is just not the same. I don’t think it is just my taster either, as the products from M&M / Mars still taste the same as they always did, and today, outshine the Hershey product.

Perhaps that is fitting that Hershey will be making more of its product in Monterrey, as chocolate was originally created by the Mayans and Aztecs of pre-Columbian times in the area now known as Mexico.

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