Cadbury cuts Tassie jobs in Mondelez cost-cutting squeeze
Cadbury has announced it will be cutting 80 jobs from its Claremont chocolate factory near Hobart in Tasmania.
Cadbury, which is a core brand of Mondelez Australia and part of the global food conglomerate Mondelez, is still Australia’s market-leading brand in chocolate but is facing growing competitive pressures from other national and international chocolate brands as well as from supermarket house brands in the non-chocolate segments of its business.
Mixed impact of currency shift
Despite Mondelez Australia recently reporting a 43 per cent increase in profit for the 2014 year ended last December, this was partly the result of a massive cost-cutting push from Mondelez International head-office in Deerfield Illinois. There has been strong pressures applied on the Australian and Asian managements to recognise the negative impact of their declining currency values against the value required to pay a strong dividend in US dollars to Mondelez investors.
Informing employees at the start of their Friday morning shift, the decision comes with Mondelez Australia sales recently take a dive. The drop co-incided with the unpopular Cadbury management decision to cut costs by shrinking the size of its most popular chocolate bars. Australian sales slipped 2.8 per cent to AUD $ 1.7 Million in the 12 months to end-December 2014.
Job losses and Federal government moves
The Australian Manufacturing Workers’ Union ‘s Tasmanian Secretary, John Short labelled the announcement as a terrible day in Tasmania’s history.
“Tasmania already has one of the worst unemployment of any state in Australia. This will just add to the problem,” said Mr Short.
“As we see major job losses all over Tasmania, we’re seeing the State and Federal Governments just shrugging their shoulders. It’s not good enough,” said Mr Short.
Although the AMWU’s Short claimed that the Abbott Federal government had abandoned the plan to give the Claremont plant a AUD $16 Million boost, it was Mondelez Australia that abandoned its application for the $16 million federal government grant which required a co-contribution by the Company for a AUD $66 million redevelopment of its Claremont chocolate factory in Tasmania. The Company decided instead to commit AUD $20 million to a less ambitious expansion plan.
The Australian Manufacturing Workers’ Union is now set to work with Cadbury so a plan can be created for how and when the job cuts will roll out. The union is pushing for a voluntary redundancy process to be put in place.
The Cadbury factory has been open since 1922 and for many years it has been the largest chocolate factory in the Southern Hemisphere.
Tasmania has been an ideal Australian base for chocolate manufacturing because of a combination in the location of high-quality dairy milk, cheap hydro electricity, cool climate, loyal workforce, the beauty of the natural landscape setting and its strong tourism appeal.
Longer term history question
However many Tasmanians have expressed concerns about the longer term uncertainty of Mondelez’s investment intentions in relation to the historical Cadbury plant at Claremont. The current Chairwoman and CEO of Mondelez International Irene Rosenfeld has history herself when it comes to shutting down a historical plant in a regional area.
In March 2011, when Rosenfeld was the CEO of Kraft, there was a national outcry in the UK when Kraft sold the site of a historic Cadbury factory in Somerdale she vowed not to close for £50 million after initially publicly promising the continuity of production within the UK in order to win over support from UK shareholders of Cadbury for its takeover of Cadbury. Instead, production was immediately outsourced to Poland. The historical Somerdale factory was shut down within a few days after the takeover by Kraft Foods in 2009 but the sell-off of the historical site, which sparked the national outcry, was not finalised until 2011.