01 March 2007 | Paul Snell
The largest chocolate manufacturer in the US is to cut 1,500 jobs in its supply chain over the next three years, to make savings and become more flexible and efficient.
Hershey's said that its "comprehensive" plans would enhance manufacturing, sourcing and customer service. The reorganisation follows an extensive assessment of its manufacturing capability and the firm's needs for the future.
The restructure will take place in three areas. The company will increase capacity in manufacturing by cutting the number of production lines by a third. It will build a new low-cost factory in Mexico and outsource the production of its cheaper items.
The firm hopes the changes will make annual savings of up to $190 million (£97.5 million) by 2010. This will progress from $15 million (£7.7 million) savings this year, $80 million to $90 million (£41 million to £46 million) in 2008, and $140 million to $160 million (£72 million to £82 million) in 2009.
Yet it estimates that the cost of the restructure could be as much as $525 million (£270 million). There will also be around $50 million (£25 million) to pay in start-up and project management costs.
Richard Lenny, president and CEO of Hershey's, said in a statement: "We intend to make this transformation of our supply chain as smooth as possible for our employees and customers."
Money from the savings will be put towards investment in current products, new product development and "disciplined" global expansion.