Hershey Co. plans to eliminate hundreds of jobs in a plant modernization strategy that will see the chocolate maker move production from its historic, century-old facility to an upgraded site nearby.

Hershey, plant modernization, Next Century, David West, chocolate maker, East Chocolate Ave., West Hershey

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Hershey to cut jobs under plant modernization plan

June 14th, 2010

HERSHEY, Pa. – Hershey Co. plans to eliminate hundreds of jobs in a plant modernization strategy that will see the chocolate maker move production from its historic, century-old facility to an upgraded site nearby.

Dubbed "Next Century," the plan aims to create a more efficient, flexible supply chain and establish a more competitive cost structure, according to Hershey. The capital expenditures for the strategy include a $200 million to $225 million plant expansion of the current West Hershey, Pa., facility and $50 million to $75 million investment in distribution and administrative facilities in Hershey.

As part of the project, production will transition from the company's over 100-year-old facility at 19 East Chocolate Ave. in Hershey to a planned expansion of the West Hershey facility, which was built in 1992. Production from the 19 East Chocolate Ave. plant and a portion of the workforce will be relocated to the West Hershey facility, a change that's expected to result in the reduction of 500 to 600 jobs as investments in technology and automation improve efficiency in the new building, Hershey said.

The Next Century program grew out of Hershey's previously announced supply chain assessment and was unanimously approved by board of directors, according to the company.

"Next Century will ensure that we continue to make the world's best chocolate and are well-positioned in the marketplace," Hershey president and chief executive officer David West said in a statement. "Our investment will create a highly flexible, cost-effective manufacturing facility that will enable us to remain competitive with global players while satisfying the needs of retail customers and consumers."

West noted the East Chocolate Avenue plant's long history but said the time had come for an up-to-date facility.

"The 19 East Chocolate Avenue factory is a proud part of the company's heritage, but the facility is over 100 years old and simply cannot be modernized to meet the manufacturing needs of a 21st century business," he explained. "Our employees at the facility have worked hard, and we are pleased that many of them will transition to the new facility, continuing to make Hershey's syrup, Hershey's milk chocolate and milk chocolate with almond bars, and Hershey's Kisses brand milk chocolates, as they have for many years. We operate in an ever-changing global marketplace and will continue to make the difficult decisions necessary for our business to succeed over the long term. Additionally, we are committed to assisting all of the impacted Hershey employees during the transition."

Hershey added that to preserve the heritage of downtown Hershey, the company will continue to occupy a significant portion of office space at the historic 19 East Chocolate Ave. facility, including consolidating several local headquarters offices into the vacated space.

The company projects that when the Next Century program concludes in 2014, ongoing annual savings will be $60 million to $80 million.

"Our recent marketplace performance has been driven by the investments we have made in our brands and our global capabilities, fueled by our strategic focus on supply chain efficiency and effectiveness," West stated. "Savings from project Next Century will enable us to continue making investments that will deliver core business growth and position us for long-term success in the global confectionery marketplace. We must continue to look at all options that provide us the flexibility to make the investments necessary to ensure that Hershey is as successful in this century as it was in the past century."