Cadbury to close doors on Dunedin factory after 80 years, eliminating 350 jobs

Mondelez vice-president for Australia, New Zealand and Japan Amanda Banfield

Mondelez International, the US company that returned $US1.1 billion to shareholders last year, is to close its Cadbury factory at the end of 2018, moving production to Australia and eliminating 350 jobs to cut costs.

The decision will end more than 80 years of production in Dunedin, where the Cadbury factory is a popular tourist attraction and can send the aroma of chocolate wafting over nearby suburbs. The first redundancies would be made before the end of this year, with about 100 people kept on in the business until early 2018, it said.

Mondelez vice-president for Australia, New Zealand and Japan Amanda Banfield said the company was "focused on becoming globally cost-competitive through increased production and investment in larger sites while reducing costs, which allows us to fuel the growth in our brands."

She said the factory's distance from its main market of Australia, "low volume and complex product portfolio, make it an expensive place to manufacture our products." The Dunedin factory exports 70% of production, mainly to Australia.

Cadbury has lost supermarket shelf space in New Zealand to local brands including J H  Whittaker & Sons, the nation's second-largest chocolate brand behind Cadbury. It has also battled to retain consumer loyalty after missteps including replacing some of the cocoa butter in its bars with palm oil, a move it reversed after complaints about the taste and the source of the oil.

Nasdaq-listed Mondelez reported global sales $US25.9 billion in 2016, a year in which it returned $US800 million to shareholders by repurchasing stock and paid about $US300 million in cash dividends. It has forecast organic net revenue growth of 1% for 2017 after a 0.6% gain in 2016. Net earnings last year fell 77% to $US1.66 billion.

Mondelez shares last traded at $US45.37 and have gained about 16% in the past 12 months.

The company said it was considering making an investment in 'Cadbury World' in Dunedin and about the future use of the factory site. A final decision on a proposed redevelopment would be made by April, it said in a statement.

Green Party co-leader Metiria Turei, a Dunedin resident, sought to make election-year capital out of the announcement, saying the Cadbury factory "has survived major economic ups and downs for more than a hundred years but it hasn't been able to survive a National government's inaction on manufacturing."

"If elected to government in September, we will establish a minister for manufacturing in the cabinet, to better represent the interests of manufacturers and ensure they thrive," she said, calling the closure "a tragedy for Dunedin."

Local Labour MPs David Clark and Clare Curran said the closure was "a devastating blow for Dunedin."

(BusinessDesk)


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Lots of manufacturing processes are energy intensive meaning high carbon emissions. This just further proves that the greens environmental policies and leftist policies will never go together.

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What absolute right-wing rubbish Andrew. There are plenty of manufacturers that have found alternative clean energy sources and many others seeking such alternatives (costs of high carbon emissions being a major driving factor). Just as there are "lots" that aren't energy intensive.

And are you suggesting that your assertions are why Canterbury is being moved from Dunedin?

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https://www.eeca.govt.nz/news-and-events/news-and-views/minister-thanks-... ... 2016 ... Mr Underhill retires after 10 years at the helm; ... he has made a huge contribution ... https://en.wikipedia.org/wiki/Energy_Efficiency_and_Conservation_Authority ... https://www.eeca.govt.nz/about-eeca/our-programmes/ ... businesses in New Zealand account for about 50% of total energy use and produce more than 40% of New Zealand’s energy-related carbon emissions; EECA works with them all across the country to help them with energy management based on scale of energy use ... https://www.eecabusiness.govt.nz/funding-and-support/ ... https://en.wikipedia.org/wiki/Energy_management ... it is advisable to establish a separate organizational unit, “energy management”, in large or energy-intensive companies to support senior management and keep track ... https://en.wikipedia.org/wiki/Electricity_market#Wholesale_electricity_m... ... buying wholesale electricity is not without its drawbacks; ... however, the larger the end user's electrical load, the greater the benefit and incentive to make the switch ... https://www.nbr.co.nz/article/long-awaited-grid-cost-sharing-paper-due-m... ... http://enforcement.trade.gov/esel/newzealand/87-a05.html ... under the South Island Electricity Concession Scheme (SIECS) established in 1979, the Department of Trade and Industry (DTI) offered select industrial users with operations on the South Island a 25 percent rebate on electricity consumption costs. ... in 1986, DTI gradually phased-out the rebate scheme and implemented in its place a price differential in the bulk tariff rates (the supply rates charged to municipal distributors) between the South Island and North Island. In contrast to the SIECS, the new price differential was calculated based on government studies which documented that costs of electricity supply were lower on the South Island than on the North Island and that bulk tariff rates should reflect this differential. Moreover, while the SIECS was a direct rebate to designated industrial users, the price differential system: applies to rates charged to municipal distributors and not to end-users, and is in no way limited to specific industries ...

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This company is a PR nightmare

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https://en.wikipedia.org/wiki/Nutella ... at 20 percent, palm oil is one of its main ingredients ... https://www.oliveoiltimes.com/olive-oil-business/nutella-makers-defend-p... ... similar spreads which contain olive oil instead of palm oil are manufactured by a number of Italian companies ... https://www.ferrero.com/group-news/Ferrero-Palm-Oil-Charter ... members of the Roundtable on Sustainable Palm Oil (RSPO) ... https://en.wikipedia.org/wiki/Roundtable_on_Sustainable_Palm_Oil ... members include high-street names, like Unilever, Cadbury's, Nestlé and Tesco, as well as certain palm oil traders ...

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It's the way of the real world that companies without real product differentiation either grow or they die. Meanwhile, the likes of Whitakkers grow, expand and flourish on the back of real product differentiation - real chocolates at fair value.

Strange how the Greens have not mentioned Cadbury using palm oil in their chocolates?

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Cadbury has never recovered from their palm oil substitution of cocoa in NZ while at the same time reducing bar size. The consumer backlash was one of the few examples of consumer power in NZ which Cadbury's reversal of its decisions and constant "specials" pricing has never seen them recover from.

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https://en.wikipedia.org/wiki/Roundtable_on_Sustainable_Palm_Oil ... http://www.telegraph.co.uk/news/2017/01/11/nutella-maker-ferrero-fights-... ... the palm oil industry ... has found a vocal ally in the food sector: the maker of Nutella, Italian confectionery firm Ferrero ... https://en.wikipedia.org/wiki/Ferrero_Rocher ... main ingredients: milk chocolate, hazelnut, sugar, palm oil, wheat flour ... https://en.wikipedia.org/wiki/Nutella ...

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Sad for Dunedin but great news for Whitakers and De Spa Chocolatier. Perhaps they can make room for some new employees.

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http://www.stuff.co.nz/business/industries/89519930/the-locallyowned-con... ... once Cadbury leaves, Oamaru's Rainbow Confectionery would be the largest provider of locally made sweets in the country; ... the company would be looking at offering jobs to Cadbury staff, ... has just completed a major expansion project at the factory, which was timely given the news ...

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Oh and don't forget Queen Anne Chocolates. Cadburys will soon be forgotten in NZ.

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Does this mean that Cadbury's manufacturing in Australia will use the palm oil used there versus the cocoa used in Dunedin and that this palm oil Cadbury's chocolate will be what's exported to NZ to sit on our shelves?

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Probably - and if so, likely a slow death of Cadbury chocolate in NZ.

This has been a tragic comedy of mismanagement from Mondelez International, e.g. the palm oil fiasco and the downsizing of bars while keeping the same price. Mismanagement that's now cost 350 Dunedinites their jobs, impacting their families too.

Some other products to keep an eye if you're not keen on Mondelez's management style:
http://www.mondelezinternational.com/brand-family

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excellent question - NBR could you get a response from Mrs Banfield please

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No guesses required as to where Amanda Banfield resides.
If Head Office requires cuts to be made in a region Australia always ensures they are made in New Zealand first.

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lets boycott Cadbury, consumers show your displeasure at the till!

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Lets do what Trump is doing. If you close down and go offshore with the loss of hundreds of jobs, then expect to sell your goods back to us. Bang massive tariffs on those products, and see how they like that.
keep jobs for kiwis.

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