NAUGATUCK, Conn. (AP) - The Hershey Co. will close its Peter Paul candy factory, which employs about 200 people making Mounds and Almond Joy candy bars, as part of a wider move to cut labor and materials costs, a company spokesman said Wednesday.

About 150 jobs will move by the end of the year to a plant in Stuarts Draft, Va., where the candy will still be manufactured, Hershey spokesman Kirk Saville said. He said the Naugatuck plant is operating at less than 40 percent of capacity.

In February, the nation's largest candy-maker said it will eliminate 1,500 jobs and one-third of its existing production lines over the next three years.

Hershey said it plans to build a new plant in Monterrey, Mexico, and shift more manufacturing to contractors in the United States. The company said it has agreements with Indian and South Korean companies to make and distribute its products in Asia.

The proportion of Hershey's manufacturing in the U.S. and Canada will shrink, from 94 percent now to 80 percent by 2010, the company has said.

In recent weeks, Hershey has said it will cut up to 900 of the 3,000 workers from three plants in its hometown of Hershey, Pa., and close a plant in Smiths Falls, Ontario, affecting more than 500 workers. On Monday, Hershey announced plans to shut down a plant in Reading, Pa., and eliminate 260 jobs.

Naugatuck employees will be eligible to apply for jobs at the Virginia plant, which makes a variety of Hershey and Reese's products. Those who do not will receive eight to 65 weeks of severance pay, depending how long they have been with the company. They will also receive career assistance and financial counseling, Saville said.