Harrisburg, PA (AP)- Hundreds at two of Hershey’s hometown chocolate factories could be cut through layoffs or attrition under a proposed agreement between the nation’s largest candy maker and union negotiators, a newspaper reported Monday.
The agreement emerged from talks between The Hershey Co. and Chocolate Workers Local 464 in the wake of the company’s announcement in February that it plans to slash its workforce and build a plant in Mexico.
Up to 650 jobs could be cut, but the agreement would keep open the two plants where they work, including Hershey’s century-old flagship factory on Chocolate Avenue, the Patriot-News of Harrisburg reported.
Workers were scheduled to vote on the agreement later this week, union officials said.
Dennis Bomberger, the union’s business manager, said the cuts would happen over a three-year period, and represent more than one-fourth of the 2,200 union-represented workers at the two plants. Hershey has said most of the cuts will be made through early retirement or buyouts.
If members reject the agreement, union negotiators believe “the alternative is even worse,” Bomberger told the newspaper.
Bomberger did not return a telephone message left be The Associated Press and a company official could not confirm the job cuts in the proposal.
A third company factory in Hershey is staffed by nonunion employees.
Since chairman and chief executive Richard H. Lenny arrived in 2001, the company’s workforce has steadily dropped, from above 14,000 to below 13,000.
The maker of Hershey’s Kisses, Reese’s peanut butter cups and Mounds bars has 20 plants in the United States, Canada, Mexico and Brazil.
The restructuring plan announced Feb. 15 is geared to save as much as $190 million a year by shifting work to countries where labor is cheaper as Hershey tries to improve sales in China, India and other fast-growing economies.
“We are missing out on the cost opportunities that exist outside of the U.S., “Lenny told a Wall Street analyst conference in New York on Feb. 20.
Two days later, Hershey confirmed it would close its Smiths Falls plant in eastern Ontario, affecting more than 500 employees at the 44-year-old factory.
Under the restructuring, Hershey plans to cut 1,500 jobs and close some plants, although union officials have speculated that job losses in the United States and Canada will be even steeper because some workers will be added at a new plant in Monterrey, Mexico.
The proportion of Hershey’s manufacturing in the U.S. and Canada will shrink, from 94 percent currently to 80 percent by 2010, the company has said.