Last week's announcement that Pennsylvania candy maker Hershey Co. would close factories and move some operations to Mexico has workers at its Oakdale plant worried about their jobs.
"Rumors are running rampant right now," said John Souza of Teamsters Local 386 in Modesto, which represents plant workers. Hershey is the largest employer in Oakdale, with more than than 600 workers.
No formal announcements have been made about the future of the Oakdale plant, Souza said. He cautioned against further spreading rumors, saying that employees will be kept in the loop as more information is released in the coming weeks.
Hershey spokesman Kirk Saville said only one plant closure has been announced. The company said Thursday it will close a Canadian chocolate plant in the eastern Ontario town of Smiths Falls, which employs about 500 workers.
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Saville said he could not comment on when more closure announcements will be made, or if the Oakdale plant is in play. Hershey operates 20 plants in the United States, Canada, Mexico and Brazil.
"I don't have any announcements at this time," Saville said, noting that the company has set a three-year timeline for its restructuring plan.
The plan calls for the elimination of 1,500 jobs, or 12 percent of Hershey's global work force, and shifting more candy production to Mexico. The reductions are expected to save the company as much as $190 million a year by 2010.
Hershey close to food sources
The Oakdale plant opened in 1965. It makes Reese's Peanut Butter Cups, Hershey's Kisses and Hershey's Miniatures. Oakdale's identity is closely tied to the Hershey plant. The city holds an annual chocolate festival, and public tours were offered at the plant until 2001.
Much of the milk from Stanislaus County is sold to the Oakdale plant to be used in chocolate products, said Michael Marsh, chief executive officer of Western United Dairymen.
Marsh said Oakdale is an ideal location for a Hershey plant because it is close to raw products, which the company couldn't find as easily if it were to move the operation to Mexico.
"Here in California, you have the almonds that go into Hershey's Kisses and milk that goes into Hershey's milk chocolate," Marsh said. "I'm certain that those are some of the factors that led them to Stanislaus County in the first place. Well, we still have those."
Companies that shift plants overseas typically do so because of lower labor and health care costs, said Randall Harris, associate professor of management at California State University, Stanislaus.
"There is a host of reasons, but it comes down to the cost of operations. It is expensive to do business in California," Harris said.
Oakdale city officials and local plant managers also are waiting to hear news about the chocolate factory, said Oakdale City Manager Steve Hallam.
"There is very little anyone can do," Hallam said. "The city has positioned ourselves as well as we can, with its (wastewater) treatment capacity and being part of the enterprise zone."
Hallam said the economic impact of a plant closure would be felt in Stanislaus, San Joaquin and Merced counties, all of which have residents working at the Hershey plant.
"If the worst-case scenario happens, there will be a vacant industrial building that may attract another, larger employer," Hallam said.
Ready to help workers
Representatives from the Stanislaus Economic Development and Workforce Alliance rapid response team, which lobbies employers to stay in the county, have contacted Hershey's corporate headquarters but have not received a response, said Jeff Rowe, director of the Alliance Worknet.
The team also assists displaced workers in finding new employment or job training in the event of a mass layoff or plant closure. It took measures to help nearly 2,000 workers who were laid off last year when a handful of food-processing companies scaled back operations in Stanislaus County.
Rowe said the agency has not received a layoff or plant closure notice from Hershey. The federal Worker Adjustment and Retraining Notification Act requires that local governments be notified at least 60 days before a company lays off the majority of its employees.
Labor and government officials said employees should keep rumors in perspective because, in many cases, the worries turn out to be unfounded.
"It is natural human behavior, and the talk could just be based on speculation. That always happens when there is news about reductions anywhere," Rowe said.