Some Oakdale businesses feeling the effect of candymaker closing | Modesto Bee

OAKDALE -- In the midst of a slowing economy weighed down by real estate foreclosures, Hershey shipping off to Mexico was one more thing the Northern San Joaquin Valley didn't need, its former employees and area business owners say.

Although the county gained 800 jobs in December, that was not enough to offset the number of people looking for work and the loss of 575 jobs at Oakdale's Hershey plant. Stanislaus County's jobless rate has reached 10 percent, according to the state Employment Development Department.

That kind of unemployment rate sends ripples through small businesses. It didn't take long for cafes, salons and restaurants to start feeling Hershey's closure. One day spa lost 10 to 12 clients, said Mary Guardiola, chief executive officer of the Oakdale Chamber of Commerce.

Business owners took notice when loyal customers who used to work for Hershey stopped coming by.

"When you lose a business like that, it's going to affect you. But I know this won't make or break me," said Mary Anne Heath, who has owned Moss Rose Bakery for 27 years.

It's hard to determine how much of small businesses' pain can be attributed to the Hershey layoffs and how much is a result of bigger issues roiling the economy. Guardiola said the housing market delivered the biggest wallop.

The closure of Hershey is expected to directly affect 283 jobs that weren't at the plant, according to a jobs impact analysis by Stanislaus County's Alliance Worknet, a work force development agency. That prediction started coming to fruition when Graham Packaging Co., which made plastic bottles for Hershey, decided to close its Oakdale plant. Its 25 employees were offered severance packages or transfers.

Oakdale has seen enough job growth in its industrial sector to compensate for the 175 Hershey employees who live in the city, said Mayor Farrell Jackson. Even as Hershey employees were being laid off in three waves, companies such as Con-Agra and Medex Medical Billing were hiring.

"I feel bad that people have lost their jobs, but as a normal citizen of Oakdale, I haven't seen an impact," Jackson said.

Other companies rally to hire workers

Counselors at the Alliance Worknet, who have been helping employees find jobs or get training, say companies have come forward to hire Hershey employees in a way Worknet staff has never seen.

"There was a huge rally of quality employers to get those folks back to work. I haven't seen that much interest when other companies closed," said Worknet's Don Dressler.

But a job elsewhere is not necessarily equal to one at Hershey. Some people who were making $19 to $20 an hour are looking at $9.50 to $14.

Day spa owner Terra Lairez said she fears people who have less money in their pockets will spend less. To keep clients coming in, she has started offering discounts to convince customers that they can afford their regular beauty and personal care treatments.

Some said they have been surprised to find their businesses have been unscathed by the closure.

When Lois Sipe, who manages the Food Mart near the plant, first heard it was closing, she anticipated a steep drop-off in business. She had estimated about 20 percent of her customers worked at the plant. After two waves of layoffs, she hadn't seen much difference in business.

So Thursday, the last day of production at the plant, she said she wasn't worried about how it would affect her business.

Those who sold products to the plant also have been affected.

Valley almond producers will continue selling to Hershey after a plant opens in Mexico. So Almond Board President Richard Waycott said he doubts the closure will hurt the industry.

But dairies will be losing a milk processor in a state that is short on processors, said Western United Dairymen President Ray Souza. The loss of Hershey means there will be more milk on the market in California and fewer places to turn it into something consumable.

"We're all affected by it," Souza said of the expected surplus.

Bee staff writer Eve Hightower can be reached at ehightower@modbee.com or 578-2382.