NZ's own Jaffas could be made overseas if Dunedin Cadbury factory closes video

HAMISH MCNEILLY/Stuff.co.nz

Cadbury factory in Dunedin to close

Kiwi favourites Jaffas and Pineapple Lumps could be made overseas under a plan unveiled on Thursday to shut Cadbury's Dunedin factory.

Cadbury's owner, American food giant Mondelez International, is planning to close the factory next year with the loss of over 350 jobs.

Are you affected, or do you know more? Email us at newstips@stuff.co.nz

While its chocolate bars are already produced overseas, the Dunedin factory, which has been open since 1884, still makes Pineapple Lumps and Jaffas, as well as crumb chocolate that is used in other products.

These NZ favourites are currently made here, but could be manufactured offshore if the factory closes.

These NZ favourites are currently made here, but could be manufactured offshore if the factory closes.

Under the proposal, all of the volume would be absorbed into existing Mondelez operations "mostly in Australia", Amanda Banfield, Mondelez vice president for Australia, New Zealand and Japan, said.

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"In the case of the Kiwi favourites, the Pineapple Lumps and Jaffas, we are interested in looking at whether there is a local manufacturer willing to take that on behalf and would manufacture here for us.

A security guard has been posted outside the Cadbury factory and tourist centre in Dunedin.
HAMISH MCNEILLY/FAIRFAX NZ

A security guard has been posted outside the Cadbury factory and tourist centre in Dunedin.

"That is something we would be looking at consulting the community once we have worked through the proposal period."

That could be in Dunedin, she said, adding that the recipes would not be changed and confirming that the products would still be available.

Despite the "great work of the team" and an $80 million investment over the last decade, the company was unable to find a long-term future for the factory, Banfield said.

Dunedin's Cadbury factory has been temporarily closed while its future is debated.
Hamish McNeilly

Dunedin's Cadbury factory has been temporarily closed while its future is debated.

"The plant is not losing money, it is not about that. It is about its long term sustainability. It is actually more cost effective for us to move this volume elsewhere and that is really the view we have taken."

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She said the Dunedin operation was challenged by scale, with the volume about a third of what it needed to be sustainable in the long-term.

About 70 per cent of what was produced in Dunedin was exported, mainly to Australia, and shipping across the Tasman, "was one of the most expensive stretches of water to ship across in the world".

A worker at Dunedin's Cadbury factory wears a media contact card on her forehead.
HAMISH MCNEILLY/FAIRFAX NZ

A worker at Dunedin's Cadbury factory wears a media contact card on her forehead.

Asked about support the company received, including rates relief, Banfield said it wasn't about looking for Government handout but was about the long-term viability of the operation.

Security guards were outside every entrance to the factory on Thursday, with the factory closed for the day as workers attended a meeting.

Hundreds of workers were called to a meeting and briefed on the proposal to move production to Australia.

Tourists were turned away from Dunedin's Cadbury World as workers were briefed on the factory's probable closure.
HAMISH MCNEILLY/FAIRFAX NZ

Tourists were turned away from Dunedin's Cadbury World as workers were briefed on the factory's probable closure.

Mondelez said it would invest to redevelop the tourist side of the popular Cadbury World operation if the local community wanted it to. It would look to sell the main factory site.

Reaction to the closure

Workers leaving the meeting had been told not to comment and had been given media contact cards to show people.

Dunedin's Cadbury factory is to be shut, joining others all across the developed world as Mondelez shifts production to ...
HAMISH MCNEILLY/FAIRFAX NZ

Dunedin's Cadbury factory is to be shut, joining others all across the developed world as Mondelez shifts production to low-wage countries.

They looked shocked and upset.

"I'm gonna get a bottle of wine," said one worker who had been with Cadbury for over 20 years.

The E Tu Union, which represents some of the affected workers, said the shock waves would roll through Dunedin.

"The company had reported it was doing well and this has come out of the blue," E Tu's Chas Muir said. 

"It's devastating news for the workers at Cadbury's and for the local Dunedin economy. Cadbury is the city's fourth biggest employer and many workers have been with the company for years."

Muir said there would be consultation over the closure "but the company says the factory will definitely close from March next year."

Cadbury's Dunedin factory and tourist centre employs 350 people and almost three quarters of the products it manufactures are shipped to Australia.

If the plan goes ahead, the first job loses will kick in late this year for most staff. Mondelez said about 100 people would be kept on until early 2018.

Mondelez said while the manufacturing operations would stop, it was "ready to" invest money to redevelop the Cadbury World tourist attraction to create more jobs and attract more visitors, with a decision due by April.

Dunedin's Labour MPs Clare Curran and David Clark said the factory closure was a devastating blow.

"Employment changes affect mortgages and schooling choices. It is too soon to grasp the flow on effects, but we can be certain this will have a huge impact across Dunedin." Curran said.

Finance Minister Steven Joyce said the closure was disappointing.

"My understanding is there are some unique aspects to this, the age of the factory, the composition of the product mix that they use, a whole range of things. And unfortunately from time to time these things happen," Joyce said.

"That doesn't change the story in terms of NZ's high-quality food because in Porirua for example, you've got the Whittaker's family selling chocolates and increasing their exports all over the world."

New Zealand First leader Winston Peters said the move would prompt consumers to buy New Zealand made chocolate.

"Many New Zealanders will now feel more inclined to buy Whittaker's chocolate and other Kiwi produced chocolate knowing they are eating a product that is keeping New Zealanders in jobs," he said.

Dunedin Mayor Dave Cull was working with local agencies to support workers affected by the announcement.

"This decision will be a difficult, if not devastating time for affected staff and their families," he said.

"My message to those workers is that you are not in this alone. The city will pull together to support you, your families and the wider community."

It is understood no decision has been reached about the annual Cadbury Chocolate Festival, including the popular Jaffa race.

Cadbury closed is Auckland plant in 2009 and moved all New Zealand production to Dunedin. It said then that distance from its main Australian market was not seen as an issue.

Financial assistance

In 2006 the Government's Strategic Investment Fund provided funding of $2 million for Cadbury's crumb research and development facility, in partnership with the University of Otago, 

A Dunedin City Council spokeswoman confirmed the council granted rates relief of $61,300, to the company in 2006 for a four year period.

Cadbury's application was made on the basis of a $20 million development at their Dunedin factory.

Cull said he contacted all the relevant agencies to coordinate a "whole of city" response.

He wasn't surprised by the company citing "tyranny of distance" as a reason for the proposed closure.

"I think the writing has been on the wall for Dunedin as a manufacturing centre for goods that have been bulky or heavy."

The city had survived the closure of Fisher and Paykel plant in 2008, and Hillside engineering in 2012.

 - Stuff

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