PhillyDeals: Phila. food plant to close as Mondelez, its parent, soars

Posted: February 12, 2014

Mondelez International sells $35 billion worth of Oreo cookies, Ritz crackers, Cadbury chocolates, Trident gum, and other brands a year. Its Wall Street fans expect the company to boost its annual profit one-third, to $2.7 billion, when it reports Wednesday.

Not enough, Mondelez chairman and chief executive Irene Rosenfeld has told her investors, including New York investor Nelson Peltz, a billionaire crusader for higher dividends and lower costs, who has also been buying into DuPont Co.

Rosenfeld collected $29 million in cash and stock last year (plus personal use of the corporate jet) as she launched Mondelez from the old Kraft Foods Inc.

She has been consolidating the company's aging plants around the United States and building big new ones in other countries, using speeded-up baking equipment that requires a fraction of the workforce.

The Mondelez express stopped Thursday in Philadelphia: Workers at the company's plant (formerly Kraft, formerly Nabisco) up at Roosevelt Boulevard and Byberry Road were called in by Cindy Waggoner, Mondelez vice president for biscuits, and told they'd lose their jobs when the plant closes early next year.

"She tried to say the union was notified and [that] we weren't interested in doing anything" to save the plant, which wasn't true, John Lazar, president of Bakery, Tobacco & Confectionary Workers' Local 492, told me.

About 350 workers earning an average of $24 an hour - $960 a week, before taking out Social Security, federal, state, and city taxes - will lose their jobs.

At a meeting in December, when Mondelez promised to talk to the union about the plant's future, "we said, 'What could we do to keep the Philadelphia bakery open?' They said, 'No, you tell us,' " Lazar told me.

So the union made a proposal: If Mondelez agreed to bring work back to the half-empty Philadelphia plant from a low-wage contractor in western Ohio, the union would reconsider cost-cutting steps the company had asked for in earlier contract talks: two-tiered wages (lower for new workers), part-time workers, a flexible workweek.

"They said, 'Nah, not interested,' " Lazar said.

"The discussions with the union," company spokeswoman Laurie Guzzinati told me, "did not provide us with a scenario that I would call a viable alternative."

Mondelez says it's going to invest $130 million in two other union plants: a more-modern facility in Richmond, Va., and another in Fair Lawn, N.J., near the corporate headquarters and R&D.

But Lazar said workers didn't believe that: They suspect Mondelez is going to move Oreo and Ritz production to the giant new bakery it's building in the government-subsidized Interpuerto de Monterey export zone in northern Mexico.

Mondelez says it's building the world's largest cookie plant down there, for $350 million. The Mexican government says Mondelez will eventually invest $600 million. That plant will make cookies and crackers for "the United States and the Americas," spokeswoman Guzzinati said.

In a meeting with Wall Street investors in late summer, Mondelez called its current plant network "fragmented, complex, and inefficient," and promised to close some plants while doubling production at 16 "strategic sites," using two-thirds less labor.

Is America enjoying, as we've been hearing, a "manufacturing renaissance" the government ought to support? And is this what it looks like: a global network of robot bakeries?

215-854-5194 @PhillyJoeD

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