Citing a "commitment to regain the leadership position in a changing global candy industry," Brach's
Confections, Inc. announced its intention to outsource much of the production of its current and future candy offerings to facilities in the United States and abroad over the next three years.
The firm, that is a union of Brock Candy of Chattanooga and Brach's of Chicago, is cutting back on manufacturing in both cities - including a phased shut-down in Chicago.
Employees at the Chattanooga facility have been told that hard candy manufacturing here will end this month.
Brock Candy (now Brach Confections) has been making hard candy here for over 90 years.
The company's operations in Chattanooga and in Winona, Minn., will continue to focus on the manufacturing of fruit snacks and gummies, officials said.
``We are focusing renewed attention and investments in product development and brand-building sales and marketing activities,'' said Kevin Kotecki, Brach's president and chief operating officer.
As part of this strategy, the company plans a phased shutdown of its nearly century-old manufacturing complex in Chicago, scheduled to conclude by the end of 2003. No more than 160 of Brach's 1,100 Chicago
employees will be affected during the current year.
The present executive management team will continue to be based in Chicago.
``Our employees are top-notch,'' Kotecki said, ``That's what makes this decision so difficult.''
He said the company "is facing three unavoidable forces affecting its business:
-- Despite investments of almost $76 million during the past 10 years, the company's current building complex - portions of which date to 1924 - are old and inefficient.
"Continuing investment will not bring the buildings and infrastructure up to modern manufacturing
standards," Kotecki said.
-- Brach's competitors enjoy an important economic advantage that comes from their ability to buy low-cost sugar from foreign sources. Despite support from local officials, including Mayor Richard M. Daley,
Brach's appeal to the U.S. government 10 years ago for this privilege was denied.
As a result, Brach's is required to buy domestic sugar at a significant price premium.
-- A dramatically altered competitive landscape, driven largely by continuing consolidation among global candy manufacturers.
``Over the years Brach's management and labor have worked extremely hard to stay competitive on the manufacturing side, but the pressures of the global marketplace no longer can be ignored,'' Kotecki said.
``The intended phase-out will allow us to invest our revenues in the marketing and sales of our products, rather than in an old and inherently inefficient building complex.''
Kotecki said that in announcing the intended phase-out well in advance, Brach's is signaling its commitment to conducting the move in a way that reflects the company's concern for its employees.
``We are committed to working closely with the union leadership to craft an agreement that provides for a smooth transition for the business, and benefits for our valued employees,'' said Kotecki.
``Our commitments to quality products and service that have long been hallmarks of the Brach's name will continue,'' Kotecki added.
Founded in 1904 by Emil J. Brach, Brach's Confections, Inc. is a leading producer of high quality candy. The privately held company produces nearly 200 varieties of candy including fruit snacks, chocolates and
hard candies. Brach's is best known for its StarBrite Mints®, Milk Maid Caramels® and Maple Nut Goodies®.