After more than 80 years, Cadbury’s Dunedin factory is about to close for good. Mondelēz International has presented a proposal to end manufacturing operations in 2018, and if that is adopted, the first phase of redundancies will start in late 2017. The facility currently employs 350 staff, and approximately 100 employees are set to remain with the business until early 2018. The company has committed to retaining as many of the team as possible while providing the rest with the necessary outplacement and career transition training.
The Dunedin site has been producing Cadbury products for decades, with more than 70 percent of products being exported, particularly to Australia.
In announcing the move, Amanda Banfield, Mondelez International’s area vice-president for Australia, NZ and Japan, said the proposal was the result of ‘extensive consideration of the issues affecting local production,’ as part of a multi-year strategy to reinvent the company’s global supply chain.
“We operate in an increasingly competitive industry and the factory’s distance from its main market, low volume and complex product portfolio, make it an expensive place to manufacture our products,” she said.
Mondelez plans to increase production and investment in larger sites, while also reducing costs. Unfortunately, production at the Dunedin factory has been generating additional costs that the business could no longer absorb.
“There’s existing capacity in our Australia sites which can deliver these production volumes at the same quality our consumers expect,” Banfield said.
The company guaranteed that New Zealand would remain an important asset, with more than 130 people continuing to work in the commercial, finance and human resources teams. Moreover, Mondelez aims to support Dunedin’s tourism sector by investing in its Cadbury World Experience, a guided tour that attracts 110,000 visitors each year.
A final decision will be made by April.
NZ Food and Grocery chief executive, Katherine Rich, said she felt great sadness at this decision, but pointed out that the company had done everything in its power to keep the facility running, and there had been no shortage of support from local council leaders and MPs.
“The reality is it’s been tough keeping the doors open," she said, adding that the site's massive footprint would have required a much larger manufacturing scale to ensure profitability.
"Over the past 20 years in different roles, I have seen first-hand the people of Cadbury, Kraft and Mondelez try everything to make the numbers work – from new market ideas, reorganisation, innovation to increasing export production and new factory investment. The passion for chocolate-making and the intentions have been sincere, but the reality is no new strategy has worked."