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Cadbury announces plant closure deal in operations shake up

By Neil Merrett, 28-May-2009

Cadbury says it has reached an agreement with some of its workforce to close a Barcelona-based gum factory as part of an operational shake up of its operations.

A spokesperson for the manufacturer announced that unions had agreed terms with the company this week, which were approved via an 81 per cent majority, though could not detail any specifics of the deal with its employees and representatives.

Cadbury in Spain

Cadbury says that it first proposed closing the Spanish gum factory at the end of March as part of a wider European supply chain review designed to cut operational costs in increasingly competitive times.

Following a challenging fiscal 2008 linked partly to raw materials costs and the spin off of its North American beverage operations, Cadbury says it is looking at measures such as instigating price increases in 2010 to better compete in the market.

Although company sales were up on a worldwide basis by six per cent during the 2008 financial year, the company says it continues to review cost efficiency in its operations.

“As part of our efficiency agenda, we are always reviewing capacity across our gum supply chain network in Europe to ensure we achieve greater efficiencies of scale,” states the company.

Despite the decision to close the Barcelona plant, the company says that it still has sales and marketing operations in the city as well as two additional plants in Spain situated at Valladolid and Ateca.

Price push

The operational shake up follows an announcement made by Cadbury in February that it expects to further hike prices for its products in 2010 as the cost of cocoa was found to remain ‘stubbornly high’ amidst wider economic uncertainty.

Profits in 2008 for the group fell to £366m (€408m), from £407m (€454m) in 2007, largely due to the loss of the company's beverage brands following the spin-off of the Dr Pepper Snapple Group.

For the 12 months to 31 December 2008, Cadbury's registered total sales rose by 15 per cent to £5.38bn (€6bn).