Hershey eyes expansion with new restructuring scheme

By Catherine Boal

- Last updated on GMT

Related tags: Hershey, Management, Chocolate, Revenue

US chocolate maker Hershey has embarked on a three-year
restructuring plan to further increase the company's global
footprint and allow it to outsource production of low value-added
products.

The strategy will cut 1,500 jobs and move 80 per cent of Hershey's production volume to Canada and the US. Hershey president and CEO Richard Lenny said: "When completed the transformation programme will deliver a flexible, advantaged supply chain designed to meet a diverse range of consumer and customer needs while generating significant resources available to invest behind our strategic growth initiatives."​ As part of the 'Global Supply Chain Transformation'​ Hershey will be outsourcing operations as well as reducing its number of production lines by over a third and focusing production at a small number of factories rather than scattering manufacturing. The company said: "Finished products will be sourced from fewer facilities, each one a centre of excellence specialising in Hershey's proprietary product technologies. "Increase access to borderless sourcing will further leverage the company's manufacturing scale within a lower overall cost structure."​ Hershey expects margins to swell significantly as a result of the restructuring with predicted savings of $170 million (€129.7m) to $190 million (€144.9m) by 2010. With the excess revenue generated from the programme Hershey plan to invest in core brand growth, new product development, selling and go-to-market capabilities and global expansion. Moving further into worldwide markets has been high on the agenda for the owners of the Hershey Kisses brand after disappointing results last month showed a €13m fall in net income through its US operations. In order to target the lucrative potential of the burgeoning Chinese market, Hershey formed a partnership with Korean confectioners Lotte in January this year with production expected to be underway by the summer.

Related topics: Markets, Hershey

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