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Hershey: West factory expansion will have $1B impact

By - Last modified: September 21, 2012 at 6:50 AM

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From left, Jim Nevels, Hershey chairman; Gov. Tom Corbett; and J.P. Bilbrey and Philomena Krosmico of The Hershey Co. at the Sept. 18 opening of the company’s West Chocolate Avenue factory expansion. Photo/Submitted
From left, Jim Nevels, Hershey chairman; Gov. Tom Corbett; and J.P. Bilbrey and Philomena Krosmico of The Hershey Co. at the Sept. 18 opening of the company’s West Chocolate Avenue factory expansion. Photo/Submitted

The Hershey Co. unwrapped the expansion of its West Chocolate Avenue factory in Dauphin County on Sept. 18 and said its investments in the modern facility will add $1 billion to the state economy in contracts, payroll and related spending over the next five years.

"Today, we are celebrating our proud Pennsylvania heritage, the growing popularity of Hershey products in global markets, our continuing investments in productive technology and our great workers who make it possible to enjoy these iconic products," Hershey President and CEO John P. Bilbrey said in a prepared statement.

Hershey started the $300 million expansion of the facility in 2010. In June, the Derry Township-based chocolate giant announced its plans to ramp up its international presence with a goal of hitting revenue of $10 billion in five years. The company wants to boost its international sales from 30 percent today to 50 percent in 2017.

Hershey has made developing markets — such as China, where sales of its Kisses have grown 97 percent since 2007 — a priority in that global expansion. Hershey also said this month it would buy out its joint venture partner in India to take the driver's seat in its expansion there.

China and India together represent about 50 percent of the world's growing middle classes, a key demographic for Hershey.

Hershey has said the new facility will be an integral part of its international expansion and hinted that the workforce could grow in the future as the company grows. But the company's transition to the new plant in a changing economy hasn't always been as smooth as the chocolate it produces.

In March, the company cut about 200 jobs as part of its transition to the expanded factory and closed the historic factory on East Chocolate Avenue that founder Milton Hershey opened in 1905. The company and its workers, represented by Chocolate Workers Local 464, sparred over jobs related to the transition in February.

At that time, the company and union said about 500 jobs would move from the old plant to the expanded west facility. Today, that number is 700, according to Hershey.

Hershey's factory expansion has become a hallmark of what Gov. Tom Corbett wants to achieve in expanding and modernizing Pennsylvania's manufacturing sectors.

"I am proud the commonwealth was able to partner with Hershey as they grow, evolve, create jobs, train great employees and continue their commitment to Pennsylvania's prosperity," Corbett said.

The governor also used his Hershey remarks to advance his vision of how Pennsylvania will prosper in the future.

"To keep this legacy of manufacturing alive, we need a sound economy and a state that understands that partnership is better than confrontation," Corbett said. "There have been some tough economic choices made at the state level, but every one of those decisions has been made with a clear understanding. Private sector employment, not government spending, creates prosperity."

In 2010, the state gave Hershey $2.5 million in Opportunity Grant Program funding to assist in its modernization, according to records with the state Department of Community and Economic Development.

The plant expansion infused about $70 million into the state economy and created about 300 construction jobs, according to Hershey. The 340,000-square-foot plant expansion has some of the latest candy production technology, including the capability to produce 70 million Kisses per day, the company said. Hershey employs 4,800 people in Pennsylvania and more than 14,000 worldwide.

Hershey's shares are traded on the New York Stock Exchange under the ticker symbol HSY.

Jim T. Ryan

Jim T. Ryan

Jim T. Ryan covers Cumberland County, manufacturing, distribution, transportation and logistics. Have a tip or question for him? Email him at jimr@cpbj.com. Follow him on Twitter, @JimTRyanCPBJ.

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