Bitterness Taints a Sweet Victory
When word leaked out two months ago that the Hershey Foods Corp. was for sale, residents here had a collective panic attack. Everyone prepared for the worst--new owners who would cut jobs, dismantle bits of the business and kill the soul of a company town that owes its very presence and prosperity to chocolate.
The town fought back. Lawsuits were filed and protests were held. Citizen groups were formed and Web sites were started. Placards declaring: “Derail the Sale” sprung up on the lawns of hundreds of homes. Edginess turned to anger. And Cathleen Lewis, president of the local historical society, said of the community-minded man who had founded the town: “Mr. Hershey must be turning over in his grave.”
On Wednesday, Hershey’s despair turned to jubilation as this town of 12,000 residents--half of whom work for the chocolate company or one of its entities--awoke to unexpected news: By a 10-7 vote late Tuesday night, the trust company that controls Hershey Foods had capitulated to public opinion and two unfavorable court rulings. Hershey Foods would not be sold.
“This is a day of celebration,” said J. Bruce McKinney, an ex-member of the trust’s board and an anti-sale activist. “It shows what a totally unified community can accomplish. But it’s going to take time and effort on the part of a lot of people, particularly the board members, to reconstruct what has been fractured.”
Robert Vowler, Hershey Trust Co. chairman and chief executive, said Wednesday that the trustees had not bowed to community pressure, but decided not to sell because they didn’t like the offers they got. One bid from chewing gum maker the Wm. Wrigley Jr. Co. was for $12.5 billion and the other--a joint offer from chocolate giants Nestle and Cadbury--was for $10.5 billion. Hershey Foods had been expected to receive bids as high as $15 billion.
Even with the sale scuttled and the jobs at Hershey’s now secure, wounded feelings remain--as does a public sense of betrayal concerning the board’s decision to look for buyers. Citizens have collected 6,000 signatures on a petition calling for the board’s removal. It is an expression of distrust unimaginable in Milton Hershey’s time.
Even 57 years after his death, Hershey often is referred to here in the present tense. It is as though his ghost walks the last of America’s company towns, keeping watch over the well-being of his neighbors and the fortunes of his chocolate factory.
Hershey--who never got beyond the fourth grade and had failed as a candy maker in Philadelphia, Chicago and New York--ruled as a benevolent dictator here for 40 years after returning to his native township and, in 1905, opening a confectionery plant in a cornfield to produce Hershey’s milk chocolate bars.
With the wealth from what would become the world’s largest chocolate factory, he paid off churches’ mortgages, built--and sold at cost--attractive, landscaped homes for his workers, set up a trolley system and a junior college and founded a school for orphaned boys. He operated the newspaper, the bank, the department store, the telephone and electric companies, the hotel and the drugstore, as well as the park and the ballroom where Glenn Miller and Harry James played in the summers. If it moved or breathed, people used to say, it belonged to Mr. Hershey.
He commanded such allegiance--he subsidized the town services he owned and provided steady jobs, even through the Depression--that when workers of a new union staged a sit-down in 1937 over issues of seniority, townspeople marched up Chocolate Avenue to Hershey’s mansion to demonstrate against their striking neighbors. “Be loyal to Mr. Hershey,” one sign said . “He was loyal to you.”
“Let’s face it, this was Utopia. Mr. Hershey took care of this town,” said Robert Feaser, the current business manager of Chocolate Workers Local 464. Even now, he added, turnover at the plant is only 3% a year. “Everyone was scared to death of what might happen [if the company were sold]. And no one could understand why they’d sell. It made no sense.
“You could understand if there had been a couple of bad years or the stock wasn’t growing or the dividends weren’t holding up. But in good times and bad, Hershey’s been profitable. We’re recession-proof. When the economy goes down, our business goes up. When the economy recovers, we grow even more. It’s like the goose that lays the golden egg.”
Before he died in 1945, Hershey bequeathed his $60-million fortune to the Milton Hershey School for orphans. A 17-member board of local citizens was set up to oversee the trust, which now is $5.8 billion. The trust owns 31% of the chocolate company’s shares and 77% of its voting shares; 56% of the trust’s assets are invested in Hershey Foods.
The board--most of whose members no longer live in Hershey, and only five of whom own Hershey stock personally--said it had ordered Hershey Food executives to explore a sale in March in order to diversify the trust’s holdings. To do otherwise, members said, could make them susceptible to charges of failing to fulfill their fiduciary duties. (Hershey Foods controls 32% of the chocolate market in the United States.)
“There’s only one reason for exploring a sale: to diversify and stabilize existing assets.” Rick Kelly, a spokesman for the board, said last week. “No one and certainly no foundation keeps 56% of assets in a single company. The fact is, Hershey has to compete in a global economy. Everyone else is growing bigger. A strategic acquisition could strengthen Hershey Foods, strengthen the brand and
Even Pennsylvania Atty. Gen. Mike Fisher joined the fight against the board, saying any sale would cause “irreparable harm” to the company’s hometown. In response to his filing, Judge Warren Morgan of the Dauphin County Orphans Court, which oversees charitable trust activities, issued a temporary injunction Sept. 4 to block the trust from selling. Morgan said the trust’s board showed “a capriciousness that is an abuse of their discretion.” The trust appealed his restraining order, but a five-judge Commonwealth Court upheld the injunction.
In a town where the street lamps resemble Hershey’s Kisses and the spa at the Hershey Hotel offers milk chocolate baths, the imprint of company largess is everywhere: on the five public golf courses, the minor-league hockey team, the new library, the country-club-caliber recreation center, the excellent public schools. The private Milton Hershey School--whose 1,150 students are financially needy but no longer have to be orphans to attend--has an endowment larger than that of Duke University and Dartmouth College combined.
“My concern was that a sale would have changed the character of Hershey and torn the heart out of our town,” said Mike Pronio, who runs the grocery store that his grandfather, an immigrant from Italy, opened in 1918. “This is a company town, the last of its kind in America. People feel fiercely loyal to it. We all work to enhance Hershey. Visitors come and they say, ‘What a beautiful little town you have.’ ”
On Wednesday, things in Hershey seemed to be getting back to normal. Restaurants gave diners Hershey’s Kisses instead of after-dinner mints, and from the limestone Hershey plant, the fragrance of chocolate poured into the crisp autumn. Once again, the sweet smell of success hung over this company town.
