Hershey Co. is cutting its workforce by 1,500 and is building a factory in Mexico as part of a three-year plan to scale back its production lines, the nation's biggest candy maker said Thursday.
The announcement came only a day after Valentine's Day, one of the most popular days of the year for gifts of chocolate.
The maker of Reese's peanut butter cups and Mounds bars employs about 13,000 workers, so the planned cuts would amount to 11.5% of its workforce.
When the restructuring plan is complete, Hershey will make its chocolates and other candies at fewer facilities and have a lower overall cost structure.
About 80% of Hershey's manufacturing will take place in the U.S. and Canada. A union leader suggested that the job cuts would be particularly acute in those countries.
Dennis Bomberger, business manager for Chocolate Workers Local 464, which represents 2,500 workers at Hershey plants in Hershey and Reading, Pa., speculated that the actual job cuts might have to be deeper to achieve a net reduction of 1,500 at the company's 20 plants.
"They're going to gain some jobs in Mexico ... so there's going to be a higher number lost" in the U.S. and Canada, Bomberger said. "Whenever they move something out of the country, that's not good news for any company from the workers' standpoint."
Hershey spokesman Kirk Saville declined to discuss details about the job cuts or the plant Hershey plans to build in Monterrey, Mexico.
Hershey reported a 10% drop in fourth-quarter earnings last month on lackluster sales. Results lagged because of weak merchandising, the company said, as well as a recall of products made at a plant in Canada last year after salmonella bacteria were discovered.
Hershey shares rose 80 cents, or 1.6%, to $52.10.