Sweet result: how Mondelez invested in Cadbury's factory
Cadbury's chocolate factory in Bournville opened in 1879.Today it's owned by the US food giant after a hotly contested takeover. But after initial fears Mondelez might shut the plant, the Americans have reinvested. The FT's John Murray Brown reports.
Filmed by Petros Gioumpasis. Edited by Oliver McGuirk. Produced by Daniel Garrahan
Cadbury has made chocolate here in Bournville since 1879. The site was a model of enlightened capitalism for the Victorian era. Today, the facility is owned by the US food giant Mondelez International, which paid out 11.5 billion pounds in 2010 after winning what was one of the most hotly-contested takeovers of recent decades.
There were fears at the time that Mondelez, which was then known as Kraft Foods, was only interested in the Cadbury brand and might shut the plant and move production overseas, but the Americans have reinvested. The company has even moved production of brands made elsewhere to Bournville and set up its global chocolate research and development centre here.
Behind me is one of the 23 production lines here at Bournville. This one makes Cadbury Dairy Milk bars, a million bars a day the workers tell me. Part of the result of this increase in automation has meant fewer workers are manning this line, but the company says this investment is vital to secure the future of this plant.
Many locals still believe workers' pay and conditions have deteriorated under the new owners. Julie Davis, who runs a wool shop in Bournville's Victorian model village, says her business has been affected by the changes Mondelez has brought in.
It certainly seems a feeling in the shop here that a lot people have left, found other employment, or retired, taken redundancy packages.
As part of the 75 million pound investment programme, 200 people took early retirement under a voluntary redundancy scheme.
Now, the investment of 75 million pounds has enabled to both increase capacity so we can grow our business here in the UK from Bournville, and we can also do it in a more competitive way. And that competitiveness has allowed us to reinvest in the brand. So we've increased our investment here in the UK in Cadbury by about 25% over the last three years, and we've grown our revenue and our market share as a consequence of that investment.
Experts believe the future of British manufacturing and factories like Bournville will depend on introducing new technologies, raising the amount of automation, and raising skill levels.
So in the Cadbury case, there was relatively low productivity there, old plant and equipment. The quid pro quo in this case was significant investment for a reduction in the headcount to really drive productivity growth, to kind of go for a high road of higher productivity and higher wages. And by and large, the unions have signed up to that, and they've been understanding of it.
The local Church of England vicar says it's important to remember Cadbury has seen many changes in its 150-year history.
It's a different company now and perhaps doesn't invest in the community in the way that the original founders did because the whole sort of model of the business 100-plus years ago was all the profits were ploughed back into the community. Part of global capital is very different now, isn't it?
In today's global economy, few companies can provide the sort of cradle-to-grave benefits safety net that George Cadbury laid on for his workers, where employees were housed by the company and went to a school and prayed in a church built by the company. But its American owners attracted widespread praise for its recent above-inflation pay deal, with the Unite union commenting that it was delighted that the Cadbury business, with its strong ethical traditions, can still act in a positive fashion in relation to its workforce and set the benchmark within the food, drink, and agricultural industries for other employers to follow.
At the time of the takeover, there were fears that the UK was losing its last independent chocolate manufacturer, but Mondelez International has invested heavily here. And the future of this iconic facility now looks assured.
John Murray Brown, Financial Times, in Bournville.