Suzanne Savill: Bid for Bristol's chocolate factory is sweet

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Wednesday, September 09, 2009
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This is Bristol

Sweeter than the contents of an entire box of Dairy Milk, washed down with a large mug of Bournvita, followed by a couple of Creme Eggs.

The news that the Cadbury factory in Keynsham, on the outskirts of Bristol, might not close if a takeover bid for the company goes ahead has certainly created a sugar rush of new hope.

It's too early to tell whether the bitterness at being cast aside by Cadbury directors in favour of cheaper labour in Poland could be replaced by the sweet taste of survival for workers at the Somerdale plant.

However, the fact that a major international firm like Kraft considers the factory worth saving shows how the world has changed since October 2007, when Somerdale was scheduled to be shut down with the loss of 500 jobs.

When Cadbury was announcing plans to axe the Somerdale plant, a crisis was developing among American sub-prime mortgage lenders following a rise in interest rates and a drop in property prices.

Meanwhile, the French Bank BNP Paribas had suffered liquidity problems widely considered to mark the start of the Credit Crunch on August 9, 2007.

Since then, there has been a surge in toxic debts – many based on flawed property deals – resulting in banks losing thousands of billions of pounds (and collapsing, in the case of Lehman Brothers).

At the same time the price of oil has been rising, and so have uncertainties over continuing supply at current levels.

In the space of just a few years, many old orthodoxies have started to melt away, like a Wispa bar left out in the sunshine for too long.

The suits in the Cadbury boardroom claimed it made better business sense to shut down Somerdale and move production to a sister factory in Poland, even though the plant – which has been in Keynsham since 1923 – was making a profit.

Many observed that as well as benefiting from cheap labour, Cadbury could also potentially gain substantial profits from selling the factory site in Keynsham for housing development.

But now Cadbury's rationale for closure appears to have been questioned by Kraft, which is expected to put in a new offer after an initial bid of £10.2 billion was rejected.

Could it be that companies are having to contemplate doing business in a different way, because we're beginning to live in a different way to that which was the norm a couple of years ago?

Cheap flights and cheap fuel look set to be a thing of the past – along with imports of cheap goods and labour, credit card consumerism, debt-based growth, and making easy money by buying and selling property at over-inflated prices.

Amid all this change, many corporate types more interested in raising profit levels than rising sea levels have become aware that the price and availability of oil could have long-term ramifications for those businesses which rely heavily on imports.

Maybe instead of witnessing the absurdity of closing a profitable factory, taking money out of the UK economy, and then importing back into the UK products that used to be made in this country, we could see a return to some sort of sanity.

The tragedy is that this change will be too late for the many other factories that have already been shut all over the UK.

More that a million jobs have been lost in UK manufacturing since 1997 – a fact which leaves a bitter taste that cannot be sweetened by continued production at Somerdale of Creme Eggs, Crunchies and Curly Wurlys.

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3 Comments

  • Profile image for This is Bristol

    by Chris, Mars

    Thursday, September 10 2009, 3:40PM

    “Mars bars are the best!

    I don't like anything Cadburys!

    Mars........hmmm yummy!!!”

  • Profile image for This is Bristol

    by Mark, Stoke Bishop

    Wednesday, September 09 2009, 12:48PM

    “Suzanne maybe did not know when she wrote this that, despite Marathon negotiations, the Kraft takeover would be fudged. Hopefully now after a little Time Out, Hershey's will come a long with a Crunchie proposal to give Somerdale a Boost.”

  • Profile image for This is Bristol

    by Jeff, Bristol

    Wednesday, September 09 2009, 10:43AM

    “Was there a point to this article? I can't find one. All I read was a lot of copied and pasted irrelevancies with a few chocolate bar metaphors thrown in.

    I suppose we should be thankful this column only appears once a week.”

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