| New Study: Fleeing Candy Companies See Cheaper Labor and Benefits, Not Sugar |
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FOR IMMEDIATE RELEASE CONTACT: Phillip Hayes
PARK CITY, Utah—The large candy company that recently relocated some operations from Pennsylvania and Canada to Mexico did so to save on overhead expenses. Ingredient costs, such as sugar, changed very little, according to a new study by former USDA official Peter Buzzanell. “We found huge disparities in wage rates to be the major economic factor,” the study read. Buzzanell, who will present his findings tomorrow at the 26th International Sweetener Symposium, lists candy company wages at $18.78 an hour and yearly healthcare costs at $7,680 per worker in Pennsylvania. That plummets to 51 cents an hour and $258 per worker for healthcare in Mexico. Rent costs and sewage bills are also much lower south of the border. “Independent site-selection research for manufacturing firms puts labor at 58-74 percent of overall operational costs,” he said. “Sugar prices, meanwhile, varied modestly from country to country.” The well-known chocolate bar maker that relocated part of its Pennsylvania presence has not decreased its product prices for American grocery shoppers in 2009 and reported a 20 percent profit increase for the first quarter of the year. Despite the increased profits of this candy maker, Buzzanell believes candy company flight to low-wage countries “has run its course and that trend of job loss may be reversing itself.” Many food corporations are expanding U.S. candy production operations; jobs in America’s confectionary business rose by 12 percent in 2007; the amount of sugar in imported sweetened products has declined for the past two years; and industrial sugar use is up 11 percent since 2003, the study reported. But most importantly, Buzzanell said, profits in the confectionary business are up despite the recession, “with the industry’s trade association itself boasting profit margins of 35 percent.” When companies are making healthy returns, there should be little pressure to leave skilled American workers, he concluded. -0-
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