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Mondelez: Job cuts planned at Southwest Side bakery

May 19, 2015
Food & Drink
Mondelez International said Friday that up to half of the 1,200-plus jobs at its Chicago bakery could be eliminated as the maker of Oreo cookies makes changes at the aging plant.
 
Plans call for Mondelez to shut down nine of 16 manufacturing lines at the bakery, at 7300 S. Kedzie Ave. But the company also is weighing whether to add four high-speed manufacturing lines in Chicago or at a new facility in Salinas, Mexico. Adding new capacity in Chicago would cost the company more than $46 million in annualized operating costs and capital expense compared with Mexico, officials said.
 
Either way, with the shutdown of the older lines, the Chicago bakery will lose hundreds of workers. Mondelez would cut about 600 jobs in Chicago if it decides to open the four new lines in Mexico. But if the company adds new capacity in Chicago, job losses would total about 300 positions.
 
Deerfield-based Mondelez did not say when it would decide on where to put $130 million worth of high-speed, high-tech bakery equipment.
 
Mondelez now wants the unions “to provide us with any input they may have, particularly related to the financial gap but not limited to that before we make any final decisions,” spokeswoman Laurie Guzzinati said late Friday.
 
“The bakery will not close, the bakery is an important part of the network,” Guzzinati said. “There is an opportunity to invest and no decisions have been made.”
 
The Southwest Side facility opened as a Nabisco bakery in the 1950s and makes snacks, including Oreo and Chips Ahoy cookies and Ritz and Premium crackers. In late 1993, Nabisco — then part of RJR Nabisco — received millions in city and state tax savings to help finance a 10-year, $300 million to $500 million face-lift at the plant.
 
At that time, the facility was the world’s largest bakery and had 2,400 employees. During more than a year of negotiations, Nabisco made it clear that it had considered moving all or part of the plant’s capacity — and its jobs — out of state.
 
Nabisco, which had its headquarters in Chicago more than a century ago, has changed hands several times.
 
The brand is now owned by Mondelez, the global snack maker that changed its name from Kraft Foods in 2012. Envisioned as a high-growth global snacking juggernaut, Mondelez has seen the global snacking industry slow down and has been cutting costs to keep investors happy.
 
Guzzinati said Mondelez has not had formal discussions with the city about the project but believes the city and the state are aware of its plans to invest in new equipment. A spokeswoman for the city of Chicago, Elizabeth Langsdorf, declined to comment Friday afternoon.
 
Currently the facility, the snack-maker’s largest in the U.S., has a north bakery building and a south bakery building. Under the plans outlined Friday, the south building would be shut down.
 
The Bakery, Confectionery, Tobacco Workers and Grain Millers International Union stands to lose 445 positions if the new lines are set up in Mexico, or 225 employees if the new lines are installed in Chicago, said International Strategic Campaign Coordinator Ron Baker.
 
“Regardless of what you do, you lose jobs,” Baker said. “If you do nothing, you lose more.”
 
Mike Masterson, business representative for the International Union of Operating Engineers, said that union stands to lose 24 of its 66 jobs at the plant if the four new lines are added in Chicago, or 35 jobs if the new lines are instead built in Mexico.
 
Karl Sarpolis, of the International Association of Machinists and Aerospace Workers District 8, said the machinists union stands to lose 68 of its 104 jobs in Chicago if the lines go to Mexico. If the four new lines are installed in Chicago, it would lose about 41 jobs.
 
Sarpolis said the union asked Mondelez for details on how the company arrived at the $46 million figure, which weren’t provided at the meeting.
 
“It’s pretty personal,” Sarpolis said about the cuts. He worked at the plant for about 30 years.
 
Mondelez is in the process of shutting down a bakery in Philadelphia, a move announced in early 2014 that is leading to the loss of about 350 jobs. The company is spending another $130 million updating two of its other U.S. bakeries, one in New Jersey and one in Virginia.
 
The majority of Mondelez’s sales now come from outside the United States, and international growth is critical for the snack maker. Europe is its largest market, bringing in more than 40 percent of its $34.24 billion in revenue last year.
 
The bakery union said it represents more than 1,000 workers at the Chicago plant. Union members operate the bakery’s 16 lines producing such brands as Oreo, Chips Ahoy, Nutter Butter, Honey Maid, belVita, Premium, Ritz and Wheat Thins.
 
According to the bakery union, bakery processors in Chicago can earn up to about $26 an hour with opportunities for overtime such as working on weekends and extending eight-hour shifts.
 
Mondelez would not comment on the wages at its plant in Mexico, which opened in 2014, but said its manufacturing employees around the world are skilled technicians who are paid fair, competitive wages and benefits.
 
Mondelez’s contracts with the bakery union — five including one for Local 300 in Chicago — expire Feb. 28. Its contract with IUOE Local 399, the union representing 66 workers in Chicago, expires in 2017.
 
By Jessica Wohl
 

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