Will Kraft save Keynsham?
Amoree Radford had almost given up. Now... Amoree's not the sort of woman to give up easily. She's been running the 'Save Cadbury's' Campaign enthusiastically for two years, after the chocolate giant announced it would be closing its Keynsham factory in 2010.
"Chocolate's in our blood round here," Amoree tells me. "There's been a chocolate factory here since the eighteenth century with Fry's. People play football on the Fry Grounds, bingo at the Fry Club. Keynsham just won't be Keynsham without Cadbury's."
Amoree got thousands onto the streets of this small north east Somerset town, even Roger Moore backed the cause. But it seemed a battle of the heart against cold commercial calculus.
Cadbury's insisted selling up and moving the plant to Poland would boost their profits. Polish costs would be lower, and the Keynsham factory was on prime land - ripe for development. The firm weathered the local battle and appeared to have won the war. By this weekend Amoree was all but on her own.
Then, Kraft wade in. In their massive takeover bid for Cadbury's they could have merely made encouraging noises about supporting UK jobs. But no; they specifically picked up the Keynsham plant - or "Somerdale", as it's known.
The company statement says: "We believe we would be in a position to continue to operate the Somerdale facility...."
Which demands two questions: One, how can they make money in Keynsham when Cadbury's insist they cannot? And, two, why make such a play of it now?
In the way of boardroom battles, neither firm is answering questions like that. But Unite, the union involved, has a theory that holds water. Steve Preddy, their Bristol man who's been following this closely, tells me that Cadbury's were interested in "short term profits, to please their big investors", and that Kraft are in it for the long term.
"Over 5 to 10 years", Mr Preddy tells me, "Kraft can clearly see that the profitability lies in the UK, so it makes sense to make the chocolate here." He would say that, wouldn't he.
But it adds up. Cadbury's are making good money in the recession, but city analysts agree that they need to show good numbers every quarter to avoid hostile takeover bids. Kraft has fewer worries like this, and would be in it for the long term. And since 2007, the shine has gone off the Polish deal.
First, fuel has gone up sharply, and threatens to stay up. Suddenly trucking Crunchies back from Poland looks rather expensive. Second, the weak pound has made it relatively cheap to make things here. But most of all, that "prime real estate opportunity" in Keynsham looks rather less attractive now property has slumped so sharply.
Cadbury's, of course, insist their planned move to Poland is still on. And Kraft won't be drawn on why they have come out fighting for Keynsham so strongly. But it is clear that raising specific commitments to specific factory ramps up the political pressure behind this deal. Kraft are now portrayed as the supporters of British jobs and British factories, instead of the American Giant trying to steal a gem of British industry.
"It's clever stuff", Union man Steve Preddy smiles to me. "You can see Ministers getting interested now, instead of just the boardrooms."
Is it enough to save Keynsham? We'll have to wait until the Crunchie crumbles, I guess.
Hello, I’m Dave Harvey – the BBC’s Business Correspondent in the West. If you’re making hay in the markets or combine harvesting; scratting cider apples or crunching tricky numbers – this is your blog too. 
Comment number 1.
At 22:30 7th Sep 2009, Newscanner60 wrote:Sounds just about right doesn't it. Quite typical of a lot of British manufacturing really. Asset stripping, short termism etc... Look how many big names we've lost over the years, and yet a fair number of these now defunct industrial concerns were profitable.
It would be sad to see yet another iconic British brand disappear. On the other hand,why is it that foreign businesses tend to look at the long term rather than short term quick bucks. Have we learned nothing. Perhaps Cadbury's should be taken over by Craft Foods of America.
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Comment number 2.
At 13:39 8th Sep 2009, hornedrebuttal wrote:Cadburys is reaping what it has long sown. The manner in which Cadburys slashed & burned its way through 15% of its workforce (well publicised) & the 25% of its senior management (little publicised) during 2007-2008, is testament to the mindsets of its Executive & those who entrusted them with the stewardship of this once iconic brand.
Having worked at the then 'Cadburys Schweppes', as a new comer it reminded me of great British amateurism on a large global scale, stuck in a hybrid way of doing things, rather dated & inappropriate for the way modern businesses work.
For at least 10 years, internally it had been well known, Cadburys had deliberately underfunded its operations & tinkered/experimented with various reorganisations, in failed attempts to 'influence' things. For example, the most embarrassing 'decision' taken at the highest levels ended up costing Cadburys millions & its reputations as a competent chocolatier. The salmonella outbreak at Cadburys Malbrook factory, allegedly resulted from attempts to save tens of thousands of pounds in testing, maintenance & infrastructure costs (one million bars were buried in rubber lined pits, similar to ones used to bury the animal carcasses of 'mad cow' disease).
When colleagues were recruited in from P&G, Kraft, PepsiCo & Mars etc, they most often commented about the difference in perception of Cadburys as a 'world leader' & the realities behind closed doors. In certain areas of R&D, the investment was likened to a 'garden shed' form of operations.
More recently, the latest 'decision making' has resulted in increased sales, but it is not as simple as all that. Cadburys had slashed the marketing budget to approximately £93 million, then raised it to approximately £650 million … one would trust they would get additional sales from an 700% increase in their marketing budget.
Ineffective management has for far too long reigned at Cadburys. They got rid of some of their best talent over recent years & those who wielded the knife, have only proven their taste & predilection for internal politics, personal advancement & survival, rather than an aptitude for tackling the problems in this ailing business.
Whilst I am personally loathe to see another iconic British brand name vacate these shores, the senior management of Cadburys, especially in its 3 Functions (BU/division) have been found lacking, especially in Science & Technology.
Cadburys is Dead, long live Chocolate.
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Comment number 3.
At 01:48 9th Sep 2009, dennisjunior1 wrote:Richard:
Is it enough to save Keynsham?
I hope it does, But, I have my doubts...
NB: I do have Kraft Food Products in my pantry...
=Dennis Junior=
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Comment number 4.
At 15:10 13th Sep 2009, John wrote:Why would anyone want Kraft to take over Cadbury? You only have to see what they did to Terry's, move it all to Poland! They would do exactly the same with Cadbury, and just as Nestles have done with Mackintosh-Rowntree, leave a few bits behind and the rest will go elsewhere.
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