The multibillion-pound contest to win control of Cadbury has brought fears that Kraft, the new US owner, will institute swingeing job cuts.
With memories of broken promises in previous sales of British confectioners, unions, politicians and members of the Cadbury family warned that the move could be disastrous.
“Cadbury’s future is very uncertain,” said Jennie Formby, Unite’s national officer for food and drink. “This is a very sad day for UK manufacturing. A successful, iconic, independent UK brand will now be owned by a giant company with massive debt.
“We have very real fears about how Kraft will repay its debt, particularly as it has ratcheted it up still further in order to purchase Cadbury. Whatever good intentions Kraft may have, the sad truth is there will be an irresistible imperative to pay down their debt, and this raises real fears for jobs and investment in this country.”
Kraft has a history of ruthlessness. In the late 1990s it implemented a wideranging rationalisation of its European confectionery operations, which includes Terry’s. Over three years it cut 2,500 jobs, nearly 10 per cent of the European workforce. Last night even Kraft executives were suggesting that jobs could be lost. Despite an initial pledge of “great respect for Cadbury’s brands, heritage and people”, Irene Rosenfeld, chief executive and chairman of Kraft, told The Times that job losses would come, mainly in administration.
She said that Britain would see a “net benefit” in manufacturing jobs, even though she has earmarked $1.3 billion for restructuring costs. She repeated her pledge to keep open Somerdale, the Cadbury factory near Bristol, which is earmarked for closure. “Overall, I do believe that the UK will be a net beneficiary in manufacturing jobs … these are serious commitments,” she said.
There are nearly 7,000 Cadbury workers at eight sites in Britain and Ireland. As Gordon Brown expressed hope that “jobs in Cadbury can be secure”, industry experts pointed to the takeover of York-based Rowntree in 1988 by Nestlé of Switzerland. Promises to keep factories open failed to materialise, and the commitment to retain the Rowntree name was reneged upon. Two decades later the British company’s workforce has shrunk from 33,000 to 3,000.
After its takeover of Terry’s in 1993 Kraft promised not to abandon the firm’s York headquarters, which had been in operation since 1767. Yet by 2005 the building had been sold to developers, with production shifted to low-cost Eastern Europe.
While workers on the factory floor worry about their livelihoods and their pension pots, some members of the Cadbury family will pocket a total of £18.5million in cash and shares from the sale. Brandon Cadbury, a descendant of Richard Cadbury, one of the brothers who started making chocolate under the Cadbury name, will receive close to £5million.
Todd Stitzer, the Cadbury chief executive, will receive about £20million, Roger Carr, the chairman, will make about £450,000 and Henry Udow, the chief legal officer, will take home close to £8million in cash and Kraft shares.
Lord Patten of Barnes will make about £90,000 from his stake in Cadbury, while Baroness Hogg, who is a non-executive director, will receive about £30,000.
Unions are determined to fight on. “It isn’t over until the fat lady sings,” said Joe Clark, a Unite official.
The Birmingham Labour MPs Lynne Jones, Richard Burden, Steve McCabe and Gisela Stuart issued a joint statement saying: “A takeover by Kraft could pose real dangers for jobs, innovation and the skill base. We worry about the kind of future that Cadbury’s would have as part of this giant multinational whose corporate priorities are decided a long way away.”
Felicity Loudon, the great-granddaughter of Sir Egbert Cadbury, feared for jobs and said the chocolate would never taste the same. “I’m horrified. We shouldn’t give up,” she said. “For a quintessentially philanthropic, iconic brand to sell out to a plastic cheese company — there’s no mix there. Cadbury is one of the last jewels in the crown for England.”
Peter Cadbury, a great-grandson of George Cadbury, one of the two Quaker brothers who founded the business, stands to make very little from the deal. He told The Times: “I don’t think Kraft have made a very convincing case about whether they can run a business better. It’s being recommended purely on terms of price. We have to be concerned, not just about the UK, but all of the employees.”
But Standard Life Investments backed Cadbury’s recommendation. David Cumming, head of UK equities at the Edinburgh-based insurer, said: “We are supportive of the management’s decision although the price is slightly light of our stated target.”
Yesterday Lord Mandelson, the Business Secretary who expressed deep reservations about the Cadbury’s sell-off, said he would be “seeking an early meeting with Kraft senior management to hear for myself how Kraft will fulfil the commitments they have made to Cadbury and its workforce”.
But Airdy’s upbeat:
Economic Development Minister Michael Aird said
it should be considered an opportunity.
“I would support any move by Kraft to expand the Claremont operation which is an important employer in Tasmania,” he said.
“There are examples of takeovers which have benefited Tasmanian operations. Lion Nathans expansion of Boags is an excellent example.”
