Commenting on the announcement, John Pollock, Director of the York plant said, "It is a very difficult time for us all. The relationship between the company, employees and the city of York, especially the Terry's connection, stretches back many, many years. In this situation it is important that we focus on our people and ensure that everyone is treated fairly. As well as providing as much advance notice as possible we will be supporting employees with appropriate settlement packages and offering assistance in their search for alternative employment."
The York plant produces confectionery products for the domestic and international market including Terry's Chocolate Orange, Terry's All Gold and Twilight. Future production is expected to be transferred to Kraft's existing facilities in Sweden, Belgium, Poland and Slovakia. This announcement reflects a combination of factors including a recent decline in export volumes that, together with the size and configuration of the site, has resulted in a cost structure that is unsustainable for current production levels. The company additionally needs to continue optimising the utilisation of manufacturing assets in its European confectionery business as well as take advantage of new, state of the art technology in chocolate assortment (praline) production at its Swedish facility.
Pollock continued, "The confectionery market both at home and overseas continues to be highly competitive. We simply have no choice but to continue improving our cost structure if we are to be able to invest in growing our brands. The York employees have made terrific efforts over many years to improve efficiencies, but given a combination of factors it has not been possible to preserve the plant. Our clear priority now is to discuss the situation with the unions and each and every employee over the coming days and weeks."
The closure is expected to be completed by the second half of 2005. The company said that it remains firmly committed to building the Terry's brand in the UK based on the same criteria that currently exists.
Earlier this year Kraft announced a global restructuring programme designed to improve the company's cost structure and generate resources to fund future growth initiatives. Under this programme, the company expects to exit or close up to 20 plants around the world over the next three years. To date, Kraft has announced plans to close five facilities.
The programme has made an impact on a great deal of the company's European food division, but in particular its food operations in Central Europe. Earlier on in the year the company announced that it was closing its confectionery manufacturing facilities in Hungary and transferring them out to other locations. As has been the case with the Terry's plant, the company suggested that its confectionery manufacturing hub in Slovakia would probably be supplying the market with its established brands in Hungary.