Lean Could Have Helped Hershey


New Haven Register – Bitter Ending

Thanks to Lean Blog reader Tom for sending this my way, sad story that it is.

Hershey's candy is moving a plant from Connecticut to Virginia:

The Hershey Co. will close its Peter Paul manufacturing plant here by the end of the year, putting about 200 employees out of work, the company confirmed Wednesday.
The 250,000-square-foot plant at 889 New Haven Road is 85 years old and the workers are non-union. Most of the jobs will move by the end of the year to a plant in Stuarts Draft, Va., where the candy will still be manufactured, said Hershey spokesman Kirk Saville.

On the surface, it's not strictly a move for lower labor costs, from CT to VA, but company officials said overall capacity utilization was very low, hence the need for consolidation. The company is, however, planning on moving work to Mexico and to outside contractors, hence the over capacity at existing U.S. plants, I guess.

The plant is the latest to succumb to offshore outsourcing, moving operations out of the United States in favor of cheaper locations, said David Cadden, a management professor at Quinnipiac University.

It's too little, too late, but the professor says Lean could have helped:

Hershey's decision to leave is “profoundly disappointing” and, while it may have short-term financial rewards, could hurt the company in the long run, Cadden said. Hershey's could reduce manufacturing costs at its U.S. sites if it used more cost-efficient, lean manufacturing techniques, he said.

To paraphrase the Almond Joy/Mounds commercial (youtube link), “Some times you feel like outsourcing, sometimes you don't.” Well, mostly you do, I guess. Another company succumbs to the promise of cheap labor. Sad.

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Mark Graban is an internationally-recognized consultant, author, and professional speaker who has worked in healthcare, manufacturing, and startups. His latest book is Measures of Success: React Less, Lead Better, Improve More. He is author of the Shingo Award-winning books Lean Hospitals and Healthcare Kaizen, as well as The Executive Guide to Healthcare Kaizen. He also published the anthology Practicing Lean that benefits the Louise H. Batz Patient Safety Foundation, where Mark is a board member. Mark is also a Senior Advisor to the technology company KaiNexus.

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