Supply chain review leads to plant closures, openings in new locations
Chicago — June 29, 2005 — On the heels of The Wm. Wrigley Jr. Co.'s announcement that it has completed the purchase of various confectionery assets of Kraft Foods Global Inc. for $1.46 billion, the confectioner said it also has plans to globally realign its supply chain.
This includes transferring chewing gum production from Chicago to the Wrigley plant in Yorkville, Ill. and phasing out production at the Company's South Side factory over the next 18 months. Wrigley will also transfer gum base production from L.A. Dreyfus, its Edison-based subsidiary, to the Company's largest gum-making facility in Gainesville, Ga., over the next 18 months.
Wrigley said the closing of the factories does not diminish the Company's commitment to Chicago, where it will maintain its corporate headquarters as well as its worldwide research and development facility — the Global Innovation Center on Goose Island. He said the Chicago factory move is one among several changes being made, based on a comprehensive global review of the Company's worldwide supply chain.
"While this is a difficult decision for me personally, we would not be making this choice if we did not believe that this change was absolutely necessary for the long-term vitality of our Company," Wrigley said. "Given the highly competitive and rapidly evolving nature of our industry, we have a responsibility to structure our resources in a manner that best meets the demands of our dynamic, global business."
Based on its recently completed global review, Wrigley also plans to discontinue operations at a newly acquired Kraft facility in Bridgend, Wales, and at its L.A. Dreyfus gum base manufacturing center in Edison, N.J. Additionally, Wrigley plans to sell the North American marketing rights and the Creston, Iowa, production facility for the Trolli brand that are part of the Kraft transaction. At the same time, the Company will increase investment and business activity at its manufacturing facilities in Gainesville, Ga. and Yorkville, Ill., as well as at its newly acquired plant in Chattanooga, Tenn.
The Chicago plant, established in 1911, is the oldest in Wrigley's global supply chain and has production split among multiple buildings and floors. For these reasons, the Company will transfer production of gum from that plant to Wrigley's 11-year-old production facility in Yorkville, Ill. The Yorkville plant has a flexible, one-story layout and more efficient access to transportation for both ingredients and finished products.
Current employment at the facility at 35th Street and Ashland Avenue stands at about 600, down from a peak of nearly 1,700 in the late 1960's. Wrigley expects to reduce the number of involuntary layoffs that will be required as operations are discontinued over the next 18 months. During this transition period, the Wrigley Co. will support associates by offering some employees the opportunity to transfer to other locations and offering others an enhanced early retirement program. For those not willing or able to take advantage of those offers, the Company will provide severance as well as outplacement services.
Darrell Splithoff, senior vice president, Worldwide Supply Chain, commented, "The long advance notice will help to ease the transition for our associates and the community, and we are committed to treating all team members with trust, dignity and respect."
Wrigley also plans to continue to invest in and expand its corporate and innovation presence in Chicago, reinforcing the City's status as its global headquarters.
Wrigley noted that the Global Innovation Center is the Company's most significant recent local capital investment. The Center features a pilot plant that will soon be adding confectionery equipment from New Jersey, as a result of the Kraft acquisition, to the gum-making machinery already in place. The new facility will serve as the creative hub for Wrigley's expansive R&D activities in terms of flavor, packaging and product enhancement and design efforts. Additionally, the combination of the Company's strong business growth, increased acquisition activity and expansion into non-gum confections has driven increased staffing needs at the corporate leadership center housed in the Wrigley Building.