The home of Mariachi bands, tacos, sombreros, burritos, the Mesoamerican ruins, Habanero peppers, and of course tequila has recently become the new home to many United States confectionery firms; or at least to their production facilities.
The home of Mariachi bands, tacos, sombreros, burritos, the Mesoamerican ruins, Habanero peppers, and of course tequila has recently become the new home to many United States confectionery firms; or at least to their production facilities. According to a report by consultant Peter Buzzanell and the American Sugar Alliance (ASA), candy companies are moving south of the border to not only enjoy a warmer climate and all things Mexican, but lower factory-worker wages as well.
The ASA report lists US wages, specifically those in Pennsylvania (home of Hershey’s), at $18.78 per hour and yearly healthcare costs at $7,680 per worker, versus Mexico’s shocking $1.08 and $258 respectively. And to no surprise, rent costs are much lower south of the border.
The National Confectioners Association (NCA) claims that companies are migrating south, not only due to lower labor costs, but because of ingredient costs as well. This does not exactly add up because on average sugar in Mexico weighed in at 31 cents per pound from 2007-2008, while American’s were enjoying a sweet 28 cents. (Sugar prices in both countries have risen in 2009.)
With more and more consumers interested in purchasing American made foods, and avoiding those produced abroad, this just doesn’t seem like the smartest move. And a few other questions arise - how do we balance just retail prices, company profits and worker fairness? What about quality - do lower wages reflect a lesser quality? Are American confectionery companies aware and willing to take responsibility for the increasing consumption (and health connotations) of “luxury” confectionery goods as foreign-domestic wealth increases?
Here are a couple facts to leave you with:
• The Congressional Budget Office concludes that current US sugar policy has contributed to the loss of over 14,000 confectionery jobs and over 75,000 food-manufacturing jobs over the past ten years in the US.
• The US confectionary industry remains among the most profitable; the industry’s trade association boasts profit margins of 35 percent.
Buzzanell does conclude on a more positive note, and believes that the trend to move abroad is slowly decreasing. He notes that many food corporations are expanding their US based candy operations and in 2007 Americans experienced a 12 percent increase in domestic confectionary jobs. Let’s hope his predictions are on target and we continue to strengthen and rebuild domestically. We can only hope for more candies and other confections labels proudly displaying their Made in America labels.