Sweet and sour
Without being too dewy-eyed about Birmingham’s chocolate-making heritage being shipped brick by brick to Kraft HQ in Illinois – in the way that London Bridge was dismantled in 1967 and reassembled in the middle of Arizona – it’s hard to view the takeover of Cadbury with anything other than a sense of foreboding.
Sniffily bemoaning that the Bournville firm has been sold to an “American plastic cheese maker” – in the words of one descendent of company founder John Cadbury on Radio Five Live on Tuesday morning – may smack of a sort of economic imperialism.
But Kraft is going to have to go some to persuade people here that Cadbury won’t go the way of York chocolate maker Terry’s, one of its previous acquisitions. In the late 1990s, Kraft implemented a ‘rationalisation’ of its European confectionery operations. Over three years, it cut 2,500 jobs. Kraft had promised not to abandon Terry’s York headquarters, which had been in operation since 1767. By 2005 the building had been sold to developers, with production shifted to Eastern Europe.
Given that Kraft has borrowed an estimated £7.5bn to fund the Cadbury deal and that Cadbury chairman Roger Carr has already said job losses are inevitable, can we really expect a different outcome in Birmingham?
Searching for positives, it has been suggested that the Kraft deal could presage a period of high-profile takeovers of UK companies by foreign buyers, which could provide a boost to the corporate finance market.
But by anybody’s standards, that’s a double-edged sword. It’s a bit like selling the family jewels and celebrating the extra storage space you’ve now got.
There’s no point raging against the machine on these occasions. We’re in an era of global super companies looking to snap up their rivals around the world. Britain is far from being a protectionist country. In fact, it is one of the easiest places in the world in which to take over a company from abroad. If foreign firms want to buy UK companies for their brand power and intellectual property and then, after a time, close the business down and lift and shift it to a cheaper production centre in Eastern Europe or Asia, there is little anyone can do about it.
You either change the system to stop these things happening or put up with it. If you change the system to make such takeovers more difficult, you risk other countries doing the same to acquisitive companies from the UK.
So we are where we are. Gordon Brown has expressed hope that “jobs in Cadbury can be secure”. That’s unlikely to bring much comfort to Cadbury’s 7,000 workers. As Jennie Formby from the Unite union said: “We are concerned about the levels of debt that Kraft has. The sad truth is that when they have to pay down that debt, the soft option is jobs and conditions.”
Maybe Kraft will surprise us all, realise what a great asset it’s got at Bournville and leave things as they are.
But locally, the general feeling is one of pessimism. As one Brummie said to me yesterday. “I’m going to take my daughter to Cadbury World, while it’s still there.”
Me? I’m hoping for the best and fearing the worst.
Any comments? Feel free to get in touch.
Andy Coyne, editor, Midlands Business Insider
