Mondelez International (Nabisco) will lay off half of its 1,200 employees in its bakery on Chicago’s Southwest Side after deciding to make a major investment in a Mexico plant rather than its long-standing facility here.
The Nabisco company decided not to make a $130 million upgrade to the facility, the company’s largest U.S. bakery, which dates to the 1950s, because the three unions that represent workers either did not make a proposal to keep the work or their concession packages were inadequate, said Laurie Guzzinati, a Mondelez spokeswoman.
The layoffs at the plant, at 7300 S. Kedzie Ave., will occur over the next year.
The facility makes BelVita, Mini Chips Ahoy and Cheese Nips, among other products, and those will continue to be made in Chicago on seven production lines that will be upgraded. Nine other lines will shut down, and that work will be transferred to four state-of-the-art production lines in Salinas, Mexico.
Mondelez’s Guzzinati could not say how much the company would spend on revamping the remaining lines in the Chicago facility.
The new production lines will make some of Nabisco’s most popular products, including Oreo, Ritz and Grahams.
This spring, Mondelez began working with the three unions that represent workers at the plant, as the company worked to decide whether to make an investment in what’s more commonly known in Chicago as the Nabisco plant or to commit the dollars to a plant that opened last year in Salinas.
There were no plans to close the facility entirely, according to the company, but it was key to move more of its production to more efficient manufacturing lines, in some cases replacing decades-old equipment, the company said at the time. The “lines of the future” can be installed much more quickly and produce twice the capacity in half the space of the older equipment, the company said in the fall of 2013.
One local union chief said Mondelez’s decision to open a plant in Salinas last year made it clear that the food giant had already made the decision to transfer some of its Chicago-based production there.
“The only reason they made an appeal to Chicago is so that they can try to get $46 million in concessions back from Chicago,” said Ed Burpo, president of the Bakery, Confectionery, Tobacco Workers and Grain Millers Local 300, which represents about 1,000 workers at the plant and did not submit a proposal. “The company had already made the decision where those lines were going.”
The other unions that represent workers at the facility, District 8 of the International Association of Machinists and Aerospace Workers and Local 399 of the International Union of Operating Engineers, could not be immediately reached for comment.
Union representatives have already seen their ranks depleted. The factory once employed more than 4,000 before some newer machinery was installed.
The Chicago facility has been, by all accounts, crucial to Mondelez’s North American bakery business, in part due to its location and because its skilled workers know how to make a variety of cookies and crackers.
Then in May, the company said it planned to close nine of its 16 lines. Union reps met with the company and sent a letter to Mayor Rahm Emanuel and President Barack Obama, imploring them to intervene.
Spokeswoman Guzzinati said Mondelez had discussions with the city, but it was not approached with a specific incentive proposal. The company, she added, was hoping for input from the unions to address the $46 million gap between the cost of operating in Chicago and in Mexico. “We invited the unions to bring forward any input they had and thoughts they had to address that gap,” said Guzzinati, adding that the unions’ “input did not provide a measurably impactful way to close the gap” between the costs in Chicago and Mexico.
Along with the Chicago plant, Mondelez’s other facilities in the Chicago area include a Naperville plant focused on Triscuits and a confectionary plant in the Rockford area that makes such products as chewing gum. Guzzinati said the company employs about 3,000 in Illinois.