Kraft apology over UK factory U-turn
US food giant Kraft today issued a public apology for raising hopes that a doomed Cadbury factory could be saved and issued a two-year guarantee on jobs after facing a furious attack over its controversial takeover of the chocolate-maker.
Executive vice president Marc Firestone was subjected to a two-hour grilling by MPs on the cross-party Business Select Committee, who accused his firm of "pillaging" the iconic British company.
Union leaders complained that thousands of British workers have been left fearing for their jobs after Kraft's multibillion-pound takeover, especially as the US firm changed its mind about keeping open the Somerdale factory near Bath.
Kraft said while it was bidding for Cadbury that it would keep the plant open, but later changed its mind, announcing the site would close with the loss of 400 jobs.
Mr Firestone issued the first public apology since the closure was confirmed last month, telling the MPs: "We are sorry to the people who we disappointed. We fully understand that for over two years colleagues at Somerdale had been under a closure programme and our statement created uncertainty, and when we announced we would not take it forward, hopes were dashed. We are terribly sorry for that."
As he issued the apology, Amoree Radford, who campaigned to keep the factory open, burst into tears in the public area of the committee room and later left looking distraught.
Mr Firestone drew gasps of surprise from Cadbury workers sitting behind him, and from some of the MPs on the committee, when he said that Kraft was not fully aware of Cadbury's plans to transfer production from Somerdale to two sites in Poland, including a new factory.
Only after the takeover was completed did Kraft discover that millions of pounds of equipment had been bought for the new Polish factory, he said, adding that the US firm did not know that Cadbury had already invested "enormous resources".
One MP was heard to say: "That is nonsense," while Labour MP Roger Berry interrupted: "Are we seriously being asked to believe that Kraft, with all the resources at its disposal, could get this so spectacularly wrong? You knew that a lot of people were going to have their expectations raised."
Mr Firestone continued: "I can see the sense of disbelief, but we had no prior access to that information. Of course we were aware that Somerdale was being closed, but we were not aware of Cadbury's plans for massive investment in Poland."
Mr Berry accused Kraft of "misleading" workers about the chance of saving their jobs to boost their takeover bid, drawing applause from workers and union activists.
Brian Binley (Conservative Northampton South) said many people believed Kraft lied about its intentions for the Somerdale plant, adding that the firm was fully aware that a new building had been erected by Cadbury in Poland.
"What did you think it was going to be used for - tennis courts?"
Mr Firestone later told the committee that for the next two years there will be no further closures or compulsory redundancies among manufacturing workers.
"We want to regain the trust of our colleagues, government and public. We want to develop a stronger growth platform in the UK and globally. We understand that in acquiring a British icon we have a responsibility to preserve its heritage."
Committee chairman Peter Luff (Conservative Mid Worcestershire) told Mr Firestone that Kraft's reputation had been damaged, adding he would be recalled for further questioning if the MPs were not satisfied with his replies.
Mr Firestone and Cadbury president Trevor Bond were repeatedly challenged about their long-term commitment to the Bournville factory in Birmingham.
They insisted they intend to keep production in Britain but stopped short of any specific long-term commitments.
Asked exactly how many years Kraft plans to maintain production at the Birmingham base, Mr Firestone said: "Bournville remains at the heart of the Cadbury business and we intend to maintain it, we intend to invest in it, we intend to ensure that it remains competitive."
Mr Bond also said that the company needs to keep its UK operations "competitive".
Asked specifically whether Cadbury's Dairy Milk would continue to be produced in the UK, he said: "Yes."
Pressed on how long this would be for, he added: "For as long as our consumers are delighted by the product and the taste that we produce."
Mr Binley interrupted: "That simply is not good enough for the workforce."
Lindsay Hoyle (Labour Chorley) said Kraft made the same promises to Terry's of York before moving production of the Chocolate Orange to Poland.
He accused Kraft of doing "exactly the same" to York as the Vikings, saying: "They pillaged and asset-stripped that company."
Jack Dromey, deputy general secretary of Unite, earlier told the committee that "warm words and cheesy smiles" from the US firm were not enough, saying the Somerdale workers had been "devastated" by the closure.
Mr Dromey said after the hearing: "Parliament has exposed the truth - Kraft lied. The 6,000 Cadbury workers will never trust Irene Rosenfeld (Kraft's chief executive) again unless she personally meets the workers and guarantees no factory closures or compulsory redundancies.
"The committee forced Kraft to take stumbling steps in the right direction but the company needs to go further and give a five-year guarantee.
"The lasting legacy of this shameful saga must be a Cadbury law, banning hostile takeovers, clouded in secrecy, of successful British companies."
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