Dominic Lawson: The feeble thinking that would keep Cadbury British

Britain has gained more than it has lost by being open to foreign capital investment
Click to follow
The Independent Online

You know that feeling you get after eating too many sweet, glutinous chocolates – the feeling that if you absorb one more, you are probably going to be sick? That's the feeling I'm developing, having read one too many articles about what a tragedy it would be for the nation if Cadbury gets taken over by Kraft.

This weekend, both the right and left-wing press contained a veritable chocolate fountain of sugary nationalism on the same topic. The Mail on Sunday printed another coupon for readers to send to the Business Secretary, Lord Mandelson: "Dear Lord Mandelson, we believe that far too many British companies have fallen into the hands of foreign owners. We do not want the same to happen to Cadbury. We do not want to eat American chocolate. We want British chocolate made by British workers."

In an effort to stem the flow of coupons through his letterbox, Mandelson rather pathetically told the paper that he gorges on Cadbury's chocolate every day: "Fruit and Nut is probably my favourite." Now I really am going to be sick.

Meanwhile, over at The Observer, Will Hutton also called for the Government to find some way of blocking any foreign takeover of "a great British company", and warned, in an extraordinarily portentous passage, that "letting Cadbury go without a whimper is just more grist to the BNP mill". I thought everyone knew that BNP members had little time for Cadbury's products, preferring Nestlé's pure white Milky Bar.

Despite Will's concerns, the unions do not seem to have mounted the nationalist barricades against a foreign takeover of Cadbury, perhaps because they do not share his anachronistic belief that Cadbury is still run along Quaker lines by Britons solely devoted to the welfare of their indigenous employees. Two years ago Cadbury announced that it would close down its Somerset factory, which employs 500 people dedicated to the production of Curly Wurlys, and that a further 200 jobs would go from its Bournville plant. The plan was to switch this production to the Polish company Wedel, where, said Cadbury, "labour and manufacturing costs are much lower".

So much for "British chocolate made by British workers". Brian Revell, the national organiser for Unite, was outraged: "This is the sort of behaviour we expect from the short-term, quick-strip private equity firm, not Britain's most respected chocolate manufacturer."

In fact this is exactly the sort of unsentimental business practice which the coupon-clippers at the Mail on Sunday and Will Hutton claim the US firm of Kraft would carry out, should it succeed in its £10bn bid.

Cunningly, Kraft has said that if it should win control of Cadbury, it will reverse some of the planned transfer of Curly Wurly manufacturing to Poland. In any case, Cadbury is already a multinational company, which had grown partly through its own acquisitions in the United States. At one point it acquired the American brands of Dr Pepper and Seven Up, although it subsequently demerged its soft-drinks operations.

The last Cadbury family member to have anything to do with the eponymous firm was Sir Dominic Cadbury, who retired as chairman almost 10 years ago. You might like to know the identity of Cadbury's current chief executive: his name is H Todd Stitzer. Yes, H Todd Stitzer hails from the land of Kraft, and was formerly the CEO of Dr Pepper/Seven Up Inc.

Somehow, I doubt that H Todd Stitzer is as worried as everyone here seems to think Cadbury is at the prospect of being taken over by an American company. I imagine his main concern is to continue in his £4m-a-year job; so if a little bit of cod British nationalism helps him in that mission – or, indeed, to wring a better offer out of Kraft – he won't do anything to discourage it.

The future of H Todd Stitzer apart, should Cadbury's workforce share any of the British media's fear that as a subsidiary of a US company, they will inevitably suffer a loss in income and opportunity? It's true that many cross-border mergers have been disastrous corporate marriages which should never have been consummated: Daimler/Chrysler is just the biggest of those misalliances. Yet such studies as have been carried out in this country do not prove the nationalists' point.

Work by a team of business economists at Nottingham University suggests that British workers have, if anything, gained as a result of foreign takeovers. Their survey of 336 foreign acquisitions found that wages of skilled workers rose by 2.6 per cent in the year after takeover and wages of unskilled workers by 7.5 per cent. In fact the biggest improvements occurred after takeovers by American firms: in those companies the earnings of skilled workers increased by 8 per cent and those of unskilled workers by 13 per cent.

In general – and despite what economic nationalists of the right and left argue vis-à-vis Kraft/Cadbury – this country has gained much more than it has lost by being open to foreign capital investment. Imagine, for example, what the British-based car-manufacturing industry would look like if our governments in the 1980s had continued to support the "national champion" British Leyland, and blocked foreign ownership. Not only would there be no Ford or General Motors plants in the UK; there would be no Nissan plants in Sunderland or Toyota in Derbyshire or Honda in Swindon. Instead there would still be one vast loss-making Leyland – or more likely still, no car manufacturing whatsoever in the United Kingdom.

In the case of Cadbury, there is also the claim that it produces a particularly special brand of chocolate, so beloved by Lord Mandelson of Foy, and allegedly much better than "American" chocolate – for example as sold by Hershey in the US. Yet in America, Cadbury has licensed the production of all its chocolate brands to Hershey – so over there they taste exactly the same as "American" chocolate. Besides, if you line up Cadbury's brands against Kraft's in the UK, is there a difference in quality favourable to "our" chocolate? Is Terry's Chocolate Orange (Kraft) any worse than Fry's Orange Cream (Cadbury)? Would you honestly turn your nose up at Toblerone (Kraft), because it is "American-owned" chocolate?

The truth is that the British national palate, when it comes to what we like to call "chocolate", is nothing to boast about. It was only with the greatest difficulty that we persuaded our partners in the EU to let us describe what Cadbury turns out as "chocolate", so unlike true chocolate is its produce. Earlier this year Cadbury even tried to replace most of what little cocoa butter there is in its product with palm oil. As the Norwegian author of the excellent food website Scandilicious recently wrote in respect of Cadbury's "chocolate": "They produce what should be called 'vegelate'. It masquerades as chocolate, replete with startling amounts of bleached sugar and some vague notion of cocoa. Their cheap mass-produced 'chocolate' is full of sugar-which is what makes it so addictive."

Of course, if Cadbury were to be taken over by Kraft, it would continue to produce the sort of sugary-oily mess which so scandalises Scandilicious. So there would be no advantage in it to true chocolate lovers. On the other hand, there would be no disadvantage; and, contrary to what Will Hutton seems to think, I don't believe the British public would regard the takeover of one confectionery multinational by another confectionary multinational as a reason for voting en masse for the BNP. However many Cadbury's bars they have ingested, they can't possibly be that stupid.