Hershey to Cut Jobs as It Automates Processes to Boost Productivity

Hershey, the US-based confectionery giant, has announced that it will lay off some of its employees as part of a restructuring plan that aims to increase its automation and efficiency. The company, which produces brands such as Reese’s, Kit Kat, and Hershey’s Kisses, has not disclosed the number of jobs that will be affected, but said that it will be less than 5% of its global workforce. The move comes as Hershey faces rising costs of cocoa and other raw materials, as well as increased competition from other chocolate makers.


The Plan and the Purpose: What Hershey Is Doing and Why

Hershey revealed its restructuring plan on Tuesday, February 8, along with its fourth-quarter and full-year 2023 financial results. The plan, which will be implemented over the next two years, will involve investing in new technology and equipment that will automate some of its processes and operations, such as supply chain, manufacturing, and marketing. The plan will also involve streamlining its organizational structure and reducing its operating expenses.

The purpose of the plan is to improve Hershey’s productivity, profitability, and competitiveness, by lowering its costs, increasing its output, and enhancing its quality and innovation. The company expects the plan to generate $300 million in annual savings by 2026, of which $100 million will be realized in 2024. The company also expects the plan to result in severance expenses of $45 million to $60 million.

The Impact and the Response: How Hershey’s Plan Will Affect Its Employees and Stakeholders

Hershey’s plan will have an impact on its employees and stakeholders, both positively and negatively. On the one hand, the plan will benefit the company’s shareholders, customers, and consumers, by increasing its earnings, growth, and value, and by offering more products, variety, and quality. On the other hand, the plan will hurt some of its employees, especially those who will lose their jobs or face changes in their roles and responsibilities.

Hershey said that it will try to minimize the disruption to its employee base, and that it will provide support and assistance to those who will be affected by the plan. The company said that it will offer severance packages, outplacement services, and career counseling to the laid-off workers, and that it will also provide training and development opportunities to the remaining workers. The company also said that it will consult and communicate with its employees and unions throughout the plan’s implementation.

The Context and the Outlook: Where Hershey Stands and Where It Is Going

Hershey’s plan comes at a time when the company is facing some challenges and opportunities in the confectionery market, which is growing and changing rapidly. Some of the factors that influence Hershey’s performance and strategy are:

  • The cost and availability of raw materials: Hershey, like other chocolate makers, is dealing with the rising prices and volatility of cocoa and other raw materials, such as sugar, milk, and nuts, which affect its margins and profitability. Hershey is also working to secure its supply chain and ensure the sustainability and quality of its ingredients, by investing in its sourcing programs and partnerships with farmers and suppliers.
  • The competition and innovation in the market: Hershey is competing with other established and emerging players in the confectionery market, such as Mars, Mondelez, Nestlé, Ferrero, and Lindt, which offer similar or different products, prices, and features. Hershey is also innovating and diversifying its product portfolio and categories, by launching new brands, flavors, and formats, such as organic, vegan, and sugar-free options, and by expanding into other segments, such as salty snacks, protein bars, and nut butters.
  • The demand and preference of the consumers: Hershey is catering to the increasing and evolving demand and preference of the consumers, who are looking for more variety, quality, and value in their confectionery choices. Hershey is also adapting to the changing consumer behavior and trends, such as the health and wellness awareness, the online and mobile shopping, and the seasonal and occasion-based consumption.

Hershey is confident and optimistic about its future, despite the challenges and uncertainties in the market. The company reported a slight increase in its net sales and a decrease in its net income for the fourth quarter and the full year of 2023, compared to the same periods in 2022. The company also provided a positive outlook for 2024, expecting its net sales to grow by 3% to 5%, and its earnings per share to grow by 6% to 8%.

Hershey is a leader and a pioneer in the confectionery industry, and its plan to automate its processes and operations is part of its vision and mission to create more moments of goodness for its employees, customers, consumers, and communities. By investing in technology and innovation, and by optimizing its efficiency and effectiveness, Hershey hopes to achieve its long-term goals and to deliver peer-leading performance in the market.

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