Much of USA's Valentine's candy came from Mexico

Much of the chocolate in the U.S. comes from across the border.

ByChris Hawley, USA TODAY
February 12, 2009, 7:09 PM

TOLUCA, Mexico -- Nothing says Valentine's Day in America like the chocolates, candy hearts or red jelly beans you'll be giving your sweetheart this year. (Right?)

Yet these days, the odds are pretty good that the candy comes from Mexico.

From jellied hearts to chocolates, Mexico's candy exports to the United States have more than doubled since 2002 as cheaper labor and sugar draw U.S. candymakers south of the border.

The latest arrival is Hershey, which is building a 1,500-employee factory in the northern Mexican city of Monterrey to replace plants it closed in the USA and Canada. It's following the lead of companies ranging from Brach's Confections, famous for its caramels, to Ferrara Pan Candy, the maker of Red Hots and Jawbusters.

Confectioners say they're trying to survive in a difficult business climate, but U.S. unions bemoan the loss of candymaking jobs. "All these companies want to make it cheap overseas somewhere, then bring it back and sell it to our people who don't have any jobs to buy it," said Dennis Bomberger, business manager of Chocolate Workers Local 464 in Hershey, Pa.

The move to Mexico began several years ago with makers of hard candy, said Bernard Pacyniak, editor of Candy Industry magazine. Many of them cited high U.S. sugar prices, which have been propped up for decades by government subsidies. "It's multinationals just trying to contain their costs," Pacyniak said.

Companies with new Mexican operations include:

•Brach's Confections, which closed its Chicago factory in 2003 and moved to a new factory in Linares, Mexico.

•Bobs Candies of Albany, Ga., a leader in the candy cane business, which moved the last of its production to Reynosa in 2005.

•Sunrise Confections, which opened a plant in Ciudad Ju?rez in 2001 to make candies for U.S. grocery store brands. For Valentine's Day, it churns out jellied hearts, cinnamon hearts and pink-and-red jelly beans. It has 1,000 Mexican employees and is one of the biggest candymakers on the continent, said Beth Podol, the company's marketing manager.

In all, the USA has lost more than 10,000 candymaking jobs since 1997 because of lower sugar prices and cheaper wages abroad, a 2006 U.S. Department of Commerce report said.

Hershey, which once marketed itself as "The Great American Chocolate Bar," has made the new plant in Monterrey the centerpiece of a $575 million cost-cutting plan.

Since 2007, the company has closed or shrunk factories in Oakdale, Calif.; Reading, Pa.; San Francisco; and other sites.

Moving many of those product lines to Monterrey could save the company about $190 million a year by 2010, Hershey says. It has a plant in Guadalajara that makes candy for the Mexican market. Company spokesman Kirk Saville would not say what the company plans to make in Monterrey and added that the plant would account for only 10% of the chocolate sold in the USA.

For U.S. makers of chocolate, low wages are the main draw, said No? Lecona, director of Mexico's National Association of Makers of Chocolate, Candy and Related Products.

Workers in Mexico's processed food industry earn an average of $2.70 an hour, according to the National Institute of Statistics, Geography and Data Processing. At Nestle's factory in Toluca, a skilled machinery operator earns 220 pesos a day, about $15.70, said Maria Luis Ochoa, secretary of the local Chocolate Workers Union. The same worker in Hershey, Pa., earns $19 to $25 an hour, Bomberger said.

Cacao growers grumble that the foreign companies and the Mexican government have done little to resuscitate Mexico's cacao industry. Mexico's small farms, mostly in the southern state of Tabasco, find it difficult to compete against cheap imports from Ivory Coast, Brazil and Indonesia, the National Union of Cacao producers says.

Floods and a disease known as frosty pod rot have also taken their toll. As a result, Mexico's production of cacao has dropped from 47,000 tons in 2003 to 20,000 tons last year, even as chocolate factories multiply.

"We're exporting more chocolate, but it's all maquila (assembly) work," Lecona said. "It leaves us nothing."

Hawley is Latin America correspondent for USA TODAY and The Arizona Republic.