7 Jun 2017

Last ditch bid to keep confectionary made in NZ

9:49 am on 7 June 2017

A Dunedin city councillor is launching a last-minute bid to keep manufacturing Cadbury's iconic products in Dunedin, and he wants the country's help to raise the funds.

Jaffas and Pineapple Lumps are manufactured in Cadbury's Dunedin factory which is set to close.

Photo: Cadbury / Pascall

Dunedin's Cadbury factory, which is owned by Mondelēz International, closes next March and up to 360 jobs will be lost.

Interested third-party investors had until last Friday to register expressions of interest for taking over manufacturing of favourites such as Jaffas, Pineapple Lumps, Buzz Bar and Pinky.

Mondelēz would not reveal how many parties had registered expressions of interest.

Councillor Jim O'Malley said he had registered interest and was launching a campaign today called 'Own the Factory'.

The campaign aims to create a publicly-listed company made up of Kiwi shareholders, that will take over Dunedin production of the favourites.

Dr O'Malley said the campaign was not associated with his council work, but involved a group of volunteers called Dunedin Manufacturing Holdings (DMH), which included other city councillors.

"We were going to see a factory that had been operating here for over a hundred years, that ... is integral to our community, would quite literally just turn off the lights in March," he said.

"I don't know if we'll succeed or not, but to not try guarantees the outcome, so I just want to give it a go and I think there's a lot of people out there who want to give it a go too."

His business case, which he had taken to Mondelēz, required raising $20 million to buy the factory's logistics building, and equipment to produce the confectionary, he said.

"However, the desire of Mondelēz to cease production on the Cadbury's site by March and to have a third party manufacturer identified well before March means that we don't have much time.

"We realize the effort to raise this amount of money would normally take months, but unfortunately we only have days."

"I don't know if we'll succeed or not, but to not try guarantees the outcome, said Jim O'Malley.

"I don't know if we'll succeed or not, but to not try guarantees the outcome, said Jim O'Malley. Photo: RNZ / Ian Telfer

Dr O'Malley said Mondelēz had given him two weeks to gather non-binding financial pledges from members of the public and get as close as possible to the fund-raising half-way mark of $10m.

"If there is enough public support we will go back to Mondelēz and discuss next steps based on the level of public support.

"Depending on the outcome of those talks we will move towards a public equity float with individuals able to invest anything from fifty dollars upwards."

Dr O'Malley said DMH wasn't looking for donations.

"This is a serious business proposition and we need investors."

He said once the new company was up and running producing Cadbury products as a toll manufacturer, there was room for it to expand into own-brand products and investors should then start seeing a return.

The company would initially employ 15 staff to run one shift producing Cadbury products, along with 10 support people, which would not generate much income, he said.

However, the equipment could be used to add an additional two shifts and produce own-brand sweets for sale in overseas markets, and expand to around 69 staff.

That would lead to the final stage of expansion, which would see chocolate production re-established on the site and the company would see significant growth potential, he said.

Councillor Marie Laufiso said she had joined DMH and backed the proposal.

She said she would be encouraging Cadbury workers to pledge towards buying a small stake in the company.

E tū spokesman Neville Donaldson said the Cadbury workers' union could not directly encourage workers to invest in the proposal.

But he said he didn't think it was too late to drum up enough public interest for Dr O'Malley's proposal.

"Ideally if this proposal had been able to be put on the table straight away there may well have been more interest, but the bottom line is I think there is plenty of market there for an operation like this to become established."

Non-binding financial pledges can be made via Own the Factory web page.

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