Sunday, February 18, 2007

Chocolate and Cars

Hersheys has announced it is cutting and running, reducing production in Canada and the United States in favour of Mexico. Which led one investment banker to note;

Wachovia Securities analyst Jonathan P. Feeney said the plan leaves fundamental problems unaddressed. "We are skeptical that pulling capacity out of the system while allocating capital away from the core business accomplishes the critical mission, which is to reinvigorate consumer response to its core chocolate products," Feeney wrote.

And this happened the same week Chrysler announced its Saint Valentines Massacre of 13,000 jobs from its own operations, but the layoffs and closers will be far deeper as secondary and tertiary parts and suppliers go out of business as a result.

What Chrysler did not announce, nor did Hershey, was any change in production. In other words in order to get out of their economic bottoming out, both companies are NOT changing their products. They are making short term economic gains on closing plants and dropping shifts of workers.

Chrysler failed to address the real source of their problems, they are producing out-moded large cars and trucks. And the Japanese and other Asian competitors are beating them with sales of compact and hybrid models in North America.

File this under the following cliche's;
Cutting ones nose to spite ones face.
Short term gain for long term pain.




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