Mondelez – The Good News And The Bad News

The good news is that Mondelez International (which owns, amongst many things, Cadbury in Dunedin) reported a first quarter 2017 operating profit of 39.4%. It is paying out a quarterly dividend of $0.19 (US) per share to shareholders.

This is wonderful for our New Zealand Superfund which has over $21 million worth of Mondelez shares, and the ACC investment fund and the Kiwisaver investment funds which have Mondelez shares in their investment portfolio.

The bad news is it has cost 350 Cadbury workers in Dunedin their jobs.

Mondelez CEO and Chairperson Irene Rosenfield spelled out Mondelez’s priorities very clearly in her report on May 2nd, “We remain confident in and committed to our balanced strategy for both top- and bottom-line growth, continuing to focus on what we can control to deliver long term value creation for our shareholders.”

Mondelez must rationalize, rationalize, rationalize, and rationalize again. They must encourage as many people as possible to buy their products. But more importantly, they must spend as little as possible on production costs. This means running as few plants as possible and making sure they access the cheapest labour available.

Cadbury Dunedin may have been operating profitably for a century, but that is not enough. In our global growth-based economy, profit must be maximized for the shareholders. Profit must grow… and keep on growing forever. The work done in Cadbury Dunedin can be done for more profit in another plant somewhere else in the world. So Cadbury Dunedin must close. The other plant will also be closed in due course when a more profitable means of production can be found.

Mondelez have made sure the Cadbury brand stays in the New Zealand public’s minds and mouths by keeping open Cadbury World in Dunedin – a tourist attraction that employs fewer than 30 workers and shows how chocolate used to be made in Dunedin, before they closed the factory.

It’s a win/win situation for Mondelez and their shareholders. It’s no use being moralistic. We are complicit in this. Through our collective investment funds we are their shareholders. And we consistently vote in governments wedded to the belief that endless economic growth is essential, governments that pander to big corporations like Mondelez.

Pity about the Dunedin Cadbury workers. Like workers everywhere, they are the ones who must pay the price for our addiction to (economic) growth.

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