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Blommer chocolate plant closure is worrying

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Blommer chocolate plant closure is worrying

Since the news that the Blommer Chocolate Co. factory in Chicago will close after 85 years, Chicagoans have been getting a head start on waxing nostalgic about the sweet smells wafting through that part of the city.

That’s likely to be Blommer’s primary legacy when the facility shutters for good at the end of May and thoughts turn to how to redevelop that highly visible 5.5-acre parcel of prime Chicago real estate on Kinzie Street.

But before we say farewell to yet another storied local institution, it’s worth unpacking some of what Blommer’s Japanese parent company said about its troubled North American chocolate unit — the largest cocoa processor on the continent — and the Chicago operation’s central role in those woes. In investor filings, Fuji Oil Holdings was blunt that the Chicago factory was a giant money suck. The question is: Why?

One explanation is obvious. The factory is by far the oldest of the four production facilities Blommer runs in North America. In its Friday release announcing plans to shutter the plant, Blommer cited higher repair and maintenance costs for the equipment there as a significant reason.

But at the top of the list of reasons Fuji Oil Holdings gave to its investors in a Friday investor presentation was “securing human resources and rising personnel costs.” In other words, the Blommer plant, which employs more than a quarter of the company’s total workforce of 900, was having trouble hiring good workers in Chicago and believed it was shelling out too much for the ones it had.

Ouch.

The financial disaster at the Chicago plant is bad enough that Blommer’s CEO (in Japanese corporate fashion) voluntarily offered to give back 30% of his monthly compensation for six months beginning in April, according to a filing. That offer was accepted.

In the announcement on Chicago’s closure, Fuji said it will invest $100 million to upgrade its three other plants, in California, Pennsylvania and Ontario. The Campbellford, Ontario, facility will be expanded, gaining jobs Chicago is losing. The closure of Chicago’s factory, the company says, will improve profitability by $30 million in fiscal 2024. In a Monday notice to the state, Blommer said it will lay off 226 Chicago workers. The company could have pumped some of that capital into the Chicago operation. It chose not to.

It would behoove Mayor Brandon Johnson’s administration to go to the company and ask why. And the company shouldn’t sugarcoat it. Give us the real story. It may be that this decision has relatively little to do with Chicago’s business climate and competitive position and more to do with company-specific issues. But let’s not make assumptions.

It wasn’t too long ago — when the Blommer family still owned the company — that it made a commitment to continue manufacturing in Chicago when it also had choices about where to invest in added production capacity. In 2004, the city of Chicago contributed more than $5 million in tax increment financing as part of an upgrade and expansion of the Chicago operation.

“Although it could have moved production to one of its plants in California and Pennsylvania, Blommer chose to invest $40 million in its Chicago plant to create an industrial campus and update its facility,” the summary sheet read in preparation for action by the city Planning and Development Department’s Community Development Commission.

The relatively modest subsidy worked in the city’s interest, at least for a time. A company that employed 150 back then saw its local workforce increase by about 100 over the next 19 years.

Yes, this is valuable property that should be highly attractive for redevelopment.

It softens the blow some, too, that Blommer’s headquarters will remain in Chicago at the Merchandise Mart and that the company will add to its research and development activities there as well. But there’s a reason politicians prize manufacturing jobs. They generally pay well and don’t require advanced degrees to perform. Simply stated, losing more than 200 of them is bad news.

There’s considerable concern in the business community about Chicago’s competitiveness amid moves by Johnson to raise costs for local businesses through minimum wage and paid-leave mandates and efforts — unsuccessful so far — to hike taxes on them. Is Blommer a cautionary tale?

The public isn’t likely to get the straight story from the company, especially so long as it remains headquartered here. But the mayor and his team surely can get honest answers — if they’re interested.

Submit a letter, of no more than 400 words, to the editor here or email letters@chicagotribune.com.



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