Oreos maker to decide between Chicago, Mexico for new investment

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Mondelez is deciding whether to invest $130 million in a South Side plant or one in Mexico to make Nabisco products. | Getty Images

Mondelez International, the maker of Oreos and Chips Ahoy cookies, will start talks Friday with its labor unions to decide whether a bakery on Chicago’s South Side or a plant in Mexico gets a major upgrade.

At stake is a $130 million investment to install four new state-of-the-art manufacturing lines that would make Nabisco cookies and crackers, Mondelez spokeswoman Laurie Guzzinati said.

Mondelez officials will make their investment decision based on “a variety of factors” after the company’s discussions with the unions, she said, declining to provide further details.

Guzzinati declined to say whether Mondelez is seeking job cuts, pay concessions or other changes in its union contracts.

The unions at the Chicago plant, 7300 S. Kedzie Ave., are Bakery, Confectionery, Tobacco Workers and Grain Millers International Union Local 300, with about 1,000 members; International Association of Machinists and Aerospace Workers District 8, representing about 105 employees; andInternational Union of Operating Engineers Local 399, which represents about 70 workers.

Karl Sarpolis, a Machinists union business representative who worked at the plant for nearly 30 years, said Thursday that the Chicago plant, though downsized through technology, remains an important part of the company’s production and distribution business.

“All three unions have a very good work ethic; we have a good reputation there,” he said.

The plant’s central location — close to water, rail and highways — and its distribution center, updated in 1982, are other key attributes, Sarpolis said.

The Machinists contract is slated to run through April 2017.

Deerfield-based Mondelez was created in 2012 when Kraft spun off its snack business. Mondelez owns brands such as Nabisco, Cadbury chocolate, Trident gum and Tang powdered beverages.

At that time, Kraft had already sold, closed or streamlined 30 plants to achieve $3 billion in cost savings.

Mondelez opened the plant in Salinas, Mexico, last year. Mondelez CEO Irene Rosenfeld told analysts in April that the plant has five new manufacturing lines that require half of the operating costs of older equipment.

The plant is part of the company’s efforts to cut costs and modernize its plants and equipment, moves that helped the company post a first-quarter profit and control extra expenses that a strong dollar create, analysts say. Mondelez gets about 80 percent of its revenue from outside of North America.

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