International Competition Hurts Spangler's Business

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International Competition Hurts Spangler's Business

Foreign competition is putting a dent in the holiday spirit at northwest Ohio's Spangler Candy Co., the world's largest maker of candy canes, according to a report in The Blade.

The Bryan, Ohio-based company is laying off 88 of its 400 workers indefinitely. A key reason: inroads by Chinese manufacturers into the U.S. candy-cane market.

The seasonal layoff is one of the largest in recent years, and its length could be longer than usual while company officials assess the situation, Dean Spangler, president and CEO, told the newspaper. "It would be a serious mistake to underestimate the Chinese," he said. "But we're very confident in our own abilities."

Spangler, whose company also makes candy canes in Mexico, hopes to get a good forecast for 2006 production needs within 90 days.

Several Chinese manufacturers are trying to market their products in the United States, and Spangler isn't sure which ones will be the strongest. At least one major drugstore chain and one major dollar-store chain, he said, are stocking Chinese-made candy canes this holiday season. Their wholesale prices appear to be 20 to 30 percent below the price of domestic candy canes, he added.

Imports of non-chocolate candies from China have "really increased" in the last few years, Susan Smith, an executive for the National Confectioners Association in Vienna, Va., told The Blade.

Imports from China grew about 25 percent in each of the last two years. The U.S. market share of imported confectioneries more than doubled in a 12-year period ending 2002, according to the U.S. Department of Agriculture.

The 99-year-old Spangler Candy makes about 4 million candy canes daily during the production season, split between the Bryan plant and a factory in Juarez, Mexico, which it opened four years ago, the newspaper reported. The Mexican plant, opened to take advantage of lower sugar prices, not lower labor costs, employs about 150. A small number of its workers will be laid off at the end of the year for maintenance reasons.

Mexican workers make about half of the company's candy canes, a product line that two years ago brought in about $20 million a year, or about a third of the firm's revenues. Because the company is privately owned, it is uncertain what revenues are now.

The candy-cane line includes traditional red-and-white confections priced lower than they were a quarter century ago to higher-margin treats in various flavors. The firm makes the lower-end traditional canes mostly in Mexico and the higher-end treats with flavors in Bryan, where its hourly workers are paid roughly $11 to $17 an hour.

In Bryan, there were no seasonal layoffs at the end of last year; 49 of the 300 hourly workers represented by Teamsters Local 20 were laid off in late 2003. In past years, workers have been called back between March and May of the next year, the newspaper said.

The company, which also makes Dum Dum lollipops, creates about half of the 1.8 billion candy canes produced by U.S.-based companies worldwide, according to Spangler. The firm's production totals up to a billion canes annually.