• Forbes/AP, Friday, February 16, 2007 12 PM

The Hershey Co. said yesterday that a new restructuring plan will move more of its production to Mexico, scaling back its work force by 1,500 jobs and forcing some plants to close. By reducing the number of production lines by more than one-third, the company expects to save as much as $190 million a year.

The maker of Hershey's Kisses, Reese's peanut butter cups and Mounds bars currently employs about 13,000 people at 20 plants in the United States, Canada, Mexico and Brazil. The planned cuts amount to 11.5% of that work force.

Reaction among financial analysts is mixed. Andrew Lazar of Lehman Brothers says the plan should provide Hershey with more marketing firepower to invest in its core brands, as well as new offerings, such as premium and dark chocolate.

Wachovia Securities analyst Jonathan P. Feeney was skeptical, however, saying that pulling capacity out of the system does not address Hershey's fundamental problem, "which is to reinvigorate consumer response to its core chocolate products."

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