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Published: Friday, 12/2/2005

Foreign rivals put candy-cane maker behind the curve

BY HOMER BRICKEY
BLADE SENIOR BUSINESS WRITER

BRYAN - 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.

The Bryan 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 at the local plant is one of the largest in recent years, and its length could be longer than usual while company officials assess the situation, said Dean Spangler, president and chief executive officer.

It represents another move by Chinese companies into a longtime American industry.

"It would be a serious mistake to underestimate the Chinese," Mr. Spangler told The Blade. "But we're very confident in our own abilities."

Bryan, Ohio s Spangler Candy Co., the world s largest maker of candy canes, is laying off 88 of its 400 workers indefinitely. Bryan, Ohio s Spangler Candy Co., the world s largest maker of candy canes, is laying off 88 of its 400 workers indefinitely.
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Mr. 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 Mr. 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 nonchocolate candies from China have "really increased" in the last few years, said Susan Smith, an executive for the National Confectioners Association in Vienna, Va.

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, based in this tiny Williams County town 30 miles west of Toledo, 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 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 company, perhaps best known for its Dum Dum lollipops, makes about half of the 1.8 billion candy canes produced by U.S.-based companies worldwide, its CEO said.

The firm's production totals up to a billion canes annually, Mr. Spangler said.

Its candy cane brands include Spangler, Dum Dum, Jelly Belly, and some for the Disney Co. with characters on the packages such as Mickey Mouse and Winnie the Pooh.

The most popular packaging of the candy canes contains 12 half-ounce canes. The Chinese imports are mostly in that format, Mr. Spangler said.

The northwest Ohio company looked into a joint venture in China but rejected the idea, mostly because of fears about trade secrets and the Asian country's political culture.

"We've seen a lot of companies that got into joint ventures [only to find] they put a competitor in business," he said.

"And it is a communist country. We're a family business, and we believe in free enterprise and appropriate rights for employees. We don't see that in China."

Contact Homer Brickey at:

homerbrickey@theblade.com

or 419-724-6129.



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