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Sweet Ending for Hershey, PA Community - 2002-09-26

A bitter dispute over the future of the largest candymaker in the United States, Hershey Foods, had a sweet ending for the residents of Hershey, Pennsylvania. People who live there are thankful those who control the company have decided not to sell it.

A few American small towns are defined by the corporations that call them 'home.' Bentonville, Arkansas is the headquarters of the retailer Wal-Mart. Battle Creek, Michigan has the breakfast cereal maker Kellogg's. And Hershey, Pennsylvania has Hershey Foods.

Hershey is all about candy. You can smell it, and almost taste it, downwind of the plant, at the corner of Cocoa and Chocolate avenues. You can also see it, in streetlights shaped like Hershey's Kisses, the company's signature chocolate drop. You can hear it on the mock factory tour at the Chocolate World visitors' center.

"This is the central blending operation," the tour operator says, "the heart of Hershey's chocolate-making process. Here, milk, sugar and chocolate liquor are brought together and mixed in just the right proportions."

Milton S. Hershey perfected his chocolate formula and founded his company in 1894. When it became successful, he used profits to set up a school for orphans. He and his wife were unable to have children. Mr. Hershey created a trust to support the school, which it has done for 93 years. Today, 1,100 disadvantaged children study in Hershey School classrooms and live on the campus.

In July, the Hershey Trust announced plans to sell its majority stake in the candy company to the highest bidder. The trustees said it was a sound, responsible decision. Hershey's in good financial shape now, they said, but if it collapsed tomorrow, the trust would lose almost all of its assets, and the school could close. And if large companies like the energy trader Enron and the telecommunications firm WorldCom could fail, couldn't Hershey Foods?

The trustees wanted to diversify their portfolio to guard against that.

Hundreds of people turned out for a hastily called rally to protest the proposed sale. Chocolate Workers union leader Bruce Hummel is a graduate of the Milton S. Hershey School. "The school taught me right from wrong and how to treat people. Let me tell you, this is wrong, and this is not how you treat people," Mr Hummel said to applause.

The town of Hershey is the economic and psychological bedrock of a rural region between Pennsylvania's two largest cities, Pittsburgh and Philadelphia. According to one study, tourists contribute $5.2 billion per year to the Hershey-area economy. Another researcher estimated 3,600 jobs would disappear if the company were sold.

Current Pennsylvania law gives the state very little say in how independent trusts are run. Trustees largely have the right to manage their funds as they see fit. But concerns about the potential effect of a sale on the community led politicians to get involved.

Pennsylvania Congressman Tim Holden is one of many leaders who backed legal action against the controlling trust.

"The name Hershey has always meant commitment. Commitment to children. Commitment to education. Commitment to the economy of Central Pennsylvania. Milton and Catherine Hershey would have never in their mind envisioned selling that company and breaking that commitment to Central Pennsylvania," Congressman Holden said.

All of this is why people in Hershey are so relieved the trust backed down. Trustees rejected a $12.5 billion bid from Chicago-based chewing gum maker Wrigley. They say because the proposal mixed cash and stock, it fell short of their diversification goals.

Long-time Hershey resident Elsie Parker is thrilled. "I'm very happy about it. I think Hershey is a very historic place. I think the community just wouldn't be the same if it wasn't Hershey," she said.

But some say there's more work to do. The Trust board's vote to retain control of Hershey Foods was 10 to 7. Two votes the other way would have changed the outcome.

That's why there are calls for all of the current trustees to be removed. Trust CEO Rob Vowler says he hopes it won't come to that, although he acknowledges it will be difficult to regain the confidence of former friends. "It'll take a little time. I mean, we've got some fence mending to do with our community. We're gonna be there. We're gonna live there. We're gonna keep the assets that we have there. We're gonna keep the friends that we have there. We're gonna talk to people. We're not gonna hide. We haven't done anything wrong. And we're just going to be members of that community, as we have been," he said.

Some Hershey neighbors say they can never forgive the trustees for considering the sale of Hershey Foods. At the moment, though, most are just happy the ordeal is over.

If it's tough to imagine America without Hershey's chocolate bars, it seems even more difficult for people here to imagine Central Pennsylvania without Hershey.