Kraft shifts biscuit making to Suzhou

By Li Jian

SUZHOU: Kraft Foods is closing one of its two Melbourne factories in Australia and shifting its biscuit manufacturing operation to China , according to Kraft Foods (China) Company Ltd.

Kraft Foods told China Daily Shanghai and Delta that the decision to move production from Broadmeadows biscuit plant in Melbourne to its Suzhou factory was due to the high manufacturing cost in Australia.
Kraft spokesman Andrew Kilsby said the decision was made after a long review.

"We're simply not producing enough biscuits out of that plant in Melbourne to make it sustainable in the long term," he said. "And manufacturing costs, despite our best efforts, we just can't get down to a point where it's viable."

"From the consumer viewpoint, they won't see any change to our brands," Kilsby said. "They'll still look and taste the same, and have the same quality."

The products will be made in Nabisco Food (Suzhou) Co, Ltd, one of Kraft's biggest biscuit plants. Kraft began building a new biscuit factory in China to replace its Melbourne operation one year ago.

Elizabeth Cho, director of corporate affairs for Kraft Foods (China) Company Ltd, said the production that is being moved to Suzhou from Broadmeadows will be exported to Australia.

Many of the products from the Suzhou plant are exported to other countries within Asia Pacific and the Middle East.

Jiang Nanfeng, an economic consultant with Suzhou Economy and Business Research Centre, said Suzhou was one of the best destinations for Kraft to shift manufacturing capabilities to, with its low labour cost and convenient access to Shanghai, China's largest logistics centre.

Kraft's Suzhou plant is one of the largest biscuit plants in the world, with approximately 1,000 employees.

Its plant in Suzhou Industrial Park along with the newly built plant has been able to accommodate the additional capacity brought on by the transition from the Broadmeadows facility in Australia, said a statement from Kraft Foods (China) Company Ltd.

Suzhou Industrial Park said they applauded Kraft's expansion in Suzhou, which was expected to create hundreds of jobs.

Kraft's expansion in Suzhou highlighted its long-term campaign for cost control, which is expected to cut 6,000 jobs and close 20 plants all over the world by 2007. However, China will be an exception in its job-cutting plan and will serve to replace redundant capacities elsewhere in the world.

"China remains an important focus market for Kraft, and our continued investments in China generally, and Suzhou specifically, are proof of our on-going belief in China's ability to manufacture world-class products for both local and international consumption," Kraft Foods (China) Company Ltd told China Daily Shanghai and Delta via an e-mail.

"We believe we can grow our business here," it said.

A new biscuits manufacturing plant in Beijing is being built while its plants in Guangzhou are gearing up to expand.

Currently, its Suzhou plant manufactures hundreds of biscuits and snack products, including Oreos, Pacific Soda, Ritz crackers, Chips Ahoy and Trakinas.