Oreo cookie in White House hopefuls' crosshairs over outsourcing

CHICAGO—Nabisco, the maker of the iconic cream-filled Oreo, has proudly touted itself as the maker of “America’s favorite cookie.”

But in the midst of a heated presidential race, the company—a division of the global snack behemoth Mondelez International that reaped more than $30 billion in revenue last year — finds itself in the crosshairs of three White House hopefuls who have criticized the company for its plans to lay off hundreds of workers in Chicago as it shifts some North American production to an upgraded plant in Salinas, Mexico.

The company, which also has marketed the Oreo as the “world’s favorite cookie,” will begin laying off 600 workers at its Chicago bakery on March 21. The cuts come as Mondelez shifts work to four new cookie and cracker production lines in Mexico, a $130 million investment expected to be completed by the middle of this year.

Donald Trump, Hillary Clinton and the Bernie Sanders campaign have pointed to the move, which the company says will save it $46 million annually, as emblematic of the problem of big corporations offshoring of American jobs.

Pointed criticism of Nabisco by Clinton, Sanders and Trump comes as all three candidates have put greater emphasis on trade issues as they attempt to make their cases to blue collar workers ahead of Tuesday’s primaries in manufacturing-heavy Illinois and Ohio.

For months, the Republican frontrunner Trump has knocked the decision by the company, which has baked cookies and crackers at a mammoth facility on Chicago’s Southwest Side since the early 1950s.

Trump, who once served as pitchman for the Oreo brand, vowed to boycott the cookie because of the company’s decision.

“You take a look at, as an example, in Chicago where you have Nabisco move its big plant—they're closing their plant,” Trump said in not entirely accurate comments after he notched primary victories this week in Michigan and Mississippi.  “They're moving to Mexico.”

Fact check: Donald Trump�s Oreo boycott

Sanders recently dispatched Larry Cohen, a campaign adviser and former president of the Communications Workers of America, to meet with workers and union leaders for the Chicago plant.

And Clinton in recent days singled out Nabisco on the stump when critiquing corporate America.

In 1993, the company was promised nearly $90 million in tax incentives and subsidies after it agreed to remain in Chicago and pass up a chance to move to Mexico. The government incentives won by the food and tobacco giant RJR Nabisco—which was one of the forerunners to Mondelez—has buttressed the criticism by the Trump, Clinton and Sanders campaigns.

“You know, when a company decides to leave like Nabisco is leaving and they have gotten tax benefits from Chicago and Illinois to stay there, I will claw back the benefits,” Clinton vowed in a debate in Flint, Mich. last week. “They will have to pay them back if they are leaving a place that actually invested in them.”

CEO Irene Rosenfeld appeared at a forum on Thursday sponsored by The Economist as dozens of Chicago factory workers protested outside the event and encouraged passersby to buy only Nabisco snacks made in the USA. Rosenfeld did not address the protests or the criticism from presidential candidates during the forum. The company declined to make her available for comment.

Mondelez says the candidates are inaccurately suggesting that they are leaving Chicago. The company will still have about 600 workers, about half of the current employee headcount, at their bakery on the city’s Southwest Side.

The company says that it considered building the new factory lines in Chicago, but opted not to because of the $46 million cost gap between operating in Chicago and Salinas, Mexico.

Laurie Guzzinati, a spokeswoman for Mondelez, said the Chicago Nabisco bakery will continue to be one of the company’s largest facilities in terms of number of employees, even after the layoffs, but will no longer make Oreo cookies once the new factory lines are up-and-running in Mexico.

Oreo and other Nabisco snacks made at the newly-installed factory lines at the Mexico plant will be sold in the North America market, but the famous cookie will also continue to be made at U.S. facilities in New Jersey, Oregon and Virginia. Beyond the U.S. and Mexico, Oreos are also made in 16 other countries for sale in international markets.

The Deerfield, Ill.-based Mondelez said it did not have data on what percentage of Oreo cookies—which earned $2.5 billion in revenue worldwide for the company in 2014—will be made in Mexico and then sold in the U.S.

“Even if the investment would have been made in Chicago, there would have been an impact to positions at that bakery,” Guzzinati said. The company would have cut about 300 workers because the new factory lines were more efficient than the current ones and require fewer workers to operate, she said.

Nate Zeff, an organizer for the Bakery, Confectionery, Tobacco Workers and Grain Millers (BCTGM) International Union, said that the call by Mondelez—which paid $21 million to Rosenfeld, the company's CEO, last year— for $46 million in concessions from workers was seen as a slap in the face.

“It’s going to have a profound effect on the local economy here,” Zeff said of the impending layoffs. “We’re talking about 600 jobs. (It’s) not just those 600 families who are going to be deeply affected. That’s millions of dollars that’s going to be stripped away from the economy here.”

Clinton caught in the middle on free trade

To be certain, White House hopefuls hammering big corporations for sending jobs overseas is hardly new.

In his 2012 reelection effort, President Obama’s campaign derided Mitt Romney as the “outsourcer-in-chief” because the private equity company he founded, Bain Capital, owned companies that sent jobs to China, India and other countries.

John Kerry in his unsuccessful 2004 campaign colorfully promised to “repeal every benefit, every loophole, every reward that entices any Benedict Arnold company or CEO to take money and jobs overseas.”

Independent candidate Ross Perot famously predicted in 1992 a “giant sucking sound” of jobs flowing into Mexico if his Democratic and Republican rivals got their way and passed the North American Free Trade Agreement. (President Bill Clinton signed the trade agreement into law in 1993.)

But the debate over trade has a reached a fevered pitch unseen in previous campaigns, according to analysts.

Trump, who has also taken aim at Indianapolis-based air conditioner manufacturer Carrier and Ford Motor Company for outsourcing jobs to Mexico, has vowed to put every trade deal on the table for renegotiation. Sanders lashed out against “race to the bottom” policies that he says force American workers to compete against low-wage workers overseas. Clinton, who backed the stalled Trans-Pacific Partnership as Obama’s secretary of State, backed away from it once she became a White House candidate.

“The rhetoric isn’t new, but it’s a lot more intense this time,” said Gary Hufbauer, a senior fellow at the Peterson Institute for International Economics. “And you have a surprising unanimity of the top candidates on what I would call the anti-trade, anti-foreign investment rhetoric, which the talk about Nabisco falls into.”

For the 277 workers already notified they will lose their jobs in the first wave of layoffs on March 21, the news has been difficult to swallow.

Michael Smith, 58, joined the company more than four years ago after he was laid off from a job at DHL. The $25 per hour job at the Chicago Nabisco plant afforded him the trappings of a middle class life—the ability to keep up with the mortgage in a tidy suburban subdivision, help his youngest daughter pay for college and eat out once a week with his wife.

Smith said he was also drawn to the job by the idea of making some of America’s most well-known snacks. He assumed that working for a company that made more than $30 billion would provide a measure of job security in his final working years before retirement.

“There are multiple generations…that have facilitated the making of this product,” said Smith, who has made belVita breakfast biscuits, Honey Maid Honey Grahams and Oreos during his years working the graveyard shift at the company. “You got nearly 60, 70 years of this being manufactured right here in this community. Then to take the revenue and yank it away and suck out the very lifeblood of a community and a people…I think it is very disheartening.”

“You want your employer to be profitable or else you don’t have a job,” added Leonard Aiello, 57, who also learned he’ll lose his job in the first wave of layoffs. “But in the same sense, there should be some loyalty from the company.”

Union officials still hope Mondelez executives give heed to the criticism leading contenders for the White House have thrown at the company and reconsider their position.

“I think it’s great what the candidates have been saying, but we also need them to do something about it," Zeff said. "Take some action.”

The chance of candidates changing Mondelez executives' minds appears to be remote.

Jim Capraro, a longtime activist on the city’s Southwest Side, recalled getting a call in the early 1990s from Valerie Jarrett, who at the time was the city’s commissioner of planning and development, to recruit him to be part of the team that dangled $90 million incentives in front of Nabisco to persuade the company to modernize the Chicago plant as they pondered a move to Mexico. Jarrett would go on to serve as a senior adviser to President Obama.

Capraro, who grew up near the factory, recalled the sweet scent that the Nabisco plant provided his neighborhood. School trips to the factory, at least in his memory, were as wondrous as scenes from “Willie Wonka & the Chocolate Factory.”

After Mondelez announced their plans to shift much of the Chicago cookie and cracker making, Capraro said he swore off Nabisco treats.

“I don’t think they care about it,” Capraro said of Mondelez. “They don’t see themselves as an American brand anymore. They see themselves as a global brand.”

Follow USA TODAY Chicago correspondent Aamer Madhani on Twitter: @AamerISmad