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Mars Invests in $270 Million Production Facility in the U.S.

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Two of the largest candy manufacturers for the U.S. market are Mars and Hershey.

Mars, which produces candy brands such as M&Ms, Twix and Snickers, is on-track to open its tenth manufacturing plant, a massive $270 million facility near Topeka Kansas in 2014. What makes this development rather noteworthy, is that rival Hershey invested almost the equivalent amount in a brand new manufacturing facility in Mexico a year or so ago.

According to an article posted by The Kansas City Star, Mars was offered some very attractive incentives to invest in Topeka.  Government agencies offered 150 acres of free land valued at $4.5 million and a 10 year moratorium on any property taxes, Additional incentives in the amount of roughly $4.2 million were provided regarding hiring and training of workers, along with the elimination of all building fees and costs for utility connections.  That is a statement of how competitive some U.S. states can be to attract new manufacturing presence.

Mars officials however indicated to reporters that the monetary incentives were not a critical factor in selecting Topeka, rather the company selects locations based on five business principles, the most important of which seems to be the overall culture of the designated community.  That includes workforce. Recent survey data from AlixPartners now point to near manufacturing landed cost parity between Mexico and U.S. plant locations within the next year or two, which probably was a factor in the decision as well, not to overlook the compelling incentives offered by Kansas authorities.

We believe that there probably was another factor in the site decision, the ability to market Mars candy brands as produced in the U.S.A., since so many other brands including those of Hershey, are produced externally.

The article notes that the new Topeka facility is large enough to accommodate five full production lines, but Mars will initially start-up two lines to produce Snickers and M&M peanut products. Daily volumes are noted as 8,000 pounds of cocoa butter and 117,000 pounds of peanuts.

It will be rather interesting to observe how U.S. consumers respond to these factors in the not too distant future.

Bob Ferrari

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