Sweet-Talking Kraft Fails to Deliver on Cadbury Factory

You can't really blame Kraft Foods (KFT) for closing Cadbury's Somerdale factory now that it's officially taking over the company. Sure, the move will result in the loss of 400 jobs, but it's something Cadbury was planning to do anyway. Cadbury spent millions building new facilities in Poland before Kraft even presented itself as a suitor, so going ahead with the closure is simply what makes the most financial sense.

The issue is the dishonesty. Cadbury workers in the UK were demonstrating against Kraft's proposed takeover specifically because they feared factory closures and job losses. Politicians and union leaders sought "meaningful pledges" from the U.S. company that it would not repay its debts by slashing jobs in the UK. And one of the few things Kraft did say was that it would keep this particular factory open.

So when Kraft reneges on that vow mere days after sealing the takeover deal, it looks pretty bad. Kraft now expects people to believe that it had done so little research on Cadbury that it didn't know how far along the transfer to Poland was until after its bid was accepted. And Kraft CEO Irene Rosenfeld met with the UK's business secretary a mere week before the official announcement about the factory, and she didn't say a word about it. People in the UK aren't furious with Kraft because of this particular factory closing -- they're furious because they don't believe the company can be trusted.