Because of the hot summer in parts of Canada and the U.S Baskin Robbins ice cream sales have been soaring. However the company has decided it will lay off 80 workers in spite of the increased demand.
Baskin-Robbins had $1.8 billion sales from 6,777 outlets spread around the world. In this first quarter of this year sales before the heat wave sales jumped by 9.4 per cent.
The factory to be closed in Peterborough is the last place in North America at least where the company actually makes what it sells. The 80 workers at the plant provided products for about 1400 outlets outside of the U.S. including 113 stores in Canada.
Production will now be moved to third party suppliers. Canadian supplies will come from Scotsburn Dairy in the province of Nova Scotia. However, much of what was produced in Peterborough will be produced in El Paso Texas. The Peterborough plant was unionized but only 5.3 per cent of worker in Texas are unionized. Texas is a right to work state with no minimum wage.
Baskin-Robbins is not just seeking to itself produce in Texas because of cheaper labor rather it has decided that it will not be bothered with producing anything itself. By getting out of manufacturing the company hopes to drive costs down and sub-contract production and the costs of labor to third parties.
However don't expect the U.S. to gain much from all this. The company sees its biggest opportunities in emerging markets as disposable income rises there. These markets also offer a great opportunity to find even cheaper third party suppliers of product.
The parent company of Baskin-Robbins is Dunkin' Brands. Dunkin Brands is owned by Bain Capital. This was Mitt Romney's company before he made a takeover bid for U.S.A. Incorporated. These firms together with Romney have been lobbying to get rid of the supply management system in dairy products that we have in Canada. This would reduce their costs further.
There are new trade deals being negotiated with Europe and there are also to be talks with Pacific nations about free trade. On the table will be Canada's supply management system. The profits of Bain Capital may go up but wages will go down. However perhaps a few cents of saving will trickle down to the consumer just like melting ice cream on a cone. For more see this article.