Sugar prices pressuring candy maker
Trade deals limiting Mexican sugar only makes things worse.
On a busy highway heading into this industrial East Texas town, a candy factory stands next to a chicken processing plant that sometimes wafts the smell of bird guts across the parking lot that divides them, mixing with the delicate scents of peppermint and peanuts.
But Atkinson Candy Co., an 85-year-old confectioner best known for its Chick-O-Stick bars sold in convenience stores across the nation, has a bigger problem than the occasional foul odor from its neighbor: sugar. Because of U.S. price supports and trade barriers, Atkinson pays about double what its foreign competitors do for the industry’s main ingredient, creating constant pressure on the family-owned business to sell out, shut down or shift production overseas.
“All of my competition for the past 30 years has been from companies offshore,” Eric Atkinson, third in a line of Atkinsons to run the company, told the Houston Chronicle. “Right now it’s kind of like playing football on the side of a mountain, and we got the bottom goal.”
As President Donald Trump tweets about the evils of imports, threatening to slap tariffs on goods brought in from overseas, Atkinson Candy Co. is a reminder that many companies and workers in America, especially in Texas, benefit from free-flowing trade.
Policies aimed at protecting certain jobs and industries from foreign competition can have devastating effects on others.
The U.S. confectionery industry, excluding chocolate makers, has shed about 25 percent of its jobs over the past 20 years, as high sugar prices made it tough to compete and forced many companies to move overseas. Atkinson says he’s lost large chunks of business over the years to foreign suppliers, forcing him to cut back production at times to three days a week and open a factory in Guatemala to take advantage of lower sugar prices there.
The situation recently became even more difficult for Atkinson and other U.S. candy makers after the Commerce Department struck a deal that would further limit the amount of sugar imported from Mexico, a move expected to send domestic prices slightly higher.
All this has Atkinson, who wears his gray hair slicked back like a Texas-style Willy Wonka, worried about whether he’ll be able to pass the company on to a fourth generation. He faces all the usual challenges for a small American manufacturer: relatively high labor costs, a strong dollar that makes exporting difficult and pressure from enormous global brands. Sugar prices just make it all the more difficult.
Employment in non-chocolate confectionery manufacturing declined from 27,000 people in 1998 to fewer than 20,000 in 2015. Confectionery imports, meanwhile, more than doubled over that period, as companies moved production to Mexico and Canada in search of lower sugar prices.