Free Markets Make The World Taste Good II

9:26 am, 5/26/05

Free Markets Make The World Taste Good II
A reader reminds me of another case of leftism destroying our precious sweets: Lifesavers back in 2003.

Showtime begins at sundown when the giant metal roll of Life Savers lights up. Then, atop the sole plant producing Life Savers in the United States, the 25-foot revolving replica of the popular hard candy flashes the fluorescent colors of its fruit flavors. This goes on all night, every night.

But not much longer. Kraft Foods is shutting the 35-year-old factory in this prosperous western Michigan city and shifting production of the American candy icon to Canada. Kraft rejected a last-ditch $38 million incentive package from Michigan last week and said its decision "is based on factors over which the state has no control."

This is death by sugar. Although Kraft officials cited several reasons for the decision to shutter the 600-employee plant, the high cost of sugar that has led to the closure of candy producers in Chicago in the last several years was a major factor.

The exit of Life Savers could loom larger as an issue as the U.S. Senate revisits the farm bill, the jealously guarded larder of agriculture tariffs and subsidies that, in the case of sugar, are directly responsible for sugar costing roughly twice as much in the U.S. as it does in Canada and Mexico. Through import quotas, the $1.8 billion sugar program is designed to shield sugar growers from lower-priced imports, but the economic law of unintended consequences and the complicated politics of sugar are driving some American candy manufacturers out of business or out of the country.

"If we believe it is in America's national interest to have a sugar industry, there are better ways to help it than this," said Rep. Peter Hoekstra (R-Mich.), who lives in Holland. "This [sugar program] is tampering with the market."

The mathematics of candy production--a Life Saver is about 99 percent sugar--provides no comfort to those who worry about the future. Candy, wafer and cereal makers are heavy consumers of sugar. Chicago-based Brach's candy company is in the process of closing its West Side factory. Kraft shut down one of the candy lines last week at the Holland plant and will close the facility and move the production equipment to Quebec by summer 2003.

The Ferrara company's growth is outside the United States. It has opened one plant in Mexico and two in Canada, the most recent two months ago. "This is going to continue. There comes a point where you can't fight city hall. You just pick up and move on," Ferrara said.

"I wouldn't think of opening anything up on this side of the border," he added.

"I can't think of a subsidy that Congress has ever eliminated," he said.

Michigan offered Kraft a $25 million incentive package to stay in the state, but that didn't cut it. Where CAFTA would guarantee the fair import of sugar from Central America, NAFTA turns around and stabs us in the back by piping in the sugar indirectly through Canada, simultaneously defeating price controls and encouraging outsourcing of labor. Of course, media accounts of the Lifesavers move focused on market controls, but ignored another suggested prime cause for the move, not wanting to attack the left's favorite sacred cow: Labor unions. Kraft may have saved a few million per year on sugar costs, but saved many times that by switching to non-union workers in Quebec at Canadian wages. Then there was the FTC decision that forced them to split up part of their operation, meaning their Michigan factory was underutilized. That's not to mention that, crazily enough, Quebec's overall tax burden is supposedly nearly a third lower than Michigan. (Wrigley's is now buying out the Lifesavers brand.)

(As an aside, to add to the screaming irony of going to Quebec to escape blue-state bureaucracy, Michigan's governor is Canadian-born, and so far to the left that she actually tried to push reparations for slavery upon being elected. She's been so successful at scaring jobs away from Michigan that the Democrats frequently argue the Constitution should be amended so she can run for President, which is exactly why we should remember that Schwarzenegger, likewise, is not good enough of a reason to amend the Constitution. We could start out with a President Schwarzenegger and end up with a President Albright or Granholm.)