Hershey Confectionery Plant, Johor, Malaysia

The Hershey Company (Hershey's), the largest chocolate manufacturer in North America, announced in October 2013 plans to build a new manufacturing plant at the Senai Free Trade Zone in Johor, Malaysia, with an estimated investment of MYR816m ($250m)

The new plant will be spread over an area of 70,000ft² and will represent the single largest investment by Hershey's in Asia. It is expected to be operational in 2015.

Hershey's will employ local people for the plant's construction and use more than 80% local construction materials.

Hershey's Johor plant details

"Hershey's will employ local people for the plant's construction and use more than 80% local construction materials."

The new Hershey's plant is being built as part of Hershey's global supply chain modernisation and expansion aimed at achieving growth over the next 100 years. The plant will cater to the increasing consumer demand for Hershey's products in the Asian markets, especially in China. It will complement the Hershey's and South Korea-based Lotte confectionary's joint venture facility in China.

The Johor plant will produce the largest variety of Hershey's finished products outside the US and Mexico. It will also become Hershey's second largest plant upon completion. It will initially manufacture four of Hershey's five global brands, including Hershey's Kisses, Ice Breakers, Reese's and Hershey's Milk Chocolate bars.

Hershey's will export approximately 90% of the output from the Malaysian plant. The plant will create employment for approximately 400 people in Malaysia and business opportunities to local cocoa makers.

Benefits of locating the plant in Malaysia

The Johor unit, owing to its convenient geographical connection, will facilitate easy distribution access for Hershey's to over 25 markets across the Asian continent.

The chocolate maker also benefits from the stable political situation and ample literate workforce. Other advantages are a robust supply chain infrastructure and a globally recognised Halal food manufacturing certification that gives it an edge for the products to be sold in this region.

Technology used

"The plant will use certain sustainable design features aiming at Green Building Index (GBI) design standards."

Hershey's will use proprietary equipment and systems that will be custom-built to meet the company's manufacturing standards for automated production process.

The production lines will be flexible to manufacture new and unique products developed at the Asia Innovation Centre in Shanghai. High-speed wrapping machines featuring proprietary, uniquely engineered wrapping technologies will be installed at the plant.

Sustainability features

The plant will use certain sustainable design features aiming at Green Building Index (GBI) design standards. It will be built for maximum usage of natural day lighting and will implement rainwater harvesting for washrooms and landscape.

Key players

Malaysian Investment Development Authority (MIDA), the main Malaysian government agency responsible for the promotion and coordination of investments in the manufacturing and services sectors in Malaysia, is providing support to Hershey's.

MEI Project Engineers will undertake the plant's construction.

Marketing commentary

Hershey has laid down a road map to expand its global distribution to achieve annual revenue of $10bn by the year 2017, and expects to generate approximately $1bn of international sales by the end of 2014.