Bittersweet Aftertaste for Joseph Schmidt Employees

Joseph Schmidt’s chocolate factory, a sprawling 100,000 square feet facility, will go silent when it stops producing its signature egg-shaped truffles and sculpted Easter chocolates on April 3.

Already, there is a hush over the headquarters at 16th and Folsom.  Inside the administrative offices on a recent Friday, many of the cubicles sat empty and a visitor had to shout, “anyone here?” before being led out. Hershey Co., which purchased Joseph Schmidt in August 2005, has forbidden employees to talk about its decision to close a company many workers consider a family.

Employees asked to share their thoughts scurried into the building, most delivering variations of the line, “We are not allowed to give statements.” A few others expressed a desire to keep their severance package.

Mid-morning, an SUV prepared to back into the warehouse when a reporter tapped on the window. The driver,  Joseph Schmidt, rolled down his window.  Schmidt started the business with a partner in 1983, according to the web site.

“They’ve been very good to the employees,” Schmidt said of Hershey. “It’s a business decision. It’s all business.”

That, however, is exactly the opposite of how Schmidt ran the factory, said an employee who agreed to talk as long as she could remain anonymous.

The employee said what people there will miss is working with Schmidt and the caring environment he created at the company. The company has been a San Francisco confectionery icon for 25 years and has been at the Folsom site where it has hired many local Mission District residents since the mid 1990s. Some 100 employees will now lose their jobs.

As he did on Friday, Schmidt comes in every morning and spends most of his days on the production floor with chocolate speckled hands and wearing a chef’s jacket. News of the closing hasn’t dampened his fervor for creating chocolate treats and last week he was sculpting with chocolate and making designs, the employee said.

Even when he retires completely Schmidt said, “I can futz around in my kitchen making chocolate.”

“He’s great to work with, I’ve never seen him mad, he’s always happy,” the employee said. “He’s excited to come to work everyday because he’s doing something he loves. He always says chocolate is love. He’s just like the Willy Wonka of the Bay area.”

Schmidt showed his appreciation to employees by handing out floral arrangements he made himself every Thursday to the women. On Fridays, truffles with design mistakes were boxed and sent home with employees.

“The day we found out about the closing we were all worried about Joseph,” she said. “I’ve never seen him sad before. He looked so helpless. Seeing him sad made everything worse.”

The employee said Hershey’s January 26th announcement came out of left field.

“We don’t have a specific reason why we’re closing. We were told this whole time the chocolate industry would not be affected because people buy more during hard times. That’s what they kept telling us every week. So when they told us they were going to close down the factory it was a shock,” she said.

“Every since Hershey took over it’s so different now. There were flavors that were removed. People who are local to the city and are familiar with the selection Joseph had from the beginning noticed,” she added.

Hershey’s may not have spelled out their reasons for closing the  plant to the employees, but the employee guessed that making artisan chocolates was too expensive and labor intensive for a such a large corporation.

“That’s why not one truffle looks like the next, even the special boxes are hand made and decorated,” she said. The truffle boxes are hand dyed on paper maché and individually decorated using the batik technique. “That’s what Joseph Schmidt is known for. A lot of people hold on to their boxes.”

Production costs for artisan chocolates may be high, but Hershey’s had a good 2008. Net sales in 2008 were $5.13 billion dollars, up from $4.9 billion in 2007. Hershey’s 2008 net profit was $311.4 million dollars, a significant increase from 2007’s $214.2 million.

“Working here was a good experience. I’m so sad. It feels like a death in the family,” the employee said.

The first two weeks after the announcement spirits were low, but Joseph Schmidt employees began to take things in stride and plan for the future. According to Kirk Seville, Hershey’s corporate communicator,  “Our employees will receive severance benefits and career transition assistance.”

When asked about these offers the employee said that Hershey’s has hosted resume and interviewing workshops. The severance packages are offered on a graduated scale based on seniority. An employee who has worked at Joseph Schmidt for 1-4 years will get two months severance pay. Employees who have been with the company since the beginning may get a year or more of severance pay. However, this pay could be in jeopardy if employees speak with reporters.

“They are saying our severance is on the line. We’re not even supposed to talk about it on our Facebook,” the employee said.  “Joseph cares about people. Hershey’s does not.”

Schmidt disagreed, “They have to think about the bottom line. The Joseph Schmidt line will not disappear. It will be in different packaging and done in a different way. They can’t afford to do special boxes. It’s just too expensive. I respect them and for what they did. They did try.”

Schmidt said that he and his partner had tried to pay workers well and give them annual increases, but that they had to sell because they did not have the financial wherewithal to continue as an independent enterprise. It’s not unusual for founders to sell once they get to a certain age.

“So we had to sell,” Schmidt said.  “It’s sad, but Schmidt happens you know.”