A Montrose mainstay for more than 45 years, candy-maker Russell Stover, will cease operations here in March 2021.
In a letter dated Jan. 14, Vice President of Operations Ron Kelehar told employees the decision is based on “shifts in customer demand and more efficient plant operations.”
Work being done at the local plant will be consolidated with operations in Kansas and Texas. In the meantime, there will be no changes to pay and benefits included in current agreements, the company said.
“This extended transition allows you time to plan for your futures,” the letter says.
The company also asked employees to consider relocating in order to work at other plants and said if they do not, they will get help finding a new job through the state labor department.
News Russell Stover will close its Montrose plant, including the retail store, and consolidate it with operations in the two other states left city and county officials grappling with what comes next — both for employees and the 330,000 square-foot building, which is a little more than three times the size of the Montrose County Event Center, and which is set up for larger-scale manufacturing.
“It’s really a hit for our community,” Mayor Pro-tem Barbara Bynum said Tuesday, during a hastily assembled meeting with other public officials, representatives from the Colorado Department of Labor, Colorado Workforce and economic development leaders, who gathered just a few hours after the letter was released.
“It’s never good for a community when a company of that size closes down,” Montrose Economic Development Corp. Executive Director Sandy Head said of the nearly 400 seasonal and full-time workers employed by Russell Stover.
Russell Stover is faced with a shift in the way people are buying products, company spokesman Robbie Vorhaus said, also confirming that the Russell Stover store on Townsend Avenue will close at the same time as the plant.
“All I have to do is say ‘Amazon,’ and you recognize that consumer habits and the way they are purchasing things these days has shifted to online and digital, which impacts our business, too,” he said.
Russell Stover was founded by the Stover family in Denver, and grew out of them making chocolate in their kitchen. In business since 1923, Russell Stover is one of America’s oldest, continuously operating brands and is changing certain formulations based on demographics, Vorhaus said. It was acquired by Lindt & Sprüngli in 2014.
“Our business is growing, but the way people are buying the product is changing. That’s one of the reasons our distribution channels are changing,” Vorhaus said.
Customer demand and the way they acquire products pushed Russell Stover to change. “Obviously, it affects lives,” said Vorhaus.
“Just as consumers change their preferred flavor or package, they’re changing the way they shop for our products and we’re making sure we have the infrastructure to deliver on their expectations,” CEO Andy Deister said in a company news release.
In conjunction with the Montrose closure, Russell Stover will expand facilities in Corsicana, Texas, and in Abilene and Iola Kansas, with the goal of adding about 300 jobs between these three locations, the company said in a news release. Russell Stover is also closing “select low-traffic stores” over the course of the next year.
As part of a consolidation process with the Lindt logistics operation that began in 2018, Russell Stover is also closing two distribution and fulfillment centers — one in Tennessee and one in Missouri — later this year and will transfer the Tennessee fulfillment center to the plant in Corsicana, per the news release.
The company says that, in total, about 400 positions are affected by the coming changes, including the Montrose closure, which “will be substantially offset by planned additions of approximately 300 positions at the expanded facilities in Kansas and Texas.”
In Montrose, the hit comes not just in the massive number of jobs being lost, which concerned everyone who was present at Tuesday’s meeting, but also in terms of the sales tax the candy factory and store generate through customer purchases, as well as the personal property tax Russell Stover pays the county each year on things like equipment (roughly $100,000 annually); the impact on special taxing districts, and revenue to the city, which provides water and sewer service to the plant. The city’s wastewater treatment plant for an additional fee removes from the water an organic material associated with the candy-making process.
Although the closure means a loss for Montrose, Head said, at least the company gave ample notice for its employees to find work. The 15-month timetable gives the workers enough leeway to find another line of work, she said.
Montrose right now has a low unemployment rate, which means businesses need personnel, and that will help the displaced workers, Head said.
“We have enough notice that we can come together with some plans and ideas,” she said. “Hopefully, we can minimize the overall impact on the community.”
City Manager Bill Bell said he thinks the majority of workers will stay in Montrose, because most of them draw pay that is on the lower end wage scale. But he wants to make sure that they can find jobs once it comes time.
“We care a lot about those workers,” Bell said.
Vorhaus said he could not provide information about the general range of pay at Russell Stover Montrose.
Kelehar’s letter informs employees that the company will assist them in making a transition, whether to another Russell Stover plant in Kansas or Texas, or in finding a different job.
Vorhaus said people will not be penalized if they search for different employment in the coming months while remaining at the plant before its closure. Employees will be offered jobs at the other plants, where he said production is increasing, and there will be assistance in moving. The company is also going to work with those who are nearing retirement. Those who do not want to relocate should receive severance based on tenure.
“We realize this is a very difficult time, but you have my commitment to treat you fairly and communicate often throughout this process,” Kelehar said in the letter.
“We have more than a year of work ahead of us here in Montrose and I thank you in advance for your continued hard work and commitment during this period.”
Vorhaus said Russell Stover, which began as a family company, retains its family values.
“It’s a sad day for us, but we’re going to make sure we do it the right way. Even though it is a difficult decision, we’re going to make sure every employee, to the last person, is going to be provided with the resources they need to move on with their lives,” he said.
“This has been really tough for us. We’ve been in Montrose since 1973.”
Russell Stover is one of the biggest power consumers in the county, it was said at the Tuesday meeting, where attendees also raised concerns about the impact on Delta-Montrose Electric Association. There could also be an effect on milk producers, it was said.
The power cooperative will feel some impact, but DMEA does not rely on large commercial accounts for a large part of its profit margin, the board president, Bill Patterson, said.
“Our power sales will go down. They are one of the bigger accounts. It will be a loss, but it’s not going to be a dramatic loss on the margin,” he said.
“It’s going to be a big hit on the community, there’s no question. There are 400 jobs that are going to disappear. You always wonder, what else can we bring in?”
Patterson added that DMEA anticipates being able to offer lower power costs with its transition from power wholesaler Tri-State Generation and Transmission Association, and that could help attract a new tenant or tenants to the Russell Stover building.
Head said some issues arose with Russell Stover back in 2017, when the company was having a difficult time hiring skilled workers to run its machinery.
Head said she relayed this to Colorado Mesa University-Montrose Director Gary Ratcliff who then helped implement classes to train employees, hoping it would “ease the pain” of finding skilled workers.
Montrose County Manager Ken Norris, who was previously the Russell Stover engineering manager, said most of the equipment is highly technical, electrical machinery. He added during his time there, whenever the machinery needed serviced, it was difficult to find qualified mechanics and electronic specialists.
“The production lines are highly, highly automated,” Norris said.
City Councilor Roy Anderson expressed his concern for the future of the property, saying “the last thing I want to see” is the building left vacant 10 years from now.
“That’s a scary thought,” Anderson said.
Those present also considered whether a different, large scale manufacturer could be attracted, or whether trying to attract several smaller businesses to set up shop in the building is a better bet.
The Russell Stover building is a behemoth and currently set up for specialized manufacturing.
Norris said the building has a 25-foot high freezer that totals one acre and can get to temperatures to -30 Fahrenheit. The plant also has two industrial kitchens, equipped with steam kettles and dishwashers. On top of that, it has facilities for condensed milk and a box factory.
“Their facilities should be in really good shape,” Norris said.
City of Montrose Director of Business Innovation Chelsea Rosty said attracting a manufacturer of comparable size may be tough. But, she added, the retail building, which had been rebuilt as an updated store in 2012, could be easily refurbished for other uses.
“It’s a beautiful building,” Rosty said. “I could see it be repurposed into a restaurant.”
Rosty and Bynum said the Russell Stover building is in a prime place for development and its location, just off Townsend Avenue, could be attractive to potential businesses.
That’s a change since the factory opened its doors back in the 1970s — it was mostly surrounded by farmland.
Russell Stover came to town through the MEDC, which was then called Montrose Industrial Development. Business owners and the banks united— and in some cases, residents took on debt — to buy the land through MEDC so that the candy producer could come to Montrose.
The land was then deeded to the city, followed by a lease agreement under which Russell Stover agreed that the property was to be contracted with the city for a certain number of years, at a cost of $100 per year, Head said. The City of Montrose went on to build the infrastructure for the plant.
“(The deal) was we’ll give you land if you can come in and build the plant and create the jobs,” Head said.
Head said Tuesday’s meeting was a step in the right direction to help the company’s workers and the future of the city.
“There’s a lot of anxiety that happens within a community when these kinds of things occur. We’re going to work together as a big group to take care of them with what we can do,” Head said.
Andrew Kiser is the Montrose Daily Press business and sports reporter.
Montrose Daily Press assistant editor and senior writer Katharhynn Heidelberg contributed to this report.