Necco

Formation

Necco dates its origins to Chase and Company, a company founded by brothers Oliver R. and Silas Edwin Chase in 1847.^[5] Having previously invented and patented the first American candy machine,^[4] the Chase brothers continued to design and create machinery that made assortments of candies, such as their popular sugar wafers.

1900s

The Necco complex in South Boston which had a sign on the roof of the factory reading, "New England Confectionery Co.", as seen from across the Fort Point Channel, circa 1902–1907

Two other confectionery companies, Ball and Fobes, founded by confectioner Daniel Fobes in 1848, and Bird, Wright and Company, a confectionery company based in Boston and founded in 1856, joined forces with Chase and Company in 1901 to become the three members of the original Necco family.^[5] The three confectionery firms then moved into a newly constructed manufacturing plant in the Fort Point–South Boston Waterfront area of Boston, Massachusetts, one year later and became the largest establishment devoted entirely to confectionery production in the United States.^[6][7]

The Boston Wharf Company developed the 1902 complex of four five-story buildings at 253 Summer Street and 11-37 Melcher Street. BWC named the adjacent streets Necco Court, Necco Street, and Necco Place.^[8] In 1907, 5 and 6 Necco Court were added behind the existing complex, connected by a four-story interior bridge. With nearby rail and water transportation, BWC specialized in shipment and storage of sugar and molasses. The Domino Sugar factory was also located nearby.

Success prompted the company, in 1906, to introduce a profit sharing plan.^[4] Necco continued its production while the confectionery industry continued to boom through the turn of the century. Around the same time, businessman David L. Clark began experimenting with his own candy creations in his home outside of Pittsburgh, Pennsylvania. He began selling the Clark candy bar for five cents and shipping his creation to soldiers fighting in World War I.^[5] At the same time, Charles Miller started a business manufacturing and selling homemade candy in the Boston area. Clark's creation and Miller's Mary Jane quickly become two of the most popular candy creations in the country.^[7]

Former Necco factory on Mass. Ave. in Cambridge, Massachusetts, featuring a water tower painted to look like a roll of Necco Wafers.

In 1927, Necco moved into a new factory on Massachusetts Avenue in Cambridge, which was then the largest factory in the world, devoted entirely to candy, as seen in a photograph, of a 1928 Necco Wafers truck.^[4][5]

Necco continued its dominance of the candy-manufacturing business through much of the first half of the 20th century. In 1942, the U.S. Government requisitioned a "major portion of the production of the wafers, during World War II since the candy doesn't melt and is 'practically indestructible' during transit,"^[4] This continued until 1945.^[7]

For several years, Necco was the first, and exclusive, licensed distributor of Rolo candy in the US.^[9] After losing the license to Hershey, for a time Necco marketed an identical product called "Milk Chocolate Caramel Roll".

Necco, still a family-run business in 1963 but having financial problems, was acquired by United Industrial Syndicate of New York. In 1978, after several reorganizations and seven company presidents, Domenic Antonellis was named its CEO,^[6] a role he would play for nearly 30 years.^[10]

From the end of the war through the 1990s, Necco continued to acquire small candy companies throughout the United States and Europe, and with those companies, the rights to manufacture their trademarked candy bars. Wisconsin's Stark Candy Company, which was founded in 1939, was acquired in 1988.^[11] The acquisition of Stark's Sweethearts, combined with Necco's existing Sweet Talk line of candies, made Necco the leading manufacturer of candy "conversation" hearts. In 1999, Pittsburgh-based Clark Bar America, Inc. was purchased,^[5] and by 2000 the company had 1200 employees.^[4]

2000s

Necco's Sweethearts as of 2011

Banana Split chews

Necco Wafers

In 2003, Necco consolidated its facilities to share a 52-acre (210,000 m²), 810,000-square-foot (75,000 m²) Revere, Massachusetts, plant and warehouse, where its international headquarters resides to this day.^[4][12] The site employed more than 700 workers.^[1]

Since April 2004, the Necco building at 250 Massachusetts Ave in Cambridge has been occupied by the Novartis Institutes for Biomedical Research. The water tower was repainted with a double helix to represent the biomedical research being performed within.^[13] In 2005 the structure, which is still referred to as the Necco candy factory, was added to the U.S. National Register of Historic Places.^[14]

By 2005, the company's annual revenue was around $100 million, at which level it was to remain for several years.^[10]

In December 2007,^[15] a buyout of Necco was orchestrated by the private equity fund American Capital Strategies (in partnership with Clear Creek Capital and Domenic Antonellis, the company's CEO).^[10][16] Necco announced the closure of its Pewaukee, Wisconsin, plant in March 2008.^[11] In August 2008, Necco replaced its CEO with Richard Krause, a former Procter & Gamble executive, who in February 2009 announced plans to "expand its brand now in the U.S. so it can expand globally later", aiming for a 30% growth in revenue by 2011.^[10]

In November 2010, Necco was listed for sale with a New York broker; although by February 2011, American Capital announced that the sale was off for the time being.^[1]

In July 2013, United Service Organizations sued Necco in U.S. District Court for continuing to use their trademarks after their 2009 marketing deal had expired.^[17] In February 2014, the case (1:13-cv-11754) was dismissed due to an out of court settlement.

Company tax breaks

The 2011 news that the company was no longer for sale was accompanied by reports that the company had supplied the city of Revere with five years' worth of overdue reports required as part of a tax increment financing (TIF) deal the company had received from the city; those reports "seemed to indicate that Necco has—for several years—not created the jobs they promised in the TIF agreement"; as of March 2011 Necco employed 483 people, including 30 Revere residents.^[1] The company's failure to meet the terms of its TIF agreement led the Massachusetts Economic Assistance Coordinating Council to decertify Necco's participation in the economic development program that administers the agreement.^[18] With the support of Revere's mayor, the city council voted to maintain the tax break, which saves the company $300,000, reducing their annual property taxes to $750,000.^[18] At one city hearing, Miles Arnone, a managing director of American Capital,^[19] had a heated exchange with city council member George Rotondo (who was running for mayor).^[20] Arnone was upset about being forced to talk about Necco's health "when you're down 30 percent"; the public exposure of the issue was raising concerns from large customers of Necco such as CVS Pharmacy and Target.^[18]

Sale and closure

In May 2017 it was announced that the Revere complex containing the company headquarters and major manufacturing center had been sold for $54 million to Massachusetts real estate developers Atlantic Management and VMD Companies. The complex was leased to Necco until the end of August 2018.^[21]

In March 2018, chief executive Michael McGee announced that, unless a buyer for the company could be found, most of Necco's workforce could be laid off as early as May 6, 2018. With a workforce of approximately 500, Necco was the largest employer in Revere at the time.^[22] Online sales of Necco Wafers and other products subsequently spiked, with buyers concerned that the candy would be discontinued.^[23][24][25]

The assets of Necco were sold in a bankruptcy auction on May 23, 2018, with Spangler Candy Company having the winning bid of $18.83 million.^[26] After Spangler backed out of the transaction, the company was instead sold for $17.33 million to Round Hill Investments, a company owned by billionaire C. Dean Metropoulos,^[27] who briefly operated the candy manufacturer under the name of Sweethearts, LLC.

Two months later, on July 24, 2018, Round Hill Investments announced that they had sold Necco to an unnamed candy manufacturer; the immediate closure of Necco's Revere facility was also announced.^[2] About 230 workers were laid off when the Revere plant closed. At the time, Necco was the oldest candy company in the United States.^[28] In July 2018, Necco workers were reportedly in high demand by other companies.^[29] It was subsequently announced that the purchaser had been the Spangler Candy Company, who had backed out of the purchase months earlier.^[3] They plan to restart manufacture of Necco wafers, Sweethearts and Canada Mints, but other Necco-owned brands would not be retained. The Clark bar was sold in early September to Boyer Candy Company,^[30] while other brands and equipment were disbursed at auction beginning September 26.^[31] Candy buttons were bought by Doscher's Candies,^[32] while Banana Split chews and Slap Stix lollipops went to the Reading, Pennsylvania-based Mega Candy Co.^[33]