Sweet Company

Sweethearts and wafers -- and an assortment of nostalgic candies -- connect Necco to its rich past. And its nimble customer-responsive approach to the candy business makes for a very sweet future.

"Be good." "Be true." "Be mine." "Kiss me." "Sweet talk." For more than a century, grade-schoolers across America have been introduced to the language of love by the New England Confectionary Co. (Necco), whose "conversation hearts" -- tiny pastel candies stamped with the briefest of sweet nothings -- have become the essence of Valentine's Day. This year, Necco will produce more than 8 billion hearts, which were first introduced in 1867. And the company expects to expand capacity for next year's batch. The hearts' candy cousins, Necco Wafers, made of the same recipe, on the same manufacturing lines, are the oldest U.S. product continuously manufactured in unchanged form, dating back to 1847.

Hearts and wafers cascade from a huge, cream-colored building that sits amid the campus of MIT in Cambridge, Massachusetts. The Necco factory -- the largest, most modern candy factory when it opened in 1927 -- is a bulwark against technological and confectionary faddishness. But Necco's old favorites are in such demand that they must be made year-round -- even on Valentine's Day -- to satisfy orders for the following year. "Unless Valentine's Day is a Sunday," says Walter Marshall, 66, semiretired Necco vice president and "king of hearts." "We don't manufacture on Sundays."

Today the hearts are made in the same way that they were made in the first decade of the last century. In some cases, they may even be made on the same equipment that they were made on then. Indeed, Necco looks like a company that is operating in another era. It has a portfolio of nostalgic brands: Clark bars, Mary Janes peanut-butter candies, Mighty Malts, multicolored candy buttons on strips of paper, and a whole line of Haviland boxed mints and chocolates. The manufacturing tools that make Necco's sweets seem quaint, if not archaic. In a world where some companies are nothing but marketing, Necco does no consumer marketing. It has been privately held since 1963 by UIS Inc., an old-fashioned conglomerate that also owns Champion oil filters. Necco's annual revenue -- $100 million or so -- doesn't even amount to $1 million for every year of the company's history.

Necco has survived merciless consolidation in the candy industry by being old-fashioned where it counts -- and modern where it matters. The company's chief executive is notoriously frugal, and despite five acquisitions in the past 10 years, Necco is debt-free. But in its practices, Necco is strictly new economy: The company prides itself on the flexibility and nimbleness that is needed in order to deliver mass quantities of custom candy to retailers just the way those retailers want it.

"I think of Necco as a Model T Ford," says Marshall, "with a Corvette engine in it."

Hearts by the Ton

The man who first made Necco wafers was a Bostonian named Oliver Chase. He made what at the time were called "lozenges," and he used a lozenge-cutter that he invented and patented in 1847, and that was the first American candy-making machine. Chase retired from the candy business in 1888. But if he were to return today, he'd have no trouble understanding what happens 18 hours a day at the 74-year-old Necco plant.

Conversation-heart dough is mixed in 550-pound batches. The taste and texture are distinctive, but the ingredients are simple: pulverized sugar, corn syrup, corn starch, xanthan gum, color, and flavor.

A man standing over a hopper feeds in chunks of the batter, which are pressed through mechanical rollers that look like the clothes wringer on an old-fashioned washing machine. What emerges is a sheet of pastel-colored sugar dough about a yard wide. A set of printing dies stamps the sayings on the sheets in edible red ink, and the hearts are cut. (Necco has 100 sayings for the hearts, and a handful change each year. This year's new ones focus on a space theme, inspired by 2001: A Space Odyssey.)

The printing-and-cutting machines are mounted in forged-steel frameworks that either are the originals, dating back to 1911, or are identical to the originals. Kevin Brennan, a 38-year-old machinist who has been at Necco for 16 years, routinely consults the original blueprints and patterns when fixing, updating, or replicating the machinery. "We have plans and blueprints from as early as 1908," says Brennan. "Use 'em all the time."

But the way in which Necco pushes the machinery to perform wouldn't have been possible in 1908. Each candy-heart machine, driven by computerized electronics, pumps away at 158 strokes a minute -- nearly three strokes a second -- producing 80 small hearts with each stroke. In a minute, one machine produces 12,640 hearts. In a typical 9-ounce bag, there are 280 hearts. In a single minute, in other words, one candy-heart machine produces 45 bags of hearts -- a lifetime's consumption for most people.

The still-soft hearts stream into dryers, where each five-eighths-inch heart rides 700 feet along 13 conveyors -- a trip that takes more than an hour. (Necco Wafers go through exactly the same process, often on parallel manufacturing lines.) At the end, firm hearts of different colors and different sayings are mixed. The hearts either cascade down a floor to be boxed or bagged, or are stored in huge bags until Wal-Mart or Target say how they want the hearts packaged.

What is most staggering about the production of those hearts is simply the quantity. In an enormous storage room for candy hearts, in a single clump that is otherwise dwarfed by open floor space, sit 18 white bags of miniature Sweethearts. Each bag is the size of a haystack and holds from 1,200 pounds to 1,500 pounds of hearts. That one part of the room holds 9 tons of hearts.

"We can't stop the machines," says Marshall. "We have to make hearts -- 60,000 pounds a day. Sometimes in this room," Marshall says as he waves his hand through the refrigerated air, "we'll have 3 million or 4 million pounds of hearts."

Tough Man, Soft Heart

Domenic M. Antonellis, the 60-year-old man who presides over Necco as CEO, president, penny-pincher, and protector, grew up in Watertown, Massachusetts. As a boy, with just a quarter to spend, he could afford a movie and a roll of Neccos. He would trade the licorice ones for chocolate or would simply flick them at the screen. When he first walked into the Cambridge plant in 1967 as a consultant, he says, workers were moving wafers around by hand, on trays. No conveyor belts. There was so much waste and breakage, Antonellis says, "I could walk ankle-deep in Necco wafers."

In 1968, Antonellis left General Motors to join Necco. Thirty-three years later, 23 years after being named president, Antonellis displays a license plate on his Cadillac that reads: "Necco." "I love the business," he says. "I live the business."

And Antonellis runs the business with the same blend of tradition and modernity that his 90-year-old, computer-driven candy machines use to make hearts. He refuses to tinker with the basics of his candies. Indeed, the company still roasts and grinds its own peanuts for peanut butter, and still melts, cooks, and mixes its own chocolate in huge copper kettles. (The Cambridge factory has an entirely separate plumbing system just to move liquid chocolate around.) But Antonellis also wholeheartedly embraces new-economy adaptability. For example, anyone can order a custom run of hearts with custom sayings -- as long as they are willing to pay for a full 3,500 pounds of them, or 1.6 million candies.

"Dollar Tree came to us; they wanted a 4.5-ounce bag of Clark bars, the coconut-crunch style," Antonellis says. "They wanted a peg-bag to hang up. We didn't have anything. We said, Okay, we can do that. We gave them the snack size, at a price point that worked for them. They bought 800,000 bags. Those bags are on a truck right now. So for a quick talk with someone, we made $600,000. I'll talk to anybody. That's what keeps us growing."

Lori Botkin is the candy buyer for another Necco customer, Family Dollar Stores Inc. "We like all of our product to be prepriced, so customers know the price when they pick it up," Botkin says. "Necco can do that for us. We try to hit a certain price point -- and Necco helps us do that by changing the package size slightly. The big guys, Hershey, Mars, Nestlé, they can't do any of that -- and they won't do it. Necco is very cooperative, and it's become very creative."

Antonellis's success has produced the most complicated strategic decision of his career at Necco. He has acquired so many candy companies that both the Necco facility in Cambridge and the Haviland facility a mile away are at capacity. The lease at Haviland is about to expire and won't be renewed. The landmark Cambridge plant now counts as its neighbors such high-tech highfliers as Biogen, Genzyme, Oncogene Science, and OraVax. Developers who want to renovate the site as office space for technology companies have offered Antonellis so much for the facility that he almost can't afford to continue making candy there.

Indeed, the Cambridge factory, with its huge, open spaces, its 14-inch-thick concrete floors, and its prime Charles River location, is worth at least as much as Necco's business itself -- except that without the factory, there is no business. So Antonellis is wrestling over whether to consolidate in Cambridge, which would make things very cramped, or to sell the building and use the proceeds to build something more spacious and modern elsewhere.

"I have the building sold, if I want to sell it," he says. "I'm quaking, the number is so big. The consultants, they say, 'Dom, move to central Massachusetts. They'll be so happy to see you out there, some municipality will give you the site.' But I've got skilled labor here. With the kind of things we do, you can't build those skills into people quickly enough so that a move wouldn't hurt the product. Plus, we have a strong moral obligation to these people who have worked for us for so long. All the associates have to come along."

Even if Necco sells its 1927 factory and moves, the company is unlikely to lose track of its history. In Antonellis's office is a framed, original invoice for lozenges from Oliver Chase, dated 1861. And members of the headquarters staff can instantly produce a sales display of 80-year-old heart sayings -- sentiments that were much longer because the hearts were larger and were printed much more slowly.

Says one: "Do you know, my little miss, there is life's elixir in your kiss." Says another: "Come, dearest, take a walk with me, I have a tale to tell to thee."

Charles Fishman (cnfish@mindspring.com) is a Fast Company senior editor. He has been eating Necco wafers and Sweethearts since the first grade. learn more about Necco on the Web (www.necco.com).

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