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The Chocolate Shoppe attached to the Smiths Falls Hershey plant drew 425,000 visitors in 2005, says town Coun. Dawn Quinn. It is shown here in a November photo. ((CBC))

Canada's "chocolatecapital" is losing itsHershey factory, the company confirmed Thursday.

Spokesman Kirk Saville said the company told employees at its Smiths Falls plant in eastern Ontario that its closure ispart of "a supply chain realignment."

"The exact timing of itsclosure will depend on business conditions, but we expect to begin a phased shutdown later this year with some operations continuing through 2008," Saville said, reading from a company statement.

He added that the company planned to work with the employees' union and partner with the government to help the workers who lose their jobs.

Last week, the company had said there was a "high probability" of a shutdown.

Henry Gadhan, who heads the union representing the plant workers, said news of the closure was an "absolute shock."

"This plant has been a profitable plant," he said."Certainly we've had no inkling that this is either losing money or that they need to close it down."

The plant employs about 400 people in a town of 9,000 that is about 60 kilometres south of Ottawa.

Chocolate capital

Town Coun. Dawn Quinn, who chairs the committee that organizes the town's annual Chocolate and Railway festival, said the Chocolate Shoppe attached to the Hershey factory drew 425,000 visitors to the town in 2005.

"We're actually known as the chocolate capital of Canada," she said. "You go outside and you can smell the chocolate in the air sometimes."

'We're actually known as the chocolate capital of Canada.... You go outside and you can smell the chocolate in the air sometimes.'—Smiths Falls Coun. Dawn Quinn

But she saidshe is confident thetown will move past the factory closure.

"It's a done deal and it really hits hard, but you know, we have to be positive."

On Feb. 15, Hershey Co., based in Pennsylvania,announced that it would cut about 1,500 jobs from its worldwide workforce of 13,000, reduce production lines by more than one-third, outsource some production and build a factory in Mexico as part of a three-year restructuring plan.