Campbell Soup Co. has announced steps to improve its U.S. supply chain cost structure and increase asset utilization across its U.S. thermal plant network.
A number of factors have resulted in excess capacity in Campbell's U.S. thermal manufacturing network, including significant productivity improvements, volume declines of U.S. canned soup and an increased focus on new packaging formats (like a pouch for its new Go! Soup) which are often produced under co-manufacturing agreements. As a result, the company is taking the following actions:
• Closing the Sacramento, CA., plant, which currently produces soups, sauces and beverages. Built in 1947, the Sacramento plant is the oldest in Campbell's U.S. network and has the highest production costs on a per-case basis. The plant has approximately 700 full-time employees. Campbell will close the facility in phases, with plans to cease operations by July 2013. The company plans to shift the majority of Sacramento's production of soups, sauces and beverages to its remaining three thermal plants in Maxton, NC; Napoleon, OH; and Paris, TX.
• Closing the South Plainfield, NJ, spice plant. Campbell currently operates two spice plants that supply ingredients to its U.S. thermal plants. Opened in 1964, the South Plainfield plant employs 27 people. The company will close the facility by March 2013. Campbell will consolidate spice production at its larger Milwaukee plant.
Mark Alexander, president, Campbell North America, says, "We recognize this is difficult news for employees in Sacramento and South Plainfield. Campbell is committed to helping them work through this transition. As we position Campbell for profitable growth, we must continue to optimize our U.S. plant network and diversify our manufacturing capabilities. We expect the steps we're announcing today to improve our competitiveness and performance by increasing our asset utilization, lowering our total delivered costs and enhancing the flexibility of our manufacturing network. These actions also will eliminate the capital investments needed to maintain the Sacramento plant."
Campbell anticipates that it will incur pre-tax costs of approximately $115 million, most of which will be incurred in fiscal 2013. The program will also require approximately $27 million of capital spending. Campbell expects these actions, once fully implemented, will result in annual ongoing pre-tax savings of approximately $30 million beginning in fiscal 2016, with fiscal 2014 savings of approximately $21 million. Details on the program will be provided in Campbell's 2012 Annual Report on Form 10-K, which will be filed with the Securities and Exchange Commission.
Campbell currently employs approximately 19,900 people around the world.
Campbell in California
In addition to the Sacramento plant, Campbell operates other facilities in California. The company has approximately 450 full-time and seasonal employees at its Dixon and Stockton tomato processing facilities. Bakersfield-based Bolthouse Farms, which Campbell acquired on Aug. 6, 2012, employs approximately 1,600 people in California. Following the closing of the Sacramento facility, Campbell expects to employ approximately 2,100 people in the state.
Campbell in New Jersey
In addition to the South Plainfield spice plant, Campbell operates other facilities in New Jersey, including its world headquarters in Camden, an office in Cherry Hill and a Pepperidge Farm bakery in East Brunswick. Following the closing of the South Plainfield facility, Campbell expects to employ approximately 1,640 people in the state.
Source: Campbell Soup Co.