Campbell Soup Company announced Thursday it will close its South Plainfield, N.J., spice plant and consolidate spice production at its Milwaukee plant.
The move makes Milwaukee’s spice facility, 500 West Edgerton Ave., the major food manufacturer’s only spice operation supplying its U.S. thermal plants.
Campbell plans to close the New Jersey facility by March 2013. A spokesman said Milwaukee’s facility is larger than the South Plainfield plant, which has 27 employees, but could not say whether more employees or space would be added in Milwaukee.
The company also announced plans to close its Sacramento, Calif. plant, which makes soups, sauces and beverages, by July 2013. The facility has 700 employees. It will shift production of the products to Maxton, N.C., Napoleon, Ohio and Paris, Tex.
Campbell has made the decisions to improve its U.S. supply chain cost structure and make its U.S. thermal plant network more efficient. The company cited productivity improvements, volume declines in U.S. canned soup and changing packaging formats, which are produced in many cases by co-manufacturing.
“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,” said Mark Alexander, president of Campbell North America.
Cambell expects pre-tax costs of about $115 million, most of which will happen in 2013. The changes will require about $27 million of capital spending and result in $21 million of 2014 savings and annual, ongoing pre-tax savings of about $30 million, starting in 2016.
The company this month reported sales of $7.7 billion for the fiscal year, flat from 2011. It attributed the number to volume and mix as well as increased promotional spending.