Campbell Soup (NYSE: CPB ) will be shutting down two U.S. factories and laying off more than 700 workers in the next 10 months, it announced today. That's about 3.5% of Campbell's international work force.
A South Plainfield, N.J., spice plant where 27 people work will close by March. A Sacramento, Calif., plant where some 700 workers produce soups, sauces, and beverages will be closed down in stages, fully closing by July. The Sacramento plant is the oldest in Campbell's U.S. network and has the dubious distinction of having the highest production costs on a per-case basis.
Campbell is trying to rebrand itself in the face of changing consumer tastes. The company purchased Bolthouse Farms earlier this summer, moving into the more promising fresh packaged food business.
The company acknowledged the difficulty this will cause employees and said Campbell expects the actions to save the company $30 million per year by fiscal 2016. Shares of Campbell were down slightly, losing $0.12 to trade at $34.74 in morning trading.
"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 which are often produced under co-manufacturing agreements," the company said in a statement. "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."