Campbell to Cut 2,800 Jobs in Restructuring
Campbell Soup Co., the giant food company whose advertising campaigns for hot soup evoke images of cozy dining, on Thursday announced that it will cut its work force by 2,800 as part of a major corporate streamlining.
Campbell, which has about 48,000 workers, said it was only the second layoff--but by far the largest--in the 120-year history of the company, which has a reputation of being among the most paternalistic in the food industry. Campbell said it would take a $344-million charge against profits in the fiscal year ended July 30 as a result of the reorganization.
Campbell will close four of its 60 domestic production plants as well as consolidate its Canadian soup-making operations. The restructuring will not affect operations at Campbell’s facilities in Sacramento.
Long Overdue
R. Gordon McGovern, president and chief executive, said the closings and layoffs “demonstrate Campbell’s continued commitment to control costs and aggressively address weak spots in our manufacturing and distribution systems.”
Analysts generally applauded the plan, saying it was long overdue for a company that has been buffeted by takeover rumors since the death of its former chairman, John T. Dorrance Jr., in April.
“It is something (Wall) Street should definitely applaud,” said Timothy S. Ramey, a food industry analyst at the County Nat/West USA investment house, who believes that Campbell’s stock is overvalued. “What this says is that the company is being told by its board and management, ‘We want to see a dramatic improvement in financial results.’ ”
It could not be learned Thursday whether Campbell’s restructuring was urged by the extended family members of Dorrance, who control nearly 60% of Campbell’s stock. Although some previous news reports have said members were disenchanted with Campbell’s management, the current plant closings were reviewed and approved by Dorrance before his death, according to Campbell spokesman David C. Hackney.
Excess Capacity
Campbell, which has an estimated 64% share of the $2.3-billion soup market, is well known for its other strong brand names, which include Godiva, Pepperidge Farm, Swanson, Franco-American, V-8, Vlasic, Le Menu and Prego. But in recent years Campbell’s earnings have been sluggish.
The company has been hurt by several food industry innovations, such as single-serving cans for small households and soups packaged in containers that can be heated in a microwave oven, said O. Lee Tawes III, an analyst at Oppenheimer & Co. in New York.
As more people bought such products, Campbell--which doesn’t nationally market any soups in containers that can be heated in a microwave oven--found itself with excess production capacity for its traditional condensed canned soups, Tawes said. The company does offer single-serving soups.