Campbell Soup Co. has been trying hard this year to turn itself around, with new soup flavors, higher prices, health-conscious acquisitions and more.
But now the Camden, N.J. company, stuck with sliding profits and sinking interest in soup, is taking a more difficult route: Shutting down two factories due to “excess capacity.”
The Sacramento plant, which makes soups, sauces and beverages, will close in phases before shuttering for good in July, the company said. As Campbell’s oldest American facility -- it was built in 1947 -- the factory has the highest production costs in the company’s network.
About 700 full-time employees will lose their jobs, according to Campbell. Production will be redistributed to plants in Maxton, N.C.; Napoleon, Ohio; and Paris, Texas.
Campbell is also closing the doors at its South Plainfield, N.J., spice plant. The factory will go dark by March, and 27 employees will be affected. Spice work will be consolidated at a larger facility in Milwaukee.
“We recognize this is difficult news for employees in Sacramento and South Plainfield,” Mark Alexander, president of Campbell North America, said in a statement.
According to a company release, the move was inevitable due to “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.”
That includes Campbell’s efforts earlier this month to bring in “a new era of soups with modern epicurean offerings” to widen its customer base.
New items include internationally inspired soups such as Moroccan-style chicken with chickpeas and coconut curry with chicken and shiitake mushrooms, served in the famous cans but also microwavable pouches “perfect for time-strapped 20-somethings,” according to Campbell.
The factory shutdowns will result in pre-tax costs of $115 million, mostly in fiscal year 2013, along with $27 million in capital spending, the company said. But Campbell expects to save $21 million in fiscal year 2014 and an additional $30 million a year beginning in 2016.
This month, Campbell reported its first boost in U.S. soup sales in two years -- a 9% increase in its fiscal fourth quarter, buoyed by condensed soup.
Going forward, much of the company’s success strategy will involve purveyors of fresh and healthful foods such as Bolthouse Farms, which Campbell bought in July for $1.55 billion.
Campbell is attempting to diversify, hoping that Bolthouse’s good-for-you offerings supplement its existing portfolio of soups, V8 vegetable beverages, Prego Italian sauces and Pepperidge Farm cookies.
Bakersfield-based Bolthouse will also help Campbell retain a strong presence in California, where Bolthouse employs 1,600 people. Campbell already has 450 employees at its Dixon and Stockton tomato processing plants.
Worldwide, the soup giant has 19,900 people in its workforce.