Campbell Soup Co. today announced plans to close two manufacturing plants in South Plainfield and Sacramento, Calif., and eliminate more than 700 jobs by next year in an effort to cut costs and reduce its excess soup production capacity.
The South Plainfield plant, which is expected to close by March 2013, currently employs 27 workers and supplies spices to Campbell's four thermal soup plants — including the Sacramento plant, which will shutter by July 2013 and shed 700 full-time jobs.
The Camden-based food manufacturer said it will consolidate South Plainfield's spice production at its Milwaukee, Wis., plant — which employs 40 people — and shift Sacramento's soup, sauces and beverages production to its remaining thermal soup plants in Maxton, N.C.; Napoleon, Ohio; and Paris, Texas.
In a statement, Campbell North America President Mark Alexander said the company expects the plant closings will "improve our competitiveness and performance by increasing our asset utilization, lowering our total delivered costs and enhancing the flexibility of our manufacturing network."
In September, the company reported a fiscal fourth quarter sales increase that was stronger than expected, though it attributed the profit boost in part to retailers stocking up inventories of its traditional canned soups. A spokesman said the soup maker will still be able to meet customer demand for those soups despite the production drop.
Campbell said closing the plants and consolidating operations will require $115 million in pretax costs and $27 million in capital spending. However, the company anticipates the consolidation will produce pretax savings of $21 million in fiscal 2014 and $30 million beginning fiscal 2016.
After closing its South Plainfield plant, cutting 130 jobs at its Camden headquarters and outsourcing nearly 70 office positions at its Cherry Hill location, the company expects to employ 1,640 workers in New Jersey.
In 2011, the state Economic Development Authority approved a $41.2 million tax incentive for Campbell to renovate its headquarters, which is projected to be complete by 2013. The agency reduced the company's Urban Transit Hub incentive to $34.19 million after learning it would not move 50 jobs from Cherry Hill to its Camden headquarters, and would eliminate 130 positions at the location.
In an e-mail, Campbell spokesman Anthony Sanzio said despite the plant closing and layoffs, the company's award is "based on employment levels at our Camden headquarters … (and) we are committed to growing our business in Camden, and are confident that we will meet the requirements outlined in the agreement with the NJEDA."
But an EDA spokeswoman said a program statute articulates the company has to maintain 80 percent of its total statewide work force in order to receive an award under Urban Transit Hub. Though the spokeswoman said "it's too early to say" if the plant closing will reduce its incentive, she noted the EDA "will have to review that impact, if any."