Campbell Soup announces cost cutting plans

by Keith Nunes
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CAMDEN, N.J. — The Campbell Soup Co. has announced a series of initiatives to cut costs and improve its supply chain efficiency. Most notably, the company plans to lay off 510 employees at its facilities around the world, close its office in Moscow and exit the Russian market, and close its manufacturing plant in Marshall, Mich.

“As part of the development of our strategic plan, our leadership team, in consultation with the board of directors, has been examining all aspects of our business, including our current emerging market operations,” said Denise Morrison, chief operating officer and chief executive officer-elect. “Though Russia remains an attractive potential growth market, the results of the business we launched in that market in September 2007 have fallen short of original expectations. We believe that opportunities currently under exploration in other emerging markets, notably China, offer stronger prospects for driving profitable growth within an acceptable time frame.”

The workforce reduction effort will include 130 positions at the company’s headquarters, the outsourcing of retail merchandising activities, which will eliminate approximately 190 positions, and the closing of the Moscow office, which will eliminate 50 positions.

From an operational perspective, Campbell plans to close its plant in Marshall and transfer production to its plant in Maxton, N.C. The company also is shifting production of ready-to-serve soups from its facility in Paris, Texas, to its plants in Napoleon, Ohio, and Maxton. The Paris plant will continue to produce soups, sauces and beverages.

At its biscuit-making facility in Virginia, Australia, the company intends to invest in a new system to automate packing operations. The new system will cost approximately $40 million and lead to the elimination of 190 positions.

“The steps we are announcing today will help us continue to lower our costs and help fund our plans to drive the growth of the business,” Ms. Morrison said. “The supply chain initiatives will enable us to improve manufacturing efficiency and further adjust the utilization of our assets to evolving consumer demand. While a workforce reduction is always a very difficult decision, these actions will streamline our organization and improve the level of coverage and the effectiveness of our sales merchandising activities.”

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