TreeHouse Foods, Dothan, Alabama
TreeHouse plans to shift some production away from its plant in Dothan, Ala.
 

Renovation plan highlights

The executive charged with executing TreeHouse 2020 is Robert B. Aiken Jr., the company’s new president and chief operating officer. During the earnings conference call he delved into some of the specifics of how he sees the program unfolding during the next few years.

Robert Aiken, TreeHouse Foods
Robert Aiken, president and c.o.o. of TreeHouse Foods

“First, we will maintain our steadfast focus on simplification, both from a product and category perspective, but also from a customer perspective,” he said. “We are deep into segmenting our customer base and shifting focus to the large and growing customers strategically committed to private label, as well as standardizing commercial terms and eliminating exceptions across our customer base.”

Mr. Aiken added that s.k.u. reductions will allow the TreeHouse executives to make targeted decisions regarding plant and production line optimization. On Aug. 3, the company announced it would close two manufacturing plants in Brooklyn Park, Minn., and Plymouth, Ind., by the end of the year, and the shifting of some production away from its plant in Dothan, Ala.

“We'll also be permanently shutting down numerous lines that are projected to operate at low utilization levels,” Mr. Aiken said. “Phase 1 includes approximately 20 such lines that we plan to decommission. Over the course of TreeHouse 2020, we plan to increase our capacity utilization by up to 20% from existing levels, but still maintain flexibility to grow.”

The company also will be focused on making its mixing centers more agile, with the ability to become more integrated with customer supply chains.

“We'll build capabilities across the spectrum of full customer requirements from full truckloads to mix pallets of the entire range of TreeHouse products,” Mr. Aiken said. “This agile distribution capability will be particularly meaningful as e-commerce customers become a greater force going forward, because that is how they typically order from suppliers.”

Finally, Mr. Aiken said there will be a greater emphasis on continuous improvement and standardizing processes throughout the company. A part of that effort will include completing the installation of a manufacturing component of the SAP enterprise resource management software.

“With the powerful new business and analytical tools we've built, we also have the opportunity to optimize pricing and margin based upon a clearer understanding at the s.k.u. level of our margin, input costs and cost to serve,” he said. “As our organizational structure continues to mature, these analytical tools also provide the platform for improved forecasting and planning across our divisions.”

For the first six months of fiscal 2017, TreeHouse Foods recorded a loss of $6 million. The same period the year prior the company earned $15.8 million, equal to 29c per share.

Sales for the first six months rose to $3,085.4 million from $2,811.6 million the previous year.