Campbell Announces Supply Chain Optimization Plan to Fuel Growth

Rhea-AI Summary

Campbell Soup Company (NYSE: CPB) announced a $230 million investment to optimize its supply chain, aiming to drive growth, improve returns, and enhance efficiency. The plan includes closing the Tualatin, Oregon plant by July 2026, impacting 330 employees, and reducing the size of the Jeffersonville, Indiana plant, affecting 85 employees. Production will shift to other modern facilities and co-manufacturing partners. Campbell is investing in new projects across various locations, including $150 million in Maxton, North Carolina, and $72 million in Hanover, Pennsylvania, creating 210 new roles. These changes align with the company's strategy to build a more agile and cost-effective network.

Positive

• Investment of $230 million to enhance supply chain.
• Creation of 210 new roles across the organization.
• $150 million investment in Maxton, North Carolina for new aseptic soup production.
• $72 million investment in Hanover, Pennsylvania to expand potato chip production.
• $8 million investment in Franklin, Wisconsin for tortilla chip capacity expansion.
• Expansion of Goldfish crackers production in Richmond, Utah, increasing output by 50% and adding 80 new roles.

Negative

• Closure of Tualatin, Oregon plant by July 2026, impacting 330 employees.
• Reduction in size of Jeffersonville, Indiana plant, affecting 85 employees.
• Inefficiency and aging of Tualatin plant leading to its closure.
• Shift in production causing potential disruption and operational challenges.

Insights

Supply Chain Analyst

Campbell Soup Company’s decision to invest $230 million in optimizing its supply chain represents a significant strategic move aimed at enhancing its operational efficiency and cost-effectiveness. By closing inefficient plants like Tualatin and reducing the size of the Jeffersonville site, Campbell is addressing the need to modernize its production capabilities and align them with increasing consumer demand. This investment in newer, more agile facilities, such as the $150 million commitment to the Maxton, North Carolina plant, is expected to streamline production, reduce overhead costs and ultimately enhance profitability in the long term.

The closure of the Tualatin plant and the scaling down of the Jeffersonville site, while unfortunate for the affected employees, reflect a move towards a more consolidated and efficient production strategy. By reallocating production to more modern plants and leveraging co-manufacturing partners, Campbell can potentially achieve better economies of scale and reduce production bottlenecks. However, the success of these changes will depend on how effectively the company manages the transition and integrates new technologies and processes into its supply chain network.

From a retail investor’s perspective, this plan indicates Campbell’s commitment to long-term growth and efficiency. While there may be short-term costs associated with the plant closures and employee transitions, the long-term benefits could include improved margins, better product availability and enhanced competitive positioning within the food and beverage industry.

Financial Analyst

Campbell Soup Company’s supply chain optimization plan is a noteworthy development from a financial standpoint. The planned $230 million capital investment through 2026 highlights the company’s focus on enhancing its return on invested capital by improving its manufacturing and distribution network. Notably, investments at Maxton, North Carolina ($150 million) and Hanover, Pennsylvania ($72 million) are expected to create new roles and expand production capacity. These measures are likely to contribute positively to revenue growth and margin expansion over the long term.

The reconfiguration of production operations, including the closure of the Tualatin plant and the downsizing of the Jeffersonville site, underscores Campbell’s effort to cut costs and eliminate inefficiencies. While the restructuring will initially impact 415 employees, the company’s provision of separation benefits and job placement support demonstrates a commitment to responsible corporate practices. Additionally, the creation of 210 new roles across its modernized facilities indicates a growth-oriented approach despite the immediate disruptions.

For investors, this strategic focus on optimizing the supply chain can be seen as a proactive step towards sustaining competitive advantage and driving shareholder value. Enhanced operational efficiency and capacity expansion could result in improved financial performance, making it a potentially favorable development for the company’s stock in the medium to long term.

Company to invest $230 million in network-wide projects to drive best-in-class manufacturing capabilities and leverage leading co-manufacturing partners

Tualatin, Oregon site to close; Jeffersonville, Indiana site reduced in size

CAMDEN, N.J.--(BUSINESS WIRE)-- Campbell Soup Company (NYSE: CPB) today announced plans as part of an ongoing effort to invest in and transform its supply chain to fuel business growth, improve return on invested capital, and enhance the overall effectiveness and efficiency of its manufacturing and distribution network.

These actions are another significant step in transforming Campbell’s supply chain into a competitive advantage. The company is investing in its best-in-class manufacturing sites, leveraging its network of leading co-manufacturing partners, and closing inefficient sites and shifting production to more modern and effective plants.

“To fuel growth and transform our manufacturing and distribution network, we must invest and further strengthen our supply chain,” said Dan Poland, Campbell’s Chief Supply Chain Officer. “By leveraging our best-in-class in-house capabilities combined with the expertise of trusted manufacturing partners, we will continue to make the highest quality products, with a more agile, flexible, and cost-effective manufacturing network. We continue to evaluate optimization opportunities across the network to build our supply chain of the future.”

Tualatin, Oregon Plant to Close

The Tualatin, Oregon plant, acquired in 2017 as part of Campbell’s purchase of Pacific Foods, produces Pacific’s organic soup, broth and plant-based beverages. The site consists of multiple leased buildings of approximately 250,000 square feet. The aging facility and inefficient nature of the site's configuration can no longer support the increased consumer demand and continued growth of the business.

Campbell will close the facility in phases and expects to cease operations by July 2026, with the first phase to impact 120 of its 330 employees in August 2024. The company plans to move the plant’s soup and broth production to other thermal and aseptic plants in its network and shift plant-based beverage production to leading co-manufacturing partners.

Jeffersonville, Indiana Plant to Specialize in Late July

The company’s Jeffersonville, Indiana plant will specialize in Late July tortilla chips. Production of kettle potato chips will be moved to Campbell’s Charlotte and Hanover plants. The change will go into effect in July 2024 and will impact approximately 85 of the 230 employees at Jeffersonville. The plant will continue to produce regional snack brands.

In total, the closure of the Tualatin site and the changes to the Jeffersonville plant will impact 415 employees. The company will provide impacted employees with separation benefits and job placement support.

Poland said, “We recognize this is difficult news for our teams in Tualatin and Jeffersonville. Any action that impacts our people is made with careful deliberation, and we are committed to provide support and assistance during these changes.”

Investing for Growth to Add 210 New Roles

To enable the supply chain network of the future and unlock the growth of the business, the company is making capital investments of approximately $230 million through fiscal 2026 at newer, more agile facilities in its network, with approximately $80 million spent to date. These projects are expected to create approximately 210 new roles across the organization and will include new training and development programs for employees. The projects include:

• Maxton, North Carolina
  • $150 million investment for new aseptic soup production
  • 100 new roles
• Hanover, Pennsylvania
  • $72 million investment to add additional potato chip kettles
  • 72 new roles
• Franklin, Wisconsin
  • $8 million investment to expand capacity for tortilla chips
  • 40 new roles

In addition to these investments, the company previously announced plans to expand production of Goldfish crackers at its Richmond, Utah plant. The new line, which is expected to be operational by the end of calendar year 2024, will increase the bakery’s output of Goldfish by 50 percent and will add approximately 80 new roles at the site.

About Campbell

For more than 150 years, Campbell (NYSE:CPB) has been connecting people through food they love. Generations of consumers have trusted us to provide delicious and affordable food and beverages. Headquartered in Camden, N.J. since 1869, the company generated fiscal 2023 net sales of $9.4 billion. Our portfolio includes iconic brands such as Campbell’s, Cape Cod, Goldfish, Kettle Brand, Lance, Late July, Milano, Michael Angelo’s, noosa, Pace, Pacific Foods, Pepperidge Farm, Prego, Rao’s, Snyder’s of Hanover, Swanson and V8. Campbell has a heritage of giving back and acting as a good steward of the environment. The company is a member of the Standard & Poor’s 500 as well as the FTSE4Good and Bloomberg Gender-Equality Indices. For more information, visit www.campbellsoupcompany.com.

Forward-Looking Statements

This release contains “forward-looking statements” that reflect the company’s current expectations about the impact of its future plans and performance on the company’s business or financial results. These forward-looking statements rely on a number of assumptions and estimates that could be inaccurate, and which are subject to risks and uncertainties. The factors that could cause the company’s actual results to vary materially from those anticipated or expressed in any forward-looking statement include: the risk that the cost savings and any other synergies from the Sovos Brands, Inc. (“Sovos Brands”) transaction may not be fully realized or may take longer or cost more to be realized than expected, including that the Sovos Brands transaction may not be accretive within the expected timeframe or the extent anticipated; the risks related to the availability of, and cost inflation in, supply chain inputs, including labor, raw materials, commodities, packaging and transportation; the company’s ability to execute on and realize the expected benefits from its strategy, including growing sales in snacks and growing/maintaining its market share position in soup; the impact of strong competitive responses to the company’s efforts to leverage its brand power with product innovation, promotional programs and new advertising; the risks associated with trade and consumer acceptance of product improvements, shelving initiatives, new products and pricing and promotional strategies; the ability to realize projected cost savings and benefits from cost savings initiatives and the integration of recent acquisitions; disruptions in or inefficiencies to the company’s supply chain and/or operations, including reliance on key supplier relationships; the risks related to the effectiveness of the company's hedging activities and the company's ability to respond to volatility in commodity prices; the company’s ability to manage changes to its organizational structure and/or business processes, including selling, distribution, manufacturing and information management systems or processes; changes in consumer demand for the company’s products and favorable perception of the company’s brands; changing inventory management practices by certain of the company’s key customers; a changing customer landscape, with value and e-commerce retailers expanding their market presence, while certain of the company’s key customers maintain significance to the company’s business; product quality and safety issues, including recalls and product liabilities; the possible disruption to the independent contractor distribution models used by certain of the company’s businesses, including as a result of litigation or regulatory actions affecting their independent contractor classification; the uncertainties of litigation and regulatory actions against the company; the costs, disruption and diversion of management’s attention associated with activist investors; a disruption, failure or security breach of the company’s or the company's vendors' information technology systems, including ransomware attacks; impairment to goodwill or other intangible assets; the company’s ability to protect its intellectual property rights; increased liabilities and costs related to the company’s defined benefit pension plans; the company’s ability to attract and retain key talent; goals and initiatives related to, and the impacts of, climate change, including weather-related events; negative changes and volatility in financial and credit markets, deteriorating economic conditions and other external factors, including changes in laws and regulations; unforeseen business disruptions or other impacts due to political instability, civil disobedience, terrorism, geopolitical conflicts, extreme weather conditions, natural disasters, pandemics or other outbreaks of disease or other calamities; and other factors described in the company’s most recent Form 10-K and subsequent Securities and Exchange Commission filings. This discussion of uncertainties is by no means exhaustive but is designed to highlight important factors that may impact the company’s outlook. The company disclaims any obligation or intent to update forward-looking statements in order to reflect new information, events or circumstances after the date of this release.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240527310152/en/

INVESTOR CONTACT:

Rebecca Gardy

(856) 342-6081

Rebecca_Gardy@campbells.com

MEDIA CONTACT:

James Regan

(856) 219-6409

James_Regan@campbells.com

Source: Campbell Soup Company

FAQ

What is Campbell Soup Company's plan for its supply chain?

Campbell Soup Company plans to invest $230 million to optimize its supply chain, improve returns, and enhance efficiency.

When will Campbell close its Tualatin, Oregon plant?

Campbell plans to close its Tualatin, Oregon plant by July 2026.

How many employees will be affected by the Tualatin plant closure?

The closure of the Tualatin plant will impact 330 employees.

What changes are planned for the Jeffersonville, Indiana plant?

The Jeffersonville, Indiana plant will specialize in Late July tortilla chips, affecting 85 employees.

How much is Campbell investing in the Maxton, North Carolina plant?

Campbell is investing $150 million in the Maxton, North Carolina plant for new aseptic soup production.

How many new roles will be created through Campbell's supply chain investments?

The investments are expected to create approximately 210 new roles.