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Campbell Soup Restructures To Capture More of Market

August 25, 1989

CAMDEN, N.J. (AP) _ Campbell Soup. Co is phasing out operations at its oldest manufacturing plant - a sign that the food industry giant is moving ahead with aggressive plans to garner a larger share of the $2 billion soup market.

A decade ago, corporate brass at the nation’s largest soup maker balked at the thought of laying off workers at antiquated plants operating at less than capacity.

It took 18 months to close an obsolete facility in Chicago because company Chairman John Dorrance Jr., the son of the inventor of condensed soup, hated to lay workers off.

″Ten years ago they acted very paternalistically,″ said Marvin B. Roffman, an analyst at the Philadelphia brokerage firm Janney Montgomery Scott Inc.

Acting on results from a 3-year study of Campbell’s operations, the company announced Thursday a worldwide restructuring that will include the loss of 2,800 jobs and the closure of the 120-year-old manufacturing plant at its headquarters here and plants in Maryland and Tennessee.

The reorganization, approved at a board of directors’ meeting Thursday, is expected to save the company almost $15 million during its fiscal 1990 and about $150 million over the next four years, said Campbell spokeswoman Marsha Cade.

The restructuring is expected to produce a one-time charge of about $344 million, or $2.01 a share, against earnings for the 1989 fiscal year, the company said.

Production at the Camden plant would be moved to other canned food plants in Napoleon, Ohio, Paris, Texas and Maxton, N.C., the company said. The plant manufactures Campbell’s soups, Franco-American pasta, beans and Prego spaghetti sauce.

The plant, which opened in the company’s first year of existence in 1869, will be closed by July 1990, eliminating 940 jobs. The plant, though large, is inefficient because of its eight-story layout.

Also slated for closure are a 272-employee plant in Pocomoke City, Md., a 246-worker plant in Crisfield, Md., and an 84-employee plant in Smyrna, Tenn.

Five more plants with a total of 1,200 workers will be closed at a later, unspecified date, company officials said.

″We feel that this will make Campbell more efficient,″ Ms. Cade said. ″Their time has passed them by and they just aren’t efficient as they should be.″

Many of the employees will be offered transfers and others will be offered severance pay or aid in finding other jobs, Campbell said.

The company said it plans to maintain its headquarters in this poor city across the Delaware River from Philadelphia. Plans are underway to begin construction later this year on a $35 million, 200,000-square-foot international headquarters on the city’s waterfront.

Company officials said the 1,700 headquarters employees will not be affected by the plant closing.

Restructuring also is expected at some of the company’s foreign plants, Ms. Cade said. Campbell has about 100 processing plants scattered around the world, including about 60 in the United States.

The board already approved capital expenditures of $430 million for fiscal 1990 to upgrade plants, Campbell said.

″It’s really a statement that management is making that we’re going to be lean and mean,″ said Roffman. ″Any food company who wants to be independent in the ’90s had better be a very low-cost producer with a global presence.″

The restructuring comes as little surprise, Roffman said.

″Two years ago the company told the world they planned to be (on) top,″ Roffman said. ″This is just moving that program into super-high gear.″

Since 1986, the company has phased out plants in Chicago, Pottstown and Doylestown, Pa., and Memphis, Mich., under the program, Ms. Cade said.

Before his death in April, Dorrance began to recognize that the industry was moving toward consolidated, state-of-the-art operations, Roffman said.

Campbell sells about 5 billion cans of soup a year, garnering about 65 percent of the $2.2 billion retail soup market, a drop of about 5 percent in the past five years. The company also has had difficulty breaking into the faster-growing dry-soup market.

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