Campbell Soup announces plan to cut costsCampbell Soup Company recently announced new plans to rework its United States supply chain to enjoy greater cost savings. The company plans to restructure its production, develop new product lines and improve efficiency to boost sales and slash expenses.

Production changes coming
One of the biggest changes the food company announced was its new plans for production. Campbell's has decided to shut down its oldest plant, built in 1947 and located in Sacramento. The company said that the age of the plant combined with the high production cost there made it more cost-effective to shift manufacturing elsewhere. The plant is scheduled to be closed in stages and should be fully shut down by July 2013. After that, production will be shifted to North Carolina, Ohio and Texas, where manufacturing costs will be more affordable.

In addition to closing the canned-soup production facility, the company is also scheduled to close its New Jersey spice facility in by March. Spice sourcing will not be an issue after the plant is closed - the company has another facility in Wisconsin that will take over responsibility for all spice production.

Boost revenue with new products
Along with the company's aim to slash production costs, it will also attempt to increase sales with new product lines. Campbell's plans to release more than 50 brand-new soups and sauces this year, hoping to tempt younger shoppers with new flavors. The company is also switching up its packaging, and will not sell the new goods in its classic cans. Instead, the soups will be sold in tubs and bags, making them easier for younger, on-the-go consumers to transport.

Significant savings
Even though the adjustments will cost an anticipated $115 million, these plans will save the company a significant amount of money in the long run. It is estimated that once the changes are fully implemented, they will provide Campbell with pre-tax savings of about $30 million beginning in 2016.

"As we position Campbell for profitable growth, we must continue to optimize our U.S. plant network and diversify our manufacturing capabilities," said Campbell president Mark Alexander. "We expect the steps we're announcing today to improve our competitiveness and performance by increasing our asset utilization, lowering our total delivered costs and enhancing the flexibility of our manufacturing network."
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