Smucker to Close Four Plants, Expand Three
J. M. Smucker Co., struggling with growing pains of nearly doubling its size over the past two years, announced in late March a "supply chain streamlining" that will result in the closing of four plants but also significant expansions in hometown Orrville, Ohio, and New Orleans.
The company said it will close fruit-spread plants in Memphis, Tenn., and Ste. Marie, Quebec, moving their production to a new plant in Orrville. It also will shutter coffee plants in Sherman, Texas, and Kansas City, Mo., to consolidate all coffee production into its two plants and a warehouse in New Orleans. Smucker said it will spend $220 million on capital improvements over the next three years to enact the plan. It also will take $190 million in restructuring charges over the course of the plan.
Some $150 million will be spent to build the new Orrville plant, which will produce fruit spreads, ice cream toppings and syrups, and on upgrades to an existing Ripon, Wis., facility.
Capital investments totaling $70 million will consolidate all coffee production into the existing facilities in New Orleans, which were acquired along with the Folgers coffee business from Procter & Gamble in 2008.
Construction of the new Orrville plant is expected to begin this fall with initial production start-up in the summer of 2012. Production is anticipated to be phased in through the summer of 2013, at which time the company expects to close its Memphis and Ste. Marie plants.
The new facility also will replace the existing manufacturing plant, which is more than 60 years old, in Orrville. As a result of new technologies and efficiency improvements designed into the new facility, a reduction of the Orrville plant workforce of approximately 40 percent is anticipated over the next three years.
Following all these changes, manufacturing facilities in North America will be reduced from 22 to 18 and employment will be cut by approximately 700 full-time positions, or 15 percent of the company's workforce. The company expects to save $60 million annually, excluding one-time costs, when the transition is fully complete.
Hungry Jack Potatoes to Basic American
As part of the consolidation effort above, J.M. Smucker Co. has agreed to sell its Hungry Jack brand of potato products to Basic American Foods, Walnut Creek, Calif. The deal does not include Hungry Jack pancake mix and syrup products, which will remain with Smucker.
Basic American Foods has been a longtime manufacturer and co-packer of the Hungry Jack and Idaho Spuds brands and is the leading producer of dehydrated potatoes in North America. The licensing agreement allows Basic American Foods to build on its already successful foodservice business by extending into the retail channel.