The J.M. Smucker Co. said last week that it is closing four plants as part of a plan to improve its supply chain network for its fruit spread and coffee brands.
Smucker is investing $150 million over the next three years in two facilities: a new, state-of-the-art fruit spread plant in Orrville, OH, which replaces its current Orrville facility; and an existing plant in Ripon, WI. The company is also consolidating all coffee production into its facilities in New Orleans, an effort that is expected to cost about $70 million.
Meanwhile, Smucker's fruit spread plants in Memphis, TN, and Ste. Marie, Quebec, are due to be shut down by summer 2013. Its Folgers coffee plants in Sherman, TX, and Kansas City, MO, are scheduled to close in spring 2011 and summer 2012, respectively.
The plant closures, along with an estimated 40 percent reduction of Smucker's staff in Orrville over the next three years, will result in the loss of about 700 full-time jobs, or 15 percent of the company's workforce.
"We are confident that this strategic decision is important for the long-term growth of the company," said Tim Smucker, chairman of the board and co-CEO. "However, it was difficult given the effect on employees, their families, and the communities related to the impacted facilities."
Smucker estimates that it will incur approximately $190 million in restructuring charges over the next five years. However, it expects to reap about $60 million in annual cost savings once its plan is fully implemented.