J.M. Smucker to build facility, close four
March 24, 2010
by Keith Nunes
ORRVILLE, OHIO —The J.M. Smucker Co. plans to build a new manufacturing facility in Orrville and invest in new equipment and technology at its facility in Ripon, Wis. The capital investment for both projects will be approximately $150 million, according to the company. The company also announced the closing of two fruit spreads plants in Memphis, Tenn., and Ste. Marie, Quebec, and two coffee plants in Sherman, Texas, and Kansas City.
Coffee production will be consolidated to a facility in New Orleans and Smucker will invest $70 million to accommodate the additional production.
“We are confident that this strategic decision is important for the long-term growth of the company,” said Tim Smucker, chairman and co-chief executive officer. “However, it was difficult given the effect on employees, their families, and the communities related to the impacted facilities. We appreciate the contributions of our employees and are committed to treating them with fairness and respect as we transition these facilities over the next several years.”
Construction of the new Orrville facility is expected to begin in the 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 the Memphis and Ste. Marie facilities.
The new facility replaces the existing Smucker plant in Orrville that is more than 60 years old. As a result of new technologies and efficiency improvements designed into the new facility, a reduction of the Orrville plant workforce of approximately 40% is anticipated over the next three years, according to the company.
The new facility will produce fruit spreads, syrups, and ice cream toppings for its consumer and food service businesses in the United States and Canada.
Upgrades have been made to the company’s New Orleans coffee facilities over the past several years, according to the company. Additional improvements will take place during the next few years, and the Sherman and Kansas City facilities are projected to close in the spring of 2011 and summer of 2012, respectively.
As a result of the closings, Smucker’s manufacturing facilities in North America will be reduced to 18 from 22. When completed, the initiative will lead to the elimination of approximately 700 jobs and reduce the company’s work force by 15%.
Smucker expects to incur restructuring charges of approximately $190 million over a five-year fiscal period. Restructuring charges include approximately $100 million of cash expenditures, including employee-related costs, site preparation and equipment relocation, and production start-up expenses. Also included in the restructuring costs are $90 million of noncash charges, primarily accelerated depreciation and asset write-downs. Restructuring cash outlays are expected to be fairly even across the fiscal 2011 to 2013 timeframe, according to the company.