Business closings bring huge losses

Nov. 28, 2012

By Katy Grimes

When a business closes it’s doors forever, the impacts are far-reaching.

The announcement of the upcoming closure of the Campbell’s Soup plant in Sacramento will have regional and statewide impact.

Econ. 101

I may have been a political science student, but my husband is a longtime Sacramento manufacturer. For many years I lived and worked Econ. 101 lessons alongside 250 employees.

My businessman husband was an economics major in college and frequently reminds me that economics education in college has seen a dramatic shift. There weren’t many Keynesian economists in universities back then. Unfortunately, today, Keynesian economics seems to be the only economic theory coming out of universities.

Keynesian economics is an economic theory stating that aggressive government interventions in the marketplace and monetary policy are the best way to ensure economic growth and stability.

Economist Walter Williams has explained for many years the reality of the free market economy in which businesses must make a profit in order to survive: “In the market, when a firm fails to please its customers and fails to earn a profit, it goes bankrupt, making those resources available to another that might do better. That’s unless government steps in to bail it out.”

Williams has long argued against Keynesian economics, “The ruthlessness of the market discipline, which forces firms to please customers and thereby earn profits, goes a long way toward explaining hostility toward free market capitalism.”

Campbell’s Soup

Campbell’s Soup has five large plants in the United States. But the Sacramento processing plant with 700 employees is the only large one closing. Campbell’s Soup also will close a tiny New Jersey spice plant with 27 employees and consolidate spice production at its Milwaukee plant.

What hasn’t been reported are the many suppliers and vendors associated with a large manufacturing plant like the Campbell’s Soup Sacramento location.

Corrugated and boxes

A Sacramento box manufacturing plant owner recently told me the story of Western Corrugated. In 1963, Sacramento company Western Corrugated was a major supplier to Campbell’s Soup in Sacramento. The box maker had to store so much for Campbell’s Soup that stacks of the box materials stood 25-30 feet high within the building. The Sacramento company shipped truckloads out every day to Campbell’s Soup.

During the very busy summer tomato season, when Campbell’s Soup ramped up efforts to can tomatoes, Western Corrugated’s 65 employees grew to 110.

Western Corrugated is gone. But whatever box maker supplies Campbell’s today will lose it’s largest client.

Campbell’s Soup also has an on-site can manufacturer. This business will also lose out, and be forced to lay off many employees.

Campbell’s Soup has its own cogeneration plant on site, which many speculate is one of the biggest reasons the soup company decided to close the Sacramento plant. Cogeneration is the use of a heat engine or a power station to simultaneously generate both electricity and useful heat. All thermal power plants emit a certain amount of heat during electricity generation, subjecting Campbell’s Soup to California’s stringent cap and trade emission laws and carbon emission credit auctions because of AB 32, the Global Warming Solutions Act of 2006.

The carbon emission credits are nothing more than a tax on business, and the caps on emissions are fabricated by the California Air Resources Board.

The Campbell’s Soup Sacramento plant is so large and significant the railroad runs right to it.

Campbell’s Soup closure

With the closure of Campbell’s Soup, the Sacramento region and all of California will lose. The label manufacturers, can manufacturers, the energy produced for SMUD through the cogeneration plant, property taxes, employment taxes, corporate taxes, and the flow of revenue from employees living in the region — all will be lost.

The real impact of a business closure is the city the business supports. The payroll alone for Campbell’s Soup is between $35 and $40 million a year.

Campbell’s Soup announced that they will ship all of the Sacramento plant equipment out of state to their other U.S. plants.

California government

With the new Democrat supermajority in the Assembly and Senate, and with a Democratic governor, California could see even greater taxes in the near future, particularly on the wealthiest Californians and corporation.  Perhaps taxing not just income, but assets. There has been talk about a wealth tax for many years in California, with some politicians insisting that this helps to equal out the “wealth inequality” in the state.

A real stimulus to the economy is a business, and the fiscal effect it has when contracting with other businesses, as well its employees and their spending ability. California politicians ought to be careful not to kill off the only real stimulus left in the state.

35 comments

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  1. Hondo
    Hondo 28 November, 2012, 17:07

    There is no reason to move Campbell’s. In Sac town, it was in the middle of all its markets, being that Kalifornia is the most populous state in the union and Sac town is the perfect place for the soup maker. It is on the main train and hiway routes going east and west and north and south. Sac town was the PERFECT place for that reason.
    Sac town was in the breadbasket of the world, Kali’s central valley, the greatest place for the production of food on earth, the food that goes into those red and white cans. Wherever Campbell’s moves to won’t have near the capacity of food production to fill those cans.
    There is no reason for Campbell’s to move other than it was forced out. The closest breadbasket to produce the soup, the midwest, is easily 1500 miles away from its biggest market, CALIFORNIA!!!. That means buying and using idiotic amounts of fuel to bring the soup to its biggest market, rather than producing it there!!!. The taxes and regulation in Kalifornia has to be horrific for Campbell’s to even think of moving its plant from Sac town.
    I ask our fine liberals who write here to disprove the economic facts Katy and I have laid out. You can’t. But try anyways. I need a good laugh.
    Hondo…..

    Reply this comment
  2. Hondo
    Hondo 28 November, 2012, 17:16

    I forgot to add that a huge percentage of the workers losing their jobs at Campbell’s, if not the majority, were MINORITY WORKERS. Were else can they get a good job like they had at Campbell’s in Kali’s economy.
    But hey, just give um an Obama phone and some food stamps. Those are the two biggest increases in Amerika’s production in Obama’s economy.
    I know the phones are made in china, but are the plastic card produced there too?
    Hondo….

    Reply this comment
  3. gree
    gree 28 November, 2012, 17:19

    So your argument answers itself. It will cost more to move than stay. If they are leaving over some perception that taxes and regulations will cost them more to operate than moving and shipping, then, well it’s a misperception. They can participate in cap and trade with everyone else. Killing off our planet and our health for cheap soup isn’t a great trade off in my book.

    Maybe they moved for other reasons? Possibly lower wages in states with lower costs of living. Or maybe they really do want to pollute freely and screw their workers. If so, good riddance.

    Reply this comment
  4. Hondo
    Hondo 28 November, 2012, 17:23

    I know the money that is funding those foodstamp cards comes form china.
    I know many people here, including Katy, don’t remember their parents telling them to ‘clean their dinner plate, there are starving people in China’. They are way to young. My parents did.
    I wonder what the parents in China tell there kids about the kids in Amerika now?
    Hondo…..

    Reply this comment
  5. Dyspeptic
    Dyspeptic 28 November, 2012, 18:36

    Everybody knows that we don’t need no stinkin’ private sector. Only the greedy rich make money off of that and it’s killing the planet. We need nationalization of industry for the good of the country. The Soviet Union proved it can work. Workers of the world unite, you have nothing to lose but your jobs, your pensions, your health insurance, your standard of living and your liberty. Who needs that stuff anyway? What’s important is that we will all be equally impoverished and the planet will be saved from that horrible and scary carbon dioxide stuff.

    Reply this comment
  6. NTHEOC
    NTHEOC 28 November, 2012, 18:42

    Campbell’s Soup announced that they will ship all of the Sacramento plant equipment out of state to their other U.S. plants.
    ==========================
    Greedy corporate PIGS!!!!! Profit before people is the motto for campbells. I wish we could impose a heavy fine on this company for raping the poor workers!!! I will never buy a campbells soup again!!!1

    Reply this comment
  7. NTHEOC
    NTHEOC 28 November, 2012, 18:47

    Dyspeptic says:
    November 28, 2012 at 6:36 pm
    Everybody knows that we don’t need no stinkin’ private sector. Only the greedy rich make money off of that and it’s killing the planet. We need nationalization of industry for the good of the country.
    ============================
    I would support nationalization of industry before I would ever support companies like the greedy fat corporate PIG walmart corp!!! Walmart works their employees around 38 to 39 hours a week so they do not have to consider them full time! This way they can avoid giving those poor workers the benefits they need,these walmart workers actually qualify for food stamps and welfare!! But hondo,and dyspeptic have no problem with this……

    Reply this comment
  8. NTHEOC
    NTHEOC 28 November, 2012, 20:28

    There has been talk about a wealth tax for many years in California, with some politicians insisting that this helps to equal out the “wealth inequality” in the state.
    ==========================
    LOVE IT!!!!!

    Reply this comment
  9. NTHEOC
    NTHEOC 28 November, 2012, 20:30

    California could see even greater taxes in the near future, particularly on the wealthiest Californians and corporation.
    ===============================
    Ohhhhhh,It’s like music to my ears!!!Please,Please let this come to be! No more raping the workers!!! LIVE BETTER,WORK UNION!!!!!!!!

    Reply this comment
  10. Kevin Dayton, Labor Issues Solutions, LLC
    Kevin Dayton, Labor Issues Solutions, LLC 28 November, 2012, 21:01

    Good thinking on the Campbell Soup Cogeneration Plant. I checked on the situation of this power plant on the day Campbell’s announced the plant closure. The 160 MW plant was built in 1996 (under a union Project Labor Agreement, of course) and is operated by a joint powers authority consisting of the Sacramento Municipal Utility District (SMUD) and the Modesto Irrigation District. SMUD is expected to continue operating it after the plant closure.

    In response to my inquiries, Melissa Wiese at the Sacramento Business Journal reported on September 27 that the closing of the Campbell’s Soup food processing plant will not affect the Campbell Cogeneration Power Plant. According to Wiese, “SMUD diverts steam to the plant for Campbell. Now they won’t.”

    Reply this comment
  11. Kevin Dayton, Labor Issues Solutions, LLC
    Kevin Dayton, Labor Issues Solutions, LLC 28 November, 2012, 21:08

    Here’s another interesting angle: Campbell Soup Company was the second highest taxable property in the Sacramento City Unified School District, where voters just gave authorization to the school board through Measures Q and R to borrow $414 million ($734 million including interest) by selling bonds. The school district already has $522 million in debt from two previous bond measures.

    The Campbell Soup Supply Company LLC held property valued at $139,006,200 – the second highest amount in the Sacramento City Unified School District – more than one-half of one percent of the total (.57%).

    These facts were included in a comprehensive web site opposing Measures Q and R (see http://www.fairandopencompetitionsacramento.com), but nothing was going to stop new taxes for The Kids in November 2012. It looks like voters approved 87 California K-12 school districts and community college districts (out of 105) to borrow money by selling bonds.

    Reply this comment
  12. Dano
    Dano 28 November, 2012, 21:49

    I couldn’t agree with you more, NTHEOC. Since this country is an economy based on the spending of its citizens with business. If this d*** congress would just pass the Bush tax cuts for 98% of Americans, it will put $2000+ in to everyone’s pocket. You deprive these people of that money, they won’t have it to spend and yes, BUSINESS’S WILL CLOSE!
    So tell your Congressman/lady to vote accordingly promptly. Is just insane to have the GOP want to have the fight over the 2% while holding the 98% hostage.

    Reply this comment
  13. Dyspeptic
    Dyspeptic 28 November, 2012, 23:22

    That’s right Dano, it’s all the fault of those greedy stupid Republicans. Everyone knows we need more money for government. Without more and more and more government we would all die! Here’s the real secret – The Soviet Union was the most successful country on earth. The Bilderbergers got jealous and convinced the Elders Of Zion to shut it down, that’s what I heard. I heard the streets of Moscow were paved with gold and everyone drove a Bentley when they weren’t driving their Rolls Royce. It was heaven on earth and we can do the same. No more Capitalism. No more free markets. Let the government run everything, they know better. Just look at Venezuela, what a wonderful country. And then their is North Korea. Don’t believe what you hear about North Korea, that’s just lies spread by running dog capitalists who are jealous.

    Everyone knows Obama is not responsible for the high unemployment. Everyone knows Obama is not responsible for the $ six trillion in new debt in 4 years. Everyone knows Obama is not responsible for the slow economic recovery and low GDP growth. It’s all the fault of Republicans and Capitalist Pigs. IT’S NOT OBAMAS FAULT, EVER! AND I MEAN NEVER EVER!!!!!!!!!!

    WORKERS OF THE WORLD UNITE!

    FROM EACH ACCORDING TO HIS ABILITY, TO EACH ACCORDING TO HIS NEEDS.

    ALL HAIL OUR SAVIOR OBAMA, ALL HAIL OUR SAVIOR OBAMA, ALL HAIL OUR SAVIOR OBAMA!!!!!!!!

    Reply this comment
  14. Ron Kilmartin
    Ron Kilmartin 29 November, 2012, 00:01

    Appalling how many people (even on this discussion) still buy into the carbon-dioxide global warming mendacity, in spite of total lack of scientific evidence that it has any validity.

    Until Californians get over their scientific gullibility, the politicians will continue wrecking the state’s economy with AB 32 and its companion rip-offs. However, having voted in Prop 30, we see that gullibility remains a strong suite for us – as they say in the other states, we are still the land of fruits and nuts. Too bad for us. Goodbye Campbells Soup, it was good to know ya.

    We can see operating here the “invisible hand” (pardon me Adam Smith) of Agenda 21. By AB 32/S375 (derivatives of Agenda 21) wrecking industry, in this case agriculturally-based industry, we will see many farmers going out of business, their market having collapsed. The invisible hand of Agenda 21 will be to capture their lands and put them in permanent wildland reserve with no human access.

    Reply this comment
  15. JoeS
    JoeS 29 November, 2012, 06:01

    Wow, I enjoy marxists like NTHEOC. They are so clear in their perception that Liberty and Personal Responsibility are enemy! They can see how installing marxist dictators brings peace and beauty to the world! They are the result of our public schools! This is what we pay taxes to produce.

    I will plan to move out of California with Campbell’s!

    This is a great website, this is a great article! Thanks CalWatchdog!
    (How did this troll find you?)

    Reply this comment
  16. Ted
    Ted "Eddy Baby" Steele, Associate Prof. 29 November, 2012, 06:54

    LOL– Dysphoric et al—-“Marxists”? LOL—

    The 1980’s are calling, they want their rhetoric back!

    It’s sad to watch the slow decline of the repubs via the tea baggy right……sad I tell ya!

    Keep it up, maybe you’ll win next time!

    Reply this comment
  17. Rex the Wonder Dog!
    Rex the Wonder Dog! 29 November, 2012, 08:24

    NTHEOC says:
    There has been talk about a wealth tax for many years in California, with some politicians insisting that this helps to equal out the “wealth inequality” in the state.
    ==========================
    LOVE IT!!!!!

    That would hit you and all the other firewhiners NTHEOC. Glad you agree with it.

    Reply this comment
  18. Dyspeptic
    Dyspeptic 29 November, 2012, 08:36

    Eddy Baby, you really are as thick as a brick. You should try paying attention between trips to the bank to cash all those government pension checks. I was being facetious. I know it’s a big word for you Eddy so go look it up.

    If you have elucidated anything from our little dialogues here you would know that I am not a Retardpublican so don’t shed any crocodile tears for the decline of the “repubs”, and try to imagine that there are more than two political parties in this country and different points of view than just your lame brained right vs. left paradigm. Take off the dunce cap Eddy and put on your thinking cap so you don’t embarrass yourself in front of class anymore.

    And remember,
    Obama is my shepherd, I shall not want.
    He makes me lie down in environmentalist pastures.
    He leads me beside still waters that I can’t drink because the snail darter is so damned important.
    He restores my home equity.
    He leads me in paths of crony capitalism for His names sake.
    Yea, though I walk through the valley of the shadow of death
    I will fear no global warming for Obama is with me
    His stimulus and His free condoms, they comfort me
    You prepare food stamps for me in the presence of my enemies
    You anoint my head with tax increases, my cup overflows with deficits.
    Surely, warrantless wiretapping and killer drones will follow me all the days of my life,
    and I shall dwell in a Gitmo forever.

    Reply this comment
  19. Hondo
    Hondo 29 November, 2012, 08:47

    Ted:
    By hating the tea party, you must be a supporter of the Occupy group, which is the most violent group since the Nazi party. They are a raping machine. The Occupy party was in a frenzy of rape and violence. There were over 300 felony arrests of Occupy people. One of them shot up the white house. Talk about a war on women. They had more rapes per capita than when Stalin’ army marched into Germany in ww2.
    The tea party were a bunch of blue headed old people who sat around with signs saying ” cut the deficit”. They are among the most peaceful groups in the world. Your occupy group is among the most violent groups on earth.
    Those are the facts, Ted.

    Reply this comment
  20. Ted Steele, Navigator
    Ted Steele, Navigator 29 November, 2012, 08:57

    Dysphoric— Despuite your denials— you remain a Republican defacto–sorry little buddy!

    Hondo— Tea baggers are a hate filled crew who like to dress up like revolutionary war charactors and eat high carb snacks in my view– sorry little buddy!

    Now if you’re talking common sense and conservative fiscal views—– you might be a Blue Dog Dem! And that’s ok!

    Reply this comment
  21. Dyspeptic
    Dyspeptic 29 November, 2012, 09:42

    Baby Eddy, if you want to “Despuite” something at least spell the word correctly dummkopf. Were you trying to say despite or dispute?

    “Now if you’re talking common sense and conservative fiscal views—– you might be a Blue Dog Dem! And that’s ok!”

    I’ve got news for you Baby Eddy, there are no Blue Dog Dems left. You Demogoguecrat partisan drones are all Yellow Dog Dems now. So put on your floppy shoes, big red nose and Bozo wig, then squeeze into your electric clown car and drive to the bank to cash another one of your public pension checks before they bounce.

    Reply this comment
  22. Rex the Wonder Dog!
    Rex the Wonder Dog! 29 November, 2012, 10:02

    Eddy Baby, you really are as thick as a brick. You should try paying attention between trips to the bank to cash all those government pension checks. I was being facetious. I know it’s a big word for you Eddy so go look it up.
    If you have elucidated anything from our little dialogues here you would know that I am not a Retardpublican so don’t shed any crocodile tears for the decline of the “repubs”, and try to imagine that there are more than two political parties in this country and different points of view than just your lame brained right vs. left paradigm. Take off the dunce cap Eddy and put on your thinking cap so you don’t embarrass yourself in front of class anymore.

    Teddy tries to lump ANYONE he disagrees with into the repug category. Ihave been Independant for 15 years, yet he still makes that bogus claim to me too….

    Bashing your head into a brick wall will give you less brain damage than trying to mkae a rational point with the sock puppet master.

    Reply this comment
  23. BobA
    BobA 29 November, 2012, 10:14

    Dyspeptic:

    Ted is a socialist, through and through. Go back and read his many inane comments and then compare to the various political ideologies and you will come to the same conclusion.

    In his small & confused mind, government knows best and is the solution to everything and anyone who opposes big government or government solutions are the enemy as far as he’s concerned.

    Some people can’t handle freedom and the responsibilities that comes with it. Ted is one such person.

    Reply this comment
  24. Ted Steele, Navigator
    Ted Steele, Navigator 29 November, 2012, 11:27

    LOL Trolls— You fellas like to call yourselfs indi’s or Libertarians etc— and then you ALL post and vote repub! LOl— God Bless your delusions! I love ya!

    Reply this comment
  25. Ted Steele, Navigator
    Ted Steele, Navigator 29 November, 2012, 11:28

    You guys might be spending too much time with the other low information voters in the Faux News ™ bubble. Be honest….don’t you watch alot of Fox?

    Reply this comment
  26. Rob
    Rob 29 November, 2012, 11:35

    Smart move Campbell’s, the Global Cooling/warming/climate change Solutions Scam (AB32) will bankrupt a whole lot more companies just to line the pockets of the spendaholic union shills in Sacramento (the best government money can buy).

    I too want to leave California and have a lifestyle far less expensive than living in a Democrat controlled state.

    Reply this comment
  27. Ted Steele, Navigator
    Ted Steele, Navigator 29 November, 2012, 11:56

    Hey Rob! We just got the super majority! PLEASE don’t go! Give us a year at least! PLEASE PLEASE don’t go yet!!! I beg you.

    Reply this comment
  28. a frequent reader
    a frequent reader 29 November, 2012, 12:08

    Hondo— Tea baggers are a hate filled crew who like to dress up like revolutionary war charactors and eat high carb snacks in my view– sorry little buddy!

    It never ceases to amaze me or slightly scathe at the display of ones imbecilic response to refer to a person who’s ideas are parallel to that of conservatism as a teabagger. One may find it plausible to overlook others for being a complete imbecile within their posts, but it’s a choice to be ignorant. Lest we forget, also an inability to spell.

    Although others refer to libs and dems with word or phrases that demean their character this term, in my opinion, is the epitome of verbal buncombe.

    I’m not sure where Eddy Baby falls, but it sure may have been the on top of his head when falling out of his mama’s arms. Oh wait, that would be excusable. It’s not and never will be coming from him.

    Reply this comment
  29. MadMax2
    MadMax2 29 November, 2012, 13:00

    California Soup Nazis.
    “No soup for you, one year!!!”

    Reply this comment
  30. Fred Mangels
    Fred Mangels 29 November, 2012, 13:31

    Obama just shut down Drake Bay Oyster Company, too. They supply 40% of the state’s oysters:

    http://www.sacbee.com/2012/11/29/5018900/ap-newsbreak-feds-deny-oyster.html

    Reply this comment
  31. Ted Steele, Navigator
    Ted Steele, Navigator 29 November, 2012, 13:39

    “slightly scathe at the display of ones imbecilic response”

    Huh?

    Reply this comment
  32. Rex the Wonder Dog!
    Rex the Wonder Dog! 29 November, 2012, 17:33

    Some people can’t handle freedom and the responsibilities that comes with it. Ted is one such person.

    Truer words have never been spoken 😉

    “Teddy Revealed”, a new movie about communism in America today 🙂

    Reply this comment
  33. BobA
    BobA 29 November, 2012, 19:03

    Rob:

    Ignore Ted. He need’s your tax money to fund his government pension. Better to leave California now than hang around and let the government parasites tax you into poverty.

    Once they’re deprived of tax money from people with a decent income, they will most assuredly go after the so-called middle class next.

    Reply this comment
  34. Ted
    Ted "Eddy Baby" Steele, Associate Prof. 29 November, 2012, 20:14

    I WISH I had a real pension– mine isn’t much– only 10 years or so in the gov—My key to success was paying off my house by about 50!!! But I’ll take your donations Bob!

    Reply this comment
  35. Ted
    Ted "Eddy Baby" Steele, Associate Prof. 29 November, 2012, 20:15

    I WISH I had a real pension– mine isn’t much– only 10 years or so in the gov—My key to success was paying off my house by about 50!!! But I’ll take your donations Bob! And Bob….PLEASE don’t ignore me as Rob requests! PLEASE !!!!

    Reply this comment

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