Processing Magazine

Smithfield Foods to cut 1,800 jobs, close six plants

February 18, 2009
The Associated Press reports that Smithfield Foods Inc. plans to cut 1,800 jobs and close six factories, as part of a restructuring that comes amid an overall slump in the meat industry. Chief Executive C. Larry Pope said the nation''s largest pork producer was switching its focus from buying up its hard-pressed competitors to operating more efficiently. He said Smithfield would shift away from low-margin businesses and instead work on expanding its packaged meat business, where it can make more money. The company plans to combine seven of its independent operating companies into three main units and close plants in six cities, by December. The moves will lead to annual cost savings, after expenses, of about $55 million in fiscal 2010 and $125 million by the following year. The meat industry is slumping as companies like Smithfield recover from volatile energy and commodity costs that reached record highs over the summer. An oversupply of meat on the market has been keeping prices down, while tight credit markets have hurt the potential for exports, a key market for meat producers. Further, a drop in restaurant spending by consumers has lowered demand. Smithfield will combine seven of its independent operating companies into three main units: The Smithfield Packing Co., John Morrell & Co. and Farmland Foods Inc. Further, John Morrell and Farmland will combine their sales forces. Plants slated for closure include: Smithfield Packing Co. plants in Smithfield, Va.; Plant City, Fla.; and Elon, N.C.; as well as a John Morrell plant in Great Bend, Kan.; a Farmland Foods plant in New Riegel, Ohio; and an Armour-Eckrich Meats factory in Hastings, Neb. The company said it would offer transfers to some employees. In the town of Smithfield, the company plans to close one of its two plants. The South plant employs 1,375 workers, and more than 1,000 will be offered transfers to either the North plant or to plants in North Carolina. The move would eliminate duplication. South plant workers process and pack meat; North plant workers slaughter, process and pack meat.