Smithfield Foods to Close Six Plants, Cut 1,800 Jobs

[Purveyor]

Source: Bloomberg

By Choy Leng Yeong

Feb. 17 (Bloomberg) -- Smithfield Foods Inc., the world’s biggest pork processor, plans to close six plants by December and cut 1,800 jobs to restructure its pork business as hog supplies dwindle.

The plan will save about $55 million in fiscal 2010 and $125 million by fiscal 2011, the Smithfield, Virginia-based company said today in a statement. The company said it will take an $85 million pretax charge in the third quarter ended Feb. 1 and pretax charges of $30 million in the next three quarters.

Chief Executive Officer C. Larry Pope is reducing the number of independent companies in the pork group to three from seven to cut costs and move operations to more profitable locations. Meatpackers’ profit margins have shrunk this year as cash-market hog prices increased 20 percent while wholesale pork prices rose 4.8 percent.

“We have long been an advocate of greater centralization in Smithfield’s pork segment,” Kenneth Zaslow, an analyst at BMO Capital Markets Corp., said today in a note to clients. “The cost savings are somewhat larger than our expectation and likely will structurally improve Smithfield’s pork-processing margins.”

Read more: http://www.bloomberg.com/apps/news?pid=20601103&sid=aZzOkOGGvAgM&refer=us

[CatholicEdHead]

1. I guess the markets are more Kosher now

;)

On a more serious note, the bleeding continues. :(

[nc4bo]

2. oh no.

Someone please stop the hemorrhaging.

They just unionized too :(

ETA: note to self - leave the * out of the frown smiley.

[KamaAina]

5. Coincidence?

They just unionized too

That's what Sprawl-Mart does. If anyone even whispers the word "union", that store closes, and a brand-new, shiny Supercenter opens 100 yards down the road. :eyes:

[nc4bo]

6. My mom said exactly the same thing after I told her about this

in fact, it was the first thing out of her mouth. Probably revenge for the workers forming a union.

Sux and probably has the workers at the other plants terrified of losing their jobs too.

[DainBramaged]

3. ...............

I just bought their pork chops at Shop Rite on Saturday, guess I will be buying store brand from now on.

[Tashca]

4. Timing is right.

The hog numbers are going down significantly because of the sell off caused by last years grain price increase. Many Pork producers had to sell breeding stock because they couldn't continue losing money......another by-product of hedge funds sucking massive amounts of money out of food production.

Smithfield has been making major purchases over the last few years. It make sense to consolidate their plants and increase efficiencies while the numbers are down. They own plants throughout the world.

I'm going to make a prediction.......over the next few years you are going to see livestock production continue to grow significantly South of the border. The giant multinationals did not ramp up grain production down there over the last thirty years just to sell grain. Livestock is where the real profit is. And they will have the added bonus of more lax environmental laws....not to mention by-passing unions. It's cheaper to ship a finished product up here than to keep sending grain. I think the next thirty years could see a major change in livestock production....

The only thing really to stop that are the stopping of free trade deals......will be interesting the next few years.

[nc4bo]

7. Good points all around. I agree, it will be definitely be an interesting next few years.

I wonder how long it will be before we have poisoned pork product recalls north of the border?