Pilgrim's Pride to close facilities
March 12, 2008
by FoodBusinessNews.net Staff
PITTSBURG, TEXAS — Pilgrim’s Pride Corp. has announced it will close a chicken process complex along with six distribution centers in the United States as a result of the industry-wide crisis of soaring feed-ingredient costs.
"Our company and industry are struggling to cope with unprecedented increases in feed-ingredient costs this year due largely to the U.S. government’s ill-advised policy of providing generous federal subsidies to corn-based ethanol blenders," said Clint Rivers, president and chief executive officer. "The cost burden is already enormous, and it’s growing even larger. Based on current commodity futures markets, our company’s total costs for corn and soybean meal to feed our flocks in fiscal 2008 would be more than $1.3 billion higher than what there were two years ago. We simply must find ways to pass along these higher costs."
The closings are expected to begin immediately and end in June, cutting about 1,100 jobs from the chicken processing complex in Siler City, N.C., and distribution centers in Oskaloosa, Iowa, Plant City and Pompano Beach, Fla., Jackson, Miss., Nashville, Tenn., and Cincinnati.
Pilgrim’s Pride expects to record asset impairment and other charges related to the closings of about $35 million. In addition, the company is in the process of reviewing other production facilities for potential mix changes, closings and consolidations in response to the current market conditions.
"We believe that the recent impact of food-based inflation, coupled with the need for food producers to continue to increase prices for their products, will further stimulate inflation, weaken consumer confidence and negatively affect demand for products in certain market channels," Mr. Rivers said. "This will require that the industry adjust its production output to levels commensurate with a reduced demand, at higher and necessary prices sufficient to sustain the industry as a whole."
This week the company also announced that Hain Pure Protein Corp. has acquired a turkey production facility and distribution facility in New Oxford, Pa., from Pilgrim’s Pride. While financial terms of the sale were not released, Pilgrim’s Pride is no longer a producer of turkey as a result of the transaction.