SMITHFIELD, VA. — As part of its plan to cut its annual costs by up to $125 million by the 2011 fiscal year, Smithfield Foods Inc. announced plans to close six pork processing facilities and eliminate approximately 1,800 jobs. The company also plans to reorganize four existing independent operating companies by consolidating them under the business units of The Smithfield Packing Company, Inc., John Morrell & Co. and Farmland Foods, Inc. The plant closings, which will occur over the next three quarters, involve only further processing facilities and none of Smithfield’s slaughtering facilities.
"Combined with the several plant closures we have made over the last three years, this restructuring should improve operating rates dramatically, allowing us to shed low-margin business," said C. Larry Pope, president and chief executive officer.
The company’s restructuring includes merging the sales forces of its John Morrell and Farmland Foods businesses. The Patrick Cudahy brand also will become a part of the John Morrell group as will Carando Foods. Meanwhile, North Side Foods Corp. will become a part of Farmland Foods’ foodservice segment and Cumberland Gap Provision Co. will merge with Smithfield Packing Co. All of Smithfield’s independent international sales operations are already being consolidated as part of Smithfield Foods International Group and will handle the company’s export business.
In terms of the reorganization of the businesses, Mr. Pope said there is reason for optimism.
"We are very excited about this restructuring plan," he said. "The plan will better align the company by enhancing operating efficiencies and increasing utilization rates to reduce our overall manufacturing and overhead structures, which will make Smithfield Foods a more competitive company."
As for the closings, the company’s hometown will feel the brunt of job cuts. With plans that include shifting its case-ready pork production to two other facilities in Virginia and North Carolina, the Smithfield Packing Company South plant in Smithfield, Va., will close in December. The plant’s 1,375 employees will be offered the opportunity to transfer to one of the company’s other operations. Also closing is the facility in Plant City, Fla., which will shut down in September. Of the 760 employees of the packaged meats plant, some salaried individuals will be offered transfers. The John Morrell fresh and smoked meats plant in Great Bend, Kas., will close in July, eliminating 275 jobs, while Farmland Foods’ New Riegel, Ohio, ham plant will be shuttered in April, affecting 230 employees. Also closing in July will be the Armour-Eckrich packaged meats plant in Hastings, Neb., where 370 people work. Lastly, in late summer, Smithfield Packing Co. will cease operating its country ham plant in Elon, N.C.
"We know that this will create adversity for the employees affected and we will work with union officials and others to determine how we can provide assistance to our employees to find future employment," Mr. Pope said.
In early 2007, Smithfield acquired its Kansas City-based rival, Premium Standard farms in a deal valued at approximately $670 million.
This past March, Smithfield announced it would close its Kinston, N.C., smoked ham plant, Smithfield Packing Co.