Smithfield Foods to cut 1,800 jobs, close six plants, including one in Elon
Posted February 17, 2009 7:56 a.m. EST
Updated February 17, 2009 11:01 a.m. EST
SMITHFIELD, Va. — Pork producer Smithfield Foods said Tuesday it plans to cut 1,800 jobs and close six factories, including one in Elon, N.C., as part of a restructuring.
The Elon closing affects 160 workers.
“This was a very difficult decision for the company,” said Timothy Schellpeper, president of Smithfield Packing. “We are proud of the workers of Elon and the plant’s record of performance. Unfortunately, we need to find ways to improve our operating efficiencies to remain competitive. And this often means consolidating operations.”
Smithfield Foods Inc., based in Smithfield, announced the closures and layoffs as part of a plan to consolidate and streamline its pork business. The company plans to save $125 million a year by 2011.
To help fund the restructuring, the company will take a pre-tax charge of $85 million in its fiscal third-quarter that ended Feb. 1, as well as another $30 million over the next three quarters. It will spend $53 million in capital expenditures related to plant consolidation.
The plants are expected to close by December 2009, the company said.
Chief Executive C. Larry Pope said Smithfield was switching its focus from "opportunistic acquisitions of high-quality companies at distressed prices" to being more efficient. He said the company would focus on growth of its high-margin packaged-meat business.
Also, the company refinanced its U.S. and European debt facilities to lower the cost of interest payments. Both agreements were reached within the past two weeks.
"This action should remove any question about the financial strength of Smithfield Foods," Pope said.
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.