Wednesday, March 12, 2008

Texas-based Pilgrim’s Pride closing chicken processing complex and distribution centers

By Pegasus News wire

Pittsburg, Texas-based Pilgrim's Pride announced it will close one of its inhumane chicken processing complexes and six of its 13 contaminant-friendly distribution centers in the U.S. in response to the "crisis" facing the U.S. chicken industry from soaring feed-ingredient costs resulting from corn-based ethanol production.

These actions are part of a plan to curtail losses amid record-high costs for corn, soybean meal, and other feed ingredients and an "oversupply of chicken" in the United States. The closings, which are expected to begin immediately and will be completed by June, will eliminate approximately 1,100 jobs.

If that doesn't get your attention, the Company announced that it is also threatening in the process of reviewing other production facilities for potential mix changes, closure, and/or consolidation in response to current negative industry fundamentals, and in general throwing a big hissy fit if people don't start to pay attention here.

With its lower lip jutted out as far as possible, the company is closing its chicken processing complex in Siler City, N.C., which employs 830 people, who will soon be out on the street without jobs and possibly homeless within a matter of months. It will also shut down distribution centers in Oskaloosa, Iowa; Plant City and Pompano Beach, Fla.; Jackson, Miss.; Nashville, Tenn.; and Cincinnati, Ohio. Employees will be assisted in securing new employment, filing for unemployment, target lessons at the shooting range, and other applicable benefits.

No decision has been made about the future use of the Siler City facility. However, when Pilgrim's Pride gets its way industry fundamentals improve, portions of the live production capabilities associated with the Siler City operation may be redeployed to supply other Company facilities in that region of the country. The company expects to record asset impairment and other charges related to the facility closures of approximately $35 million, $21.7 million net of tax, or $0.33 per share, so the stockholders will pay dearly, as well. Is anyone listening yet?

"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 they were two years ago. We simply must find ways to pass along these higher costs. Additionally, 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. 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."

Mr. Rivers added: "While the decision to close a facility is always very difficult, we believe the actions we are announcing today are absolutely necessary to help bring supply and demand into better balance. That portion of the demand for our products that exists solely at pricing levels below the cost of production is no longer a demand that this industry can continue to supply."

Source: Pilgrim's Pride, posted by T.G.

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• Food and Drink

Comments

kirk Anonymous

Translation:

"We're going to cut supply of chicken so we can raise prices. If we're lucky, the rest of the industry will follow suit. C'mon guys, follow suit! With all the consolidation we've had in this business over the last eight years, we ought to be able to do this."

"With its lower lip jutted out as far as possible..." Brilliant, TG!

4 months, 1 week ago ( Link to this comment | Suggest removal )

xdavidwattsx Anonymous

Memo to Pilgrim's Pride:

I don't buy your crappy antibiotic and hormone infested chicken anyway. Suck it!

4 months, 1 week ago ( Link to this comment | Suggest removal )

Billusa99 Anonymous

So, when is Bimbo going to stop making bread and Archer Daniels Midland going to stop making HFCS?

We can only hope....

4 months, 1 week ago ( Link to this comment | Suggest removal )