Smithfield to cut 1,800 jobs and close 6 plants

by Editor
Wednesday, February 18, 2009

Smithfield Foods Inc. (SFD) announced it plans to close six plants and shed 1,800 staff, according to Dow Jones Newswires.

The U.S. company is already committed to cutting production by 10% in the year to end-April, mirroring efforts to arrest the domestic oversupply in poultry that is spilling into exports as overseas demand starts to cool.

Smithfield has already seen margins fall and liquidity drained from a weakening demand and supply balance that collided with soaring feed costs last year, exacerbated by wrong-way hedges when corn prices started to decline.

The company is closing six of its 40 processing plants and will cut 3.4% of its workforce in a move that will impact more than 3,000 employees, though some will be relocated as part of a restructuring of its vertically-integrated operations that will eliminate four independent operating companies.

Smithfield accounts for around a third of the U.S. processed pork market, and while prices have started to strengthen, it has been hit by consumers switching down from branded products to white-label offerings. While pork remains the world's most consumed meat by volume – above poultry and beef – exports are expected to slow from the mix of weakening economic growth and the strengthening U.S. dollar.