Smithfield Foods Restructures

Earlier this week, Smithfield Foods officials released notice of a major restructuring plan. It includes cutting the number of independent operating companies from seven to three, closing six plants by December and eliminating 1,800 jobs in the pork group.

The plants to be closed:

• The Smithfield Packing Co. South facility in Smithfield, Va. Case-ready, fresh pork production will move to the Smithfield North plant and a North Carolina facility. The plant is scheduled to close in December.
• A facility producing packaged meats in Plant City, Fla., will close in September.
• The Smithfield Packing Co. plant in Elon, N.C., will close by late summer, and its country ham production will end.
• A John Morrell plant in Great Bend, Kan., which processes fresh pork and smoked meats will close in July.
• Farmland Foods will close its New Riegel, Ohio, plant in April. The spiral ham production will move to other facilities.
• An Armour-Eckrich Meats, LLC., in Hastings, Neb., producing packaged meats will close in July.

The plan includes the following other actions at various operating units:

• Smithfield Foods will reduce its independent companies in the pork group to three -- Smithfield Packing Co., John Morrell & Co. and Farmland Foods. The four others will be rolled into the various business units of the three remaining. 
• John Morrell and Farmland Foods will merge their respective fresh-pork sales forces into Smithfield Packing Co. in the East and Farmland Foods in the Midwest and West.
• Patrick Cudahy, a producer of bacon, dry sausages, hams and other specialty packaged meats, will become part of the John Morrell Group.
• Carando Foods, a unit of Farmland Foods producing Italian deli and specialty meats, also will be moved to the John Morrell Group.
• Farmland Foods will strengthen its foodservice business by bringing in North Side Foods Corp., a large supplier to the quick-service restaurant industry.
• Cumberland Gap Provision Co., a unit of the John Morrell Group and producer of hams, sausages and other specialty packaged meats, will integrate with Smithfield Packing Co.
• International sales organizations responsible for exports of several independent operating companies will consolidate into one to form Smithfield Foods International Group. This consolidation already is under way.

Smithfield officials expect this restructuring to produce annual cost savings after restructuring expenses of about $55 million in fiscal 2010 and $125 million by fiscal 2011.

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