Source: The Carolina Journal
On June 10, Smithfield Foods announced that their Vernon, California, pork-processing plant would be closing in early 2023 due to “the escalating cost of doing business in California.” With the largest pork-processing plant in the world being another Smithfield plant in Tar Heel, North Carolina, there are concerns that the rising costs of labor, fuel, and overall inflation may threaten operations like these as well.
Carolina Journal reached out to Smithfield and asked whether the same pressures are putting the Tar Heel plant at risk.
“Our Tar Heel facility plays a vital role in fulfilling our mission to supply good food responsibly,” Jim Monroe, vice president of corporate affairs, told CJ on June 15. “We have no current plans to close additional facilities and are fully committed to the work we do in Tar Heel and across North Carolina.”
The Smithfield press release did not just announce that they were shutting down one of their plants. They also said they were reducing their farming operations across the Western region.
“The company will decrease its sow herd in Utah and is exploring strategic options to exit its farms in Arizona and California,” the release said. “Smithfield harvests only company-owned hogs in Vernon. Smithfield will service customers in California with its Farmer John brand and other brands and products from existing facilities in the Midwest.”
The spring 2022 Global Pork Quarterly Report from RaboResearch sees a weak market overall, saying, “Producers’ returns will be challenged by rising costs – including feed, energy, freight, herd health, and labor expenses. Production growth is expected to slow, as is global trade. Uncertainty remains regarding how consumers will respond once higher costs are passed on to them.”
Smithfield currently has 46 facilities and 500 company-owned farms across the country, employing over 40,000 people. For those employees that will be affected by the West Coast pull-back, the company announced that they are “providing transition assistance to all impacted employees, including relocation options to other company facilities and farms as well as retention incentives to ensure business continuity until early next year.”
In the release, Smithfield CEO Brady Stewart said, “We are grateful to our team members in the Western region for their dedication and invaluable contributions to our mission. We are committed to providing financial and other transition assistance to employees impacted by this difficult decision.”