National Beef Packing Co., the US beef processor, is to close a plant in California, with the loss of around 1,300 jobs.
The company said production at its site in Brawley would end in April. CEO Tim Klein said a fall in the supply of cattle for the site was a “key driver” in the decision to shut the facility.
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“This was a very difficult decision for us to make because of the impact on our employees and suppliers. We are optimistic about the long-term prospects for US beef demand and we will continue to focus on expanding our position as the industry leader in value-added beef products,” Klein said.
National Beef is majority-owned by US conglomerate Leucadia National Corp., which also assets including investment bank Jefferies and auto dealership Garcadia. Leucadia bought National Beef in 2011.
In a presentation to analysts in October, publicly-listed Leucadia warned: “Widespread drought conditions have contributed to a delay in the reversal of the downward trend in US beef cow numbers. Fewer cows ultimately result in lower supplies of fed cattle and that has reduced industry-wide beef packing margins and National Beef’s profitability.”
In the nine months to the end of September, income from continuing operations before income taxes and income related to associated companies from what Leucadia called “beef processing services” dropped 23% to $71.3m. Revenue from what is Leucadia’s biggest business inched up only 0.3% year-on-year to US$5.63bn.
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By GlobalDataThe closure of the Brawley site will mean National Beef no longer has operations in California. Its two other processing sites are both in Kansas.
