US poultry processor Pilgrim’s Pride plans to close its chicken processing plant in Dallas to improve efficiency.
The company said today that the Dallas plant is scheduled to close by 30 September and that around 1,000 staff will be affected by the move.
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Pilgrim’s Pride said it expects to be able to offer positions at other facilities to interested employees and will provide transition programmes for employees who are not retained.
Production from that plant will be consolidated into other Pilgrim’s facilities in the region, including a site in Mt. Pleasant, which it said would improve capacity utilisation. Other live plant operations in north-east Texas will continue to function.
“While the decision to close a plant and eliminate jobs is always painful, we must make better use of our assets given the challenges facing our industry from record-high feed costs and an oversupply of chicken,” said president and CEO Bill Lovette.
“A key component of that effort is improving our capacity utilisation through production consolidation and other operational changes. By closing the Dallas facility, we can consolidate that production volume at three other plants and help those sites run closer to full capacity.”
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By GlobalDataThe company also announced a $128.1m net loss for the second quarter ended 26 June against a $32.9m loss in the same period last year. Net sales rose to $1.9bn from $1.7bn in the same period of the previous year.
Lovette said the results reflect the significant challenges facing the industry from the combination of record-high feed costs, weaker-than-expected consumer demand and an oversupply of chicken.
Feed prices increased dramatically, with market prices for corn rising 92.5% on the previous year to $6.99 a bushel.
Pilgrim’s total feed-ingredient purchases through the first six months of 2011 were more than $400m higher than a year ago. “At this time of year we are usually benefiting from stronger market pricing and increased demand from both food service and retail but to date neither that demand nor pricing has materialised,” Lovette said.
Pilgrim’s also said that market prices for some key chicken products were down on the prior year.
“Boneless skinless breast meat in the second quarter averaged $1.34 per pound versus $1.61 a year ago, while the market price for wings was $0.77, compared to$1.23/lb. last year. The average market price for leg quarters was $0.46/pound, up $0.10 from a year ago,” the company said.
The company said it is making good improvement toward its target of $400m in annuallised improvement in plant costs and yield improvements by the end of 2011.
“Through the first six months of the year, Pilgrim’s had achieved an estimated $270m in annualised improvement. In addition, Pilgrim’s is moving closer to its goal of performing in the top 25% of chicken companies as measured by Agristats, an industry benchmarking service,” it said.
