Smithfield Foods continuing layoffs as part of previously announced closure of Va. meat plant

RICHMOND, Va. – Smithfield Foods Inc. said Tuesday that it is laying off 120 more workers as part of its previously announced closure of a Virginia facility that makes hot dogs and deli meat.

The Smithfield, Va.-based pork producer plans to close the Portsmouth plant in the middle of August, said Jeff Gough, Smithfield’s senior vice-president for human resources.

Layoffs at the Smithfield Packing Co. facility began in January, with more than 400 workers to be affected by the time plant is closed.

The move comes amid the company’s pending $4.72 billion takeover by China’s largest meat producer under a deal struck last month with Shuanghui International Holdings Ltd. The deal, which is subject to regulatory and shareholder approvals, is expected to close in the second half of the year.

It would be the largest takeover of a U.S. company by a Chinese firm, valued at about $7.1 billion including debt.

Smithfield Foods announced plans in 2011 to close the Virginia plant and shift production to a facility in Kinston, N.C. At the time, the company said it was closing the plant, built in the 1970s, because it cannot support the manufacturing technology changes and product development necessary to meet the company’s needs.

Smithfield’s new $80 million state-of-the-art packaging line for hot dogs and lunch meats at the Kinston plant has been online for several months, Gough said. It currently employs about 630 workers.

The company, whose brands include Armour, Farmland and its namesake, has seen its share of the market for deli meats, bacon, sausage and hot dogs grow in recent quarters.

In a statement last week regarding its fourth-quarter and full-year earnings, CEO C. Larry Pope said Smithfield will continue to execute its growth plan to move it further toward a consumer packaged meats company, including increasing marketing spending and focusing on product innovation. Pope had previously characterized Smithfield’s packaged meats business as being “on fire.”

Earlier this year, the company said it expected its packaged meat volumes to grow at least 2 per cent to 3 per cent in 2013 and that the trend would continue in 2014. It also had said it expects that lower supply and higher prices for competing proteins like chicken and beef will push up pork retail prices in 2013.

Pork producers like Smithfield have been caught in a tug of war with consumers. The company needs to raise prices to offset rising commodity costs, namely the corn it uses for feed. But consumers are still extremely sensitive to price changes in the current economy. By raising prices, Smithfield risks cutting into its sales should consumers cut back or buy cheaper meats, such as chicken.


Michael Felberbaum can be reached at .