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Tags: smithfield foods | pork processing plant | close | rising california utility and labor costs

Smithfield to Close Pork Plant Due to Rising California Costs

Smithfield to Close Pork Plant Due to Rising California Costs
(AP)

Monday, 13 June 2022 11:36 AM EDT

Smithfield Foods, the largest pork processor in the world, will close its Vernon, California, plant and reduce its hog herd in the West, the company has just announced.

The closure, which the company attributed in a statement to "the escalating cost of doing business in California," comes as the state rolls out a new law requiring livestock be given more spacious confinements.

Smithfield, owned by Hong Kong-listed WH Group Ltd., did not immediately respond to a Reuters inquiry about whether the law, known as Proposition 12, contributed to the decision to close the plant. Prop 12 requires humane treatment of pigs housed for slaughter.

Workers at the plant will be offered financial and transition assistance, including the option to relocate to other Smithfield facilities, the company said.

"A fair agreement that compensates their workers until next year has been reached," said John Grant, the president of the United Food and Commercial Workers 770, which represents workers at the Vernon plant.

The plant, which processes pork for Smithfield's Farmer John brand, had among the largest outbreaks of COVID-19 at any U.S. meat plant according to calculations by the Food and Environment Reporting Network (FERN), which was cited by government agencies and media throughout the pandemic.

Smithfield and a subcontractor were fined more than $100,000 from California's workplace safety regulator in late 2020 for failing to adequately protect workers from the virus.

The pork company stopped slaughtering pigs at its hometown plant in Smithfield, Virginia, in 2021, after a review of its East Coast operations.

Smithfield cited higher taxes, as well as higher utility and labor costs, at the plant, compared with other facilities it operates, as the reason for the closure. The cost of utilities in California, for instance, is 3.5 times higher per head to produce pork than in the 45 other meat processing plants Smithfield operates in the U.S., according to a company spokesman.

The president of the labor union at the Vernon, Calif., plant said that the union, United Food and Commercial Workers 770, has reached an agreement with Smithfield and that the union is hopeful another operator will assume control of the plant, The Wall Street Journal reports.

The cost of livestock feed, transportation and packaging, since Russia's invasion of Ukraine, which is one of the world's biggest producers of grain, have all increased food prices, including livestock feed.

© 2022 Thomson/Reuters. All rights reserved.


StreetTalk
Smithfield Foods, the largest pork processor in the world, will close its Vernon, California, plant and reduce its hog herd in the West, the company has just announced.
smithfield foods, pork processing plant, close, rising california utility and labor costs
393
2022-36-13
Monday, 13 June 2022 11:36 AM
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