Top stories for Feb. 17
Smithfield to close 6 plants, cut 1,800 jobs
Smithfield Foods announced it will close six plants this year as part of a plan to consolidate and streamline its pork business. About 1,800 jobs will be cut. The six plants to be closed are: Smithfield Packing Co. plants in Smithfield, Va., Plant City, Fla., and Elon, N.C.; A John Morrell plant in Great Beard, Kan.; a Farmland Foods plant in New Riegel, Ohio; and an Armour-Eckrich Meats plant in Hastings, Neb.
Several of the company's business units will also be reorganized as part of the consolidation plan. The changes are as follows:
John Morrell & Co. and Farmland Foods, Inc. will merge their respective fresh pork sales groups. Some members of the John Morrell sales group will be offered positions at Farmland Foods in Kansas City, Mo., or elsewhere within the Smithfield Foods organization.
Patrick Cudahy Inc. and Carando Foods will become part of the John Morrell Group. North Side Foods Corp. will become a part of Farmland Foods. Plant employees will not be impacted at this time.
Cumberland Gap Provision Co., a unit of the John Morrell Group, will become part of Smithfield Packing Co. Inc. Production from other Smithfield Packing Company facilities will be transferred to Cumberland Gap and employment there is expected to increase over time.
“Layoffs and plant closings are difficult but necessary decisions,” said C. Larry Pope, president and CEO. “We know that this will create adversity for the employees affected and we will work with union officials and others to determine how we can provide assistance to our employees to find future employment. Also, we will be transferring many employees to other plants.”
With the plant closings, Smithfield is expected to save $125 million a year by 2011.
Sources: Smithfield Foods, Associated Press
Carl's Jr. continues Texas expansion
CKE Restaurants has announced a franchise development deal with Star Foods Investors Group to bring 72 Carl's Jr. restaurants to the Houston and Dallas markets over the next nine years. This announcement comes on the heels of an agreement with RWJP Star Enterprises to open 121 units in Texas.
“We initiated our commitment to Texas expansion with the opening of new company owned Carl’s Jr. restaurants in the state last year, and we continue to build momentum with this announcement of 72 additional units in Dallas and Houston,” said Andrew F. Puzder, CEO of CKE Restaurants, Inc. “We believe Texas is well on its way to becoming a major stronghold for our brand. We anticipate further franchise development agreements for Texas markets, as well as ongoing company expansion. Much like our burgers and our franchise deals, everything is bigger in Texas.”
Over the next five years, CKE anticipates it will add more than 800 new restaurants to its global store base, including new international markets like China, Pakistan and Kazakhstan.
Source: CKE Restaurants Inc.
Consumers shifting their retail meat purchases
The foodservice market is not the only area that has seen consumers adjust their spending habits in the poor-performing economy. Shoppers are re-evaluating their purchases at meat counters in grocery stores as well. The Houston Chronicle notes that more shoppers are purchasing hamburger and other cheaper cuts instead of steak when they shop.
At H-E-B, sales of the cheapest ground beef are up, but so are sales of prime beef. Scott McClelland, president, noted that consumers of prime beef are now eating at home more often, instead of going out to eat. “People with more money are feeling the pinch and trading down also,” he said. Sales of hot dogs have grown 33 percent from November, 2008 to January, 2009, and chicken sales have also grown.
At Kroger, more customers are buying family packs of meat, chuck steak and ground beef. Prepared foods, like rotisserie chicken, are also selling well. Kroger spokesman Gary Huddleston also attributed the changing sales patterns to consumers using their discretionary spending at retail rather than eating out.
Source: Houston Chronicle
KFC to add 9,000 UK jobs
KFC announced plans to open between 200 and 300 new restaurants in the United Kingdom and Ireland within the next three to five years, creating 9,000 jobs in the process. The initiative would also include refurbishing existing restaurants. The new restaurants would be distributed around the country but would be focused in northern England and south Wales.
Martin Shuker, CEO, said he believed that KFC was taking market share from rivals such as McDonalds, and added that the sector as a whole has been growing. Currently, KFC has 760 restaurants in the UK and employs 20,000 people.