Pilgrims to close Boaz, Ala. plant, expand operations elsewhere
Pilgrim's Pride Corp. announced several operational changes to improve efficiencies as part of its goal to generate approximately $200 million in savings in 2014. Effective January 24, 2014, Pilgrim's will expand its operations in Russellville, Ala., and Douglas, Ga., to absorb the current fresh poultry processing operations in Boaz, Ala. This consolidation will allow the company to maintain current production levels, more efficiently utilize idle capacity and generate more than $20 million in incremental margin, the company said in a statement. In addition, the company will invest approximately $10 million to upgrade its feed mill in Falkville, Ala., and add approximately 100 jobs at the Douglas and Russellville operations.
"Today's announcement reflects the strength of our balance sheet, our willingness to strategically invest in our business and our continued commitment to the pursuit of operational excellence," said Bill Lovette, President and CEO of Pilgrim's Pride Corporation. "Given our decision to consolidate operations, our intent is to offer retention incentives to encourage many of our Boaz team members to remain with the company in different capacities. We are confident these capital improvement projects will position the company, our stakeholders and our team members for success for many years to come."
Purchased by Pilgrim's from Goldkist in 2007, Boaz is the company's smallest operation in terms of processing capacity and employs approximately 1,100 people. Many Boaz employees will be offered opportunities at other nearby Pilgrim's operations and all employees will be offered retention incentives. The company anticipates that contract growers who currently supply the Boaz operation will have an opportunity to meet the enhanced supply needs of Pilgrim's operations in Russellville and Douglas.
Pilgrim's, consistent with its long-term strategy to align the company's core competencies with customer needs, will also invest approximately $25 million to expand large bird deboning capacity and modernize utilities at its Mt. Pleasant, Texas, facility. The company previously announced an investment of $25 million to upgrade its feed mill and processing operations in Enterprise, Ala.
“The strategic decisions announced today will allow Pilgrim's to optimize its operational network and efficiently deploy resources and capital to facilities with improved infrastructure, greater scale and more favorable opportunities for long-term, sustainable profitability,” the company said.
WAFF, an NBC affiliate in Huntsville, Ala., reported that city, county and state officials met with executives from Pilgrim’s Tuesday afternoon, where they learned of the decision. Mayor Tim Walker said he was not happy by the company's decision, especially after the investment that city has made to the company and the facility.
He said he is upset that as the plant has grown, the city has aided in utility infrastructure to meet the plant's growing demand. Now the company is closing, stripping the plant, and taking its assets with them, preventing Boaz from being able to lure another processing plant.
"I would be careful in those communities to make sure they don't get them in there and increase their capacities and the next thing, they leave the community holding the bag," said Walker.
Sources: Pilgrims, WAFF News