Wednesday, John Morrell & Co., a subsidiary of Smithfield Foods, Inc. (SFD), said that it will permanently close its hog processing and fresh meat fabrication plant located in Sioux City, Iowa, effective April 20, 2010.
John Morrell stated that it will comply with federal Worker Adjustment and Retraining Notification Act or WARN, and will provide employees with a 90-day notification of the plant closure as the closure will affect about 1,450 hourly and salaried employees. The company will also notify state dislocated worker units so that they can promptly offer dislocated worker assistance as per the WARN Act.
Joseph Sebring, president said, "We are constantly improving our facilities and equipment to ensure a safer, higher-quality product. In this case, the Sioux City plant was constructed in 1959 and would require significant capital expenditures to outfit it with the next generation of pork processing technology. In this adverse business environment those capital needs simply cannot be met."
John Morrell noted that in the near term, it will transfer some of its production to three of the Smithfield plants located in South Dakota, Iowa and Nebraska since they has the capacity to partially absorb the number of hogs that are currently being processed at Sioux City. The partial transfer of production capacity will not require the company to secure additional employees.
Additionally, the company stated that it will honor all production contracts at Sioux City and Smithfield has no further plans for plant closures in the foreseeable future.
SFD is currently trading at $16.40, down $0.20 or 1.20% on a volume of 0.34 million shares on the NYSE.
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