By COLLIN EATON, Staff Writer
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Published 29 July 2011 10:23 AM
Chicken processor Pilgrim's Pride Corp announced Friday it will close a Dallas production plant in the next 60 days, eliminating 1,000 jobs
Pilgrim’s expects to offer jobs at other plants to an undetermined number of affected employees; the employees were notified of the closing Friday morning.
The Dallas plant closure is part of the company’s effort to reduce costs. Pilgrim’s reported Friday that it lost $128 million in the second quarter as high corn prices and chicken surpluses hit its bottom line hard.
“While the decision to close a plant and eliminate jobs is always painful, we must make better use of our assets given the challenges facing our industry,” Bill Lovette, Pilgrim’s president and chief executive, said in a statement Friday.
Lovette said that means consolidating the Dallas plant’s production volume at three other regional plants, which will allow those plants to run closer to full capacity.
Pilgrim's spokesman Gary Rhodes said the plant's location made it too costly because the company had to transport chicken supplies in from northeast Texas and then truck rendering remains out to its Mount Pleasant protein conversion plant.
"You’re talking about 230 miles round trip,” Rhodes said. “We have to do everything we can to reduce costs and operate more efficiently. For years, we’ve supplied the Dallas plant from northeast Texas and with sky-high gas prices and with sky-high corn prices, it’s simply not efficient."
The company said its cost for corn feed in 2011 has climbed by $400 million over last year. Prices for corn feed have risen dramatically as more of the nation’s corn crop goes to ethanol production than to feed livestock.
Chicken prices are also low as producers are oversupplying the market, but that amount should decrease over the next few months, said Ian Corydon, an analyst at B. Riley & Co.
“There is some light at the end of the tunnel,” Corydon said.
Pilgrim’s was founded in 1946 in Pittsburg, Texas, but moved its headquarters to Greeley, Colo., in June 2010. The company, which also maintains plants in Mount Pleasant, Lufkin, Waco and Nacogdoches, said it doesn’t plan on closing any others.
For the second quarter, Pilgrim's Pride said its loss of $128.1 million, or 60 cents a share, compared with a year-earlier profit of $32.9 million, or 15 cents a share. Sales rose 13 percent to $1.92 billion.