Smithfield Foods plans to restructure pork group

Smithfield Foods Inc. has announced a plan to consolidate and streamline the corporate structure and manufacturing operations of its pork group to improve operating efficiencies and increase utilization. The company expects the plan will result in annual cost savings of about $55 million in fiscal 2010 and $125 million by fiscal 2011.

The plan includes these actions:

•Smithfield Foods will reduce the number of independent operating companies in the pork group to three from seven. Four independent operating companies will be combined under the various business units of The Smithfield Packing Company Inc., John Morrell & Co., and Farmland Foods Inc.

•John Morrell and Farmland Foods will merge their fresh pork sales forces. This consolidation will enable the company to serve customers with two competitive sales groups, Smithfield Packing Co. in the East and Farmland Foods in the Midwest and West.

•Patrick Cudahy Inc., a producer of bacon, dry sausages, hams, and other specialty packaged meats, will become part of the John Morrell Group.

•Carando Foods, a unit of Farmland Foods producing Italian deli and specialty meats, also will be combined with the John Morrell Group.

•Farmland Foods will strengthen its foodservice business with the assimilation of North Side Foods Corp., a supplier to the quick-service restaurant industry.

•Cumberland Gap Provision Co., a unit of the John Morrell Group and producer of hams, sausages, and other specialty packaged meats, will integrate with Smithfield Packing Co.

•International sales organizations responsible for exports of several independent operating companies will be consolidated into one group to form Smithfield Foods International Group, providing one face to overseas markets and reducing selling, general, and administrative expense. This consolidation already is underway.

•Smithfield Foods will close six plants and transfer production to more efficient facilities. These plants are expected to be closed by December 2009.

As a result of the restructuring plan, the company expects to achieve a net reduction of about 1,800 jobs in the pork group.

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