- Smithfield Foods is closing its San Jose facility in California and laying off 139 workers, marking its departure from the Bay Area after decades in business, the San Francisco Chronicle reported. The closure comes 7 months after Smithfield announced the shuttering of another meatpacking facility in San Leandro, California.
- Smithfield told the newspaper that the decision to close the San Jose location is the result of the expiration of the lease and an expected sale of the property by the owner. Employees are being offered jobs at other locations within the company or with other local employers in the area.
- The closure marks the latest for Smithfield, which announced in 2015 that it would downsize its operations to boost growth.
The company claims the closure in San Jose wasn't done by choice, but because of an expiration of its lease and a sale of the property by its owner. A union representative for the San Jose for United Food and Commercial Workers Local 5 told the San Francisco Chronicle that he doubted the company's rationale. "There are other locations that could have worked locally," the union representative said.
Still, Smithfield has spent much of the time since its sale consolidating its operations, and this closure, coupled with the shuttering of another California plant announced seven months ago, shows it remains a key part of its business strategy.
With most of its plant operations concentrated in the Midwest and Mid-Atlantic, it makes sense for Smithfield to consolidate in the name of efficiency and to save money. It's possible Smithfield ends up eventually shuttering the few remaining plants it has left open in California. But the company hasn't just closed operations in California. Smithfield also shuttered a distribution center in Virginia at the end of last year.
There are no signs that the closures in California by Smithfield are reflective of bigger underlying problems at the company though. Offerings from meat and other protein companies remain popular among consumers, even with the growing demand for plant-based options like faux pork and sausage.
With the world's population expected to reach 10 billion by 2050, companies like Smithfield should be ideally positioned to take advantage of the uptick in the demand for protein. Pork is the most widely consumed meat globally, controlling 40% of consumption in 2018, according to the Pork Checkoff, citing data from the USDA. Chicken was second at 33%, followed by beef at 21%. Smithfield has also launched its own plant-based protein line to keep up with the alternative space.
The food industry as a whole has been contracting as companies streamline their operations or run into problems within their specific industry. Del Monte, Halo Top, Russell Stover, TreeHouse Foods, Kellogg and Kind Snacks are among the companies that have announced job cuts in the past few years. Major milk producers including Dean Foods and Borden Dairy also have struggled and ended up filing for bankruptcy.
As food and beverage companies aim to streamline their businesses to better reflect their own capacity or broader changes taking place throughout their industry or the CPG space as a whole, more job cuts and plant closures are all but inevitable.