Smithfield Foods’ CEO Shane Smith expressed optimism regarding the company’s adjustments made post-COVID, aiming to maintain its workforce amidst potential mass deportations discussed by former President Donald Trump. The company, now over a decade after being acquired by China’s WH Group, recently went public, with Smith confident of its growth trajectory. By streamlining costs and focusing on its more profitable prepared meats sector, which includes brands like Eckrich, Armour, and Nathan’s Famous, Smithfield is positioning itself for future success.
On its first day of trading, Smithfield’s shares were priced at $20, experiencing a slight dip but ultimately settling close to the offering price, allowing the company to raise approximately $522 million from the market.
While monitoring the evolving immigration policies, Smith noted that there have been no recorded raids from Immigration and Customs Enforcement (ICE) at any of their 41 facilities. He emphasized Smithfield’s compliance with labor regulations and efforts to reduce the number of undocumented workers in its ranks, stating, “We follow all federal and state employment guidelines at each of our facilities.” Although uncertain about future developments, Smith feels confident about their position across the various plants.
To enhance management and cost control, Smithfield is actively reducing its dependence on contractors at their plants. This move is also expected to minimize the chances of any child labor violations, an issue documented in the last few years among contracted cleaning services at slaughterhouses.
Historically, the meatpacking sector has leaned heavily on immigrant labor due to the demanding nature of the work. However, Smithford aspires to be the preferred employer in surrounding communities, ensuring they attract the best local talent.
Thus far, immigration raid fears have not adversely affected the USDA-reported daily slaughter rates across the industry, indicating that workers have not opted to stay home en masse. Additionally, the employee turnover rate at Smithfield facilities has returned to pre-pandemic levels, reflecting improvements made during the shutdowns, like implementing safety measures including plastic barriers, mask mandates, and temperature checks to curb the spread of COVID-19.
Smithfield’s management has gleaned valuable insights from the pandemic experience, leading to stronger employee relations across its 41 plants in 19 states. They have also increased investments in automation to optimize operations and ensure their plants can adapt as necessary.
Despite facing criticism regarding its Chinese ownership, especially given the recent political climate impacting foreign companies, Smith asserted that Smithfield is fundamentally an American enterprise. Even with WH Group maintaining over 91% ownership after going public, the company primarily processes livestock raised domestically and sells most of its products within the United States.
In addressing concerns about foreign ownership of agricultural land, Smithfield has sold off over a third of its farmland in recent years but still retains around 85,000 acres. This decision, Smith clarified, was aimed at improving operational efficiency rather than succumbing to political pressure.
During the first nine months of 2024, Smithfield reported a net income of $581 million on total sales of $10.2 billion, marking a significant recovery from the previous year, which had seen a $133 million net loss due to elevated feed costs and litigation settlements related to price-fixing and wage-fixing.
Smith highlighted the growth in the company’s packaged meats division, which has become a stronger focus due to the higher profit margins associated with these products.
While the bird flu has posed challenges for poultry and egg production, Smithfield has managed to avoid significant impact. In light of new infections within dairy cattle, the company has heightened biosecurity protocols on its hog farms to mitigate any diseases’ risks. Although there have been no indications of bird flu transmission to pigs, Smithfield remains vigilant, maintaining stringent cleanliness standards for anything entering their farms.
“We basically take the approach that anything outside of the farm we consider dirty, and anything inside the farm we consider clean. So, anything coming into our farms, we pay a lot of attention to,” Smith emphasized.
