More recession fallout for Pilgrim's Pride

Monday, January 2, 2012

Goodbye to robots and hello (again) to human workers. Management for JBS SA, the Brazilian meat packing company that took over Pilgrim's Pride, the financially strapped poultry processing company in the United States, figures it could recover US$100 million in lost meat every year by ditching its automated deboning lines and replacing robots with real people. According to a report from Brazilian newspaper Brasil Economico, the company feels that the robots are leaving valuable meat on the bones. Automation used to be economical because semi-skilled workers were in short supply before the recession.

Pilgrim's Pride is bleeding faster than a, well, a stuck chicken. In September, America's largest poultry processor posted a third quarter loss of US$162.5 million, although that certainly can't all be blamed on inefficiencies. It's not a good market for selling chicken. A JBS executive told the Economico that the world chicken supply grew by 10 per cent because processors felt that beef was too costly and chicken would be an economical substitute. However, world chicken demand grew by only two per cent last year.

JBS SA is the world's largest beef packer. It bought Swift & Company, the third largest beef packer in the United States, in 2007 and then scooped up Smithfield Food's beef business a year later.

If consumers aren't eating chicken and aren't eating beef, where do they get their protein? Tofu?  Back to market research, folks!! BF