American food company Smithfield Foods said Friday it will close its only California plant next year, citing the escalating cost of doing business in the state.
The Farmer John meat-packing plant in Vernon, an industrial suburb south of Los Angeles, will shut down in February, with its 1,800 employees receiving severance and job placement support along with bonuses for those who choose to stay on the job until the closure, said Jim Monroe, vice president of corporate affairs.
Some workers, who on normal earn about $21 per hour, also will have opportunities to relocate to other facilities owned by the Virginia-based Smithfield Foods Inc.
The Vernon plant slaughters pigs and packages products such as ham and bacon. Some operations will be moved to other facilities in the Midwest, but the overall reduction in processing capacity is prompting Smithfield to reduce its sow herd in Utah. The company also said it is exploring ways to exit its farms in California and Arizona.
Monroe said operating costs in California are much higher than in other areas of the country, including taxes and the price of water, electricity and natural gas.
“Our utility costs in California are 3 1/2 times higher per head than our other locations where they do the same type of work,” he said.
The close down is not expected to reduce supply or increase costs on products, and Farmer John Products will still be sold in California, Monroe said.
“There won’t be any impact on our customers,” he said.
The Vernon plant has been the target of repeated protests by animal rights activists over its treatment of hogs. It also was hard-hit during the COVID-19 pandemic, with some 300 employees exposed to infections in 2020. Several were hospitalized.
California’s Division of Occupational Safety and Health fined Smithfield Foods about $60,000 for safety violations that exposed workers to infection.
Smithfield Foods was founded in Smithfield, Virginia, in 1936 and according to its website provides more than 40,000 jobs in the United States. It was acquired in 2013 by Hong Kong-based WH Group.