One of Chattanooga's biggest employers is starting the new year as a slimmer American operation but with the global power of its new Brazilian owner.
Despite its new foreign ownership, Pilgrim's Pride has to be extra careful to hire only U.S.-certified workers after the company recently paid a considerable fine to end a government investigation into alleged immigration employment violations.
The nation's second biggest chicken producer -- bought out of bankruptcy in December by the Brazilian meat giant JBS SA -- announced only two days after emerging from bankruptcy that it is paying $4.5 million to settle complaints of immigration employment violations.
In April 2008, 338 unauthorized workers were arrested at five Pilgrim's Pride plants, including its operations in Chattanooga. Under a settlement reached with federal authorities earlier this month, Pilgrim's Pride agreed to pay the penalty and continue to use the government's E-verify and other programs to verify the eligibility of workers.
"Pilgrim's Pride today is a stronger, leaner company with a growing customer base, improved capital structure and a culture built on results and accountability," company CEO Don Jackson said after JBS bought most of Pilgrim's Pride to bring the company out of the supervision of the U.S. Bankruptcy Court.
During its 13 months of operating under the court-protected Chapter 11 bankruptcy reorganization, Pilgrim's Pride trimmed staff and operations, including the closing in June of the company's 280-employee plant in Dalton, Ga.
Last week, the company cut another 230 jobs at its headquarters in Pittsburg, Texas, as it prepares to consolidate operations with its new owner, JBS USA, which previously bought Swift beef company headquartered in Greeley, Colo.
Poultry experts see the company emerging in 2010 as a stronger player, which should help the industry overall.
"It's a definite positive for Pilgrim's Pride and the poultry industry in general," said Michael Lacy, head of the poultry science department at the University of Georgia.
chickens come home to roost
Pilgrim's Pride became one of the biggest bankruptcies in America's farm industry in 2008 when the debt-burdened company was unable to absorb rising energy and feed costs.
Pilgrim's Pride paid $1.1 billion in 2005 to buy rival Gold Kist Inc. and become the nation's biggest chicken producer. At the time, Pilgrim's Pride CEO Lonnie "Bo" Pilgrim said the "Lord had foreordained the deal" by providing the credit.
But the subsequent jump in both fuel and feed costs quickly brought those heavenly dreams crashing down and led to a Chapter 11 bankruptcy filing in December 2008.
JBS agreed to assume the debt of the company and paid $800 million to rescue the chicken producer last month.
To settle a 2-year-old probe of its hiring and employment practices, the new owner immediately agreed to pay a fine and continue employment practices set by the U.S. Justice Department. No criminal or civil charges were leveled and Pilgrim's Pride conceded no guilt.
With Pilgrim's Pride in bankruptcy last year, some area chicken farmers said they didn't get as many birds to grow last year, cutting their income.
"It probably cost me $30,0000 to $40,000 last year," said David Chase, who operates a 600-acre farm in Bradley County. "I made more money growing chickens when I got in this buisness (in 1997) than I do now."
But with Pilgrim's Pride out of bankruptcy, Mr. Chase said he is hopeful for a better 2010.
"Farmers always think next year is going to be better," he quipped.