Fallout from the United States' first mad cow disease case is spilling over to meat processing companies, prompting packing plants to lay off hundreds of workers.
Excel Corp., the meatpacking unit of Minnetonka-based Cargill Inc., said Friday it will lay off more than 600 people at its five beef processing plants, none of them in Minnesota. The move is to adjust production to the loss of beef export markets following America's first diagnosed case of mad cow disease in December.
Closer to home, PM Beef laid off 90 of its nearly 600 workers on Tuesday at its Windom, Minn., plant, the company president said Friday.
And Arkansas-based Tyson Foods, the nation's largest beef processor, said it has "furloughed" 40 employees so far, and transferred other employees to different plants and jobs while bans on U.S. beef exports remain in effect. That is a small number among its 110,000 meat-processing employees, but it may be only the start.
"We hope that's all we'll need to do, and that the mad cow case will prove to be a temporary disruption in the markets," said company spokesman Ed Nicholson.
The Excel job losses will total from 6 percent to 7 percent of its employees, or 100 to 150 people at each of its beef plants in Dodge City, Kan., Schuyler, Neb., Ft. Morgan, Colo., and at Plainview and Friona, Texas, or more than 600 in all. Each plant has from 2,200 to 2,500 employees. Affected employees were being notified on Friday, the company said, and layoffs and recalls will be determined by collective bargaining agreements at the plants.
In a statement announcing the layoffs, Bill Rupp, executive vice president of Excel and president of the beef unit, said the bans on U.S. beef exports by a number of countries forced the company's hand.
About $3.6 billion in U.S. annual beef exports are now at risk while U.S. and Canadian health authorities continue to investigate two cases of bovine spongiform encephalopathy, or mad cow disease, found in Washington state and Alberta animals.
"We feel bad about having to take this action," he said, and noted that government agencies and the food industry are busy trying to restore trade flows.
Most affected will be employees who made what the meat industry calls variety meats. These products included organs, such as tongue and liver, and there was an export market for these products even though major importers such as Japan tend to buy more expensive cuts of meat.
Mark Klein, spokesman for the Excel unit, said the plants won't make those products at the present time. That organ meat will go to rendering plants where it is cooked down and made into various industrial products.
Cargill is the nation's second-largest beef processing company, behind Tyson and its IBP meatpacking unit. It is a large beef processor in Canada as well, and was affected by the discovery of mad cow in an Alberta animal last May.
Export customers stopped taking beef supplies from Canada at that time, just as they responded to the U.S. Department of Agriculture announcement of the Washington case on Dec. 23.
U.S. trade and agriculture officials are trying to convince American export customers to reopen trade, noting that meat from the deceased cow does not appear to have entered the food chain.
Klein said exports are again flowing from Cargill's plant in Alberta, although the U.S. and Mexico, among other countries, continue to ban certain Canadian beef products. The slowdown in the Canadian beef industry has had an enormous economic impact on Canadian farmers and meat plants, but Klein said it didn't result in as many lost jobs as the company initially feared.
Curry Roberts, president of PM Beef, said Friday that his Windom plant began furloughing workers on Tuesday as it scales back beef production.
"I hate to call this 'right-sizing,' because it is too painful to lay people off and give it a fancy name, but we had to look four to six weeks down the road and anticipate what our production needs to be without our export markets," he said.
The company, which also has plants in Virginia and Ohio, just expanded its Windom plant a year ago to increase its beef processing capacity.
Roberts also said he is hopeful the U.S. Department of Agriculture will quickly reassure overseas customers that American beef is safe and restore those export markets.St. Paul Pioneer Press/Lee Egerstrom
