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January 19, 2007
The 58 employees laid off at Swift & Co. headquarters on Wednesday came from all levels of the corporate office, many with several years of service to the company under their belts.
While many of the positions were held by lower or middle management, terminated employees said that at least one vice president was let go.
“Nobody was safe,” said one of the employees who was laid off.
On Thursday, Swift confirmed that the employees were let go as a part of a coordinated effort to reduce overhead costs. The company hopes the effort will create up to $15 million in annualized savings by the end of its 2008 fiscal year. Along with the terminations, the company plans to save money in other areas such as professional fees and contract services.
“In the course of a normal business review, we noticed that our spending was not in line with prior year levels,” said Sean McHugh, Swift spokesman. “We made a decision that to remain competitive we had to implement some changes.”
Two employees who asked not to be identified said there was no warning of the terminations before Wednesday, though rumors had been circulating. Employees were told the news individually and then were immediately told to leave.
“After working there for so long, they take your keys and escort you out of the building,” one of the terminated employees said. “You feel like a criminal.”
McHugh said that he didn’t have specific information on individual terminations, but believes the company handled the situation respectfully.
“We believe we conducted ourselves in a professional manner and treated our employees with the respect and dignity that they deserve,” McHugh said. Employees who were terminated received severance pay, health benefit continuation and job search assistance.
The news was a surprise for many people besides the terminated employees.
Tarik Dalton, a financial analyst with Credit Suisse of New York who represents people who own Swift debt, has followed Swift & Co. for a number of years. Swift, he said, “has never cut people to cut costs before, and I’m extremely surprised to see it come to that now.”
The cuts came a little more than a month after federal officials raided six Swift & Co. plants and arrested about 1,300 people suspected to be illegal immigrants. McHugh said the raids were not related to the recent cutbacks.
“The planning for this project had occurred for a period of several months,” McHugh said. “All of the analysis was completed before then. It had nothing to do with the raid.”
In the company’s second-quarter filings, released earlier this month, Swift estimated the raids will end up costing $30 million in lost productivity and training for new employees. The company also reported a net loss of $11.9 million for the second quarter, narrowed from a loss of $17.86 million in the same period a year earlier.
Clark Miller, with the brokerage firm La Salle Street Investments in La Salle, said the raids definitely didn’t help the company. He said the company has not returned to its output before the raid and that probably affects other parts of the organization.
“Their whole organization is designed around a certain productivity,” he said. “When you cut that, they can’t support that kind of capacity. They could not justify the people there.”
He said Swift is a good organization that is just trying the best it can “in a difficult industry.”
Swift is not the only food company to take cutback measures in recent years. In July, Tyson Foods Inc. announced $200 million in cost reductions — a move that meant the loss of 420 jobs at the company and 430 more positions unfilled.
“This is not unique to Swift,” McHugh said. “It is an unfortunate but necessary business measure to take given current business conditions.”
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