You are here
SMITHFIELD, Va. - Smithfield Foods Inc. on Friday said it plans to merge two of its major pork processing units, Smithfield Packing Company and Gwaltney of Smithfield Ltd., into one organization with annual sales of over $2.5 billion. The announcement coincided with the news that Smithfield Packing president Lewis R. Little will retire, effective Sept. 5, after 40 years of service with the company.
The newly merged entity will retain the Smithfield name and will be headed by Timothy A. Seely, currently president of Gwaltney. After a transition period, Seely will assume his new position on Sept. 6.
The new company will undergo modest change, as duplicate staff operations will be merged in a significant cost-savings move. "This is an opportunity for substantial cost reduction, and our goal is to merge virtually all duplicate staff functions of the two companies into one," said Seely. "The exception will be the retail sales forces of the two companies, which will remain separate. These dedicated sales forces focused intently on retail customers are vital to the health of our brands." Seely emphasized that no brands would be eliminated in the merger.
As Seely moves to head the new organization, Ronald W. Marsh will become president, Gwaltney retail sales and marketing. A 30-year veteran in the meat industry, Marsh joined Gwaltney in 1996 as vice president, retail sales and marketing.
"As retailers continue to consolidate, we must continue to take costs out of our system," said C. Larry Pope, president and COO of Smithfield Foods. "This merger will allow us to reduce administrative costs while maintaining our high quality of products and world class customer service. We will achieve additional cost savings through better utilization of our manufacturing, logistics and distribution functions."
Seely said that consolidation of administrative functions would begin immediately, and that, while most decisions would be made in the next 90 days, full implementation will not be made until early next year. "There will be minimal layoffs among long-term dedicated employees," he said.
Smithfield also announced that it would begin to integrate the foodservice personnel of Smithfield Packing and Gwaltney into one sales and marketing entity and that the new organization would be formally launched during the summer after a seamless transition. The current heads of the foodservice organizations, Lin Gupton of Gwaltney and Mike Riley of Smithfield Packing, will jointly lead the Smithfield Foodservice Group, reporting to Joseph W. Luter, IV, an executive vice president of Smithfield Foods.
Luter said that foodservice is an under-developed sales channel in the company and the creation of this new separate organization was indicative of the additional emphasis being placed on this segment. "This is a channel that we expect to grow 15 percent per year and we must have a superior organization in place to drive this growth," he said.