Foods CEO: No need to fear China

Published 11:12 am Wednesday, November 15, 2017

By Diana McFarland

Managing editor

Smithfield Foods President and CEO Ken Sullivan has heard his share of rumors about the company since it was purchased by the WH Group a few years ago, but the latest one was news to him.

It seems some folks believe Foods is shipping pigs to China where they are processed and then returned through Canada to the U.S. for sale to American consumers.

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“It’s utter nonsense. It’s asinine from an economic standpoint,” said Sullivan recently in an interview held at the corporate headquarters in Smithfield.

It’s difficult enough to make it work financially to send pork to China and make the freight costs, never mind a return trip, he said, adding that for the Chinese, growing pigs is very expensive and that is why the deal with Smithfield was so attractive. {mprestriction ids=”1,2,3,4,5,6″}

What’s really happening is that Foods is exporting 30 percent of all the meat it produces to many countries, including China, Sullivan said.

“People seem to be afraid of China, and obviously they shouldn’t,” he said.

Foods did help Hong Kong-based Shuanghui build a processing plant in China to make bacon, sausage and ham to be sold in China, Sullivan said. The goal was to build the plant to western standards because making those products was new for the Chinese, Sullivan said.

Both Foods and Shuanghui are under its parent holding company, WH Group, which is publicly traded. 

There is no management overlap between the two pork companies, Sullivan said.

Another fear that arose after the 2013 sale to the Chinese was that Foods would leave Smithfield.

That hasn’t happened either.

Foods has not only beefed up its commitment to the community — most recently evident in a $3 million donation to Smithfield High School for its career and technical education program, but also with ongoing food donations, as well as hiring a full time staffer dedicated to bringing more veterans onboard as employees.

“We’re keeping a close eye and hoping that politics and what not don’t get in the way,” said Sullivan of the construction of a new JROTC building, a multi-purpose building and a Makerspace at Smithfield High School, which are being funded with the company’s donation.

Another rumor circulating was that Foods was going to move its sales staff to Chicago.

Sullivan said the company isn’t sending its sales force to Chicago, and the chief marketing officer actually moved to Smithfield.

There are sales people all over the country, Sullivan said.

Sullivan said that at the same time, in such a large company it’s not unusual to “move the deck chairs around.”

Meanwhile, the company is expanding in Smithfield and recently added a parking lot near The Smithfield Center. If the company does bring significantly more people here, it would probably have to build something to accommodate them, Sullivan said.

One possible location is the site of the former Smithfield Packing building on North Church Street, but Sullivan said there are currently no plans to utilize that space, Sullivan said.

The company is also using its innovation center, also located on North Church Street, more actively than in the past, Sullivan said.

Innovation is part of the future and the company places a great emphasis on coming up with new products, he said.

On a corporate level, Foods plans to reach its goal of having 100 percent of its sows in group housing by the end of this year. By the end of 2016, the company was up to 87 percent, according to its sustainability report.

And despite fears that group housing would affect production, it seems that it’s no worse than the previous method of using gestational crates, Sullivan said.

It costs money, but from a production standpoint, there’s no change, he said. 

Foods decided to make the change to group housing in 2007 when just 2.6 percent of pregnant sows were penned in that method, which is considered more humane for the sow and the piglets.

The company has also phased out the use of ractopamine in three of its plants, and that allows for exports to different markets, Sullivan said.

Ractompamine is a feed additive that is banned in many countries, including China. In the U.S., however, ractompamine has FDA approval. The additive is used to increase the rate of weight gain, feed efficiency and leanness, according to the FDA.

Some independent growers still use the additive, Sullivan said.

One initiative the company is working on is cutting greenhouse gases, and that is being done on several fronts — from optimizing the fertilizer used to grow feed, urging farmers to grow sorghum and winter wheat other than traditional feeds, such as corn, to using waste to create renewable energy, monitoring electrical usage in its plants and making its transportation system more efficient.

The company’s goal is to reduce its production of greenhouse gases by 25 percent by 2025.

“We’re intent on making the goal,” said Sullivan, adding that the company had created a division to handle that enterprise.

Since coming onboard as CEO and President nearly two years ago, Sullivan has also borrowed a term from the financial world and applied it to Smithfield Foods — ROI.

But rather than “return on investment,” in the case of Foods employees that means “responsibility, operational excellence and innovation.”

Sullivan said he wants employees to feel like it’s their company, to be responsible and to feel accountable for their work and contributions.

The idea is to stimulate an innovative culture, he said.

“If you’re doing things the same way as 25 years ago, you’re doing something wrong,” he said.

“We want to strive every day to give great customer service and quality.”  {/mprestriction}