Archive for Wednesday, May 12, 2004

Arkansas City meatpacker increases production, hiring

May 12, 2004

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— Creekstone Farms Premium Beef LLC is increasing production and hiring workers at its Arkansas City slaughterhouse to keep up with peak beef demand during the summer grilling season, the company said Tuesday.

The Kansas meatpacker created an international stir in February with its request -- later spurned by the Agriculture Department -- to voluntary test all the animals slaughtered at the plant for mad cow disease. The company has maintained its survival depends on the testing.

"I don't think it was an exaggeration at all -- that is still going to be a key part of the operation in keeping Creekstone as an entity going into the future," said Kevin Pentz, plant manager.

Creekstone is losing $200 per animal slaughtered, or about $200,000 per day, in potential revenue because of the loss of export markets closed following the discovery of a single case of mad cow disease in Washington state, Pentz said.

The company is at "near break-even" revenue levels only because of the higher domestic demand that normally occurs this time of year, he said.

After the mad cow discovery, Creekstone cut operations at its Arkansas City plant to three or four days a week. It typically kills 1,000 head of cattle each day it operates. It now plans to increase production to 1,250 head of cattle a day while still operating four days a week.

Employment has held steady at 750 workers. Pentz said the company was looking to hire 20 workers to fill voids left by turnover, but it would not fill 50 jobs cut when it lost its foreign sales.

Pentz said Creekstone Farms would continue to push for 100 percent mad cow testing at the plant, even if Japan lifted its import ban on U.S. beef, because that is what Japanese consumers and its customers want. Meanwhile, the company has little faith in ongoing negotiations between the United States and Japan on restoring beef trade.

"The only thing USDA accomplished in negotiations is to continue negotiations -- they haven't had a breakthrough or improvements," Pentz said.

In anticipation of getting government approval for its testing plan, Creekstone spent $500,000 in setting up a laboratory at the facility and hired six full-time, experienced lab technicians to staff it.

The company did not lay off those technicians, who are now cross training in other areas, even after regulators denied their request, he said. It wants to make sure its lab is operational if the company does ultimately get the approval.

Creekstone said it had not gotten an official answer to its request, filed five weeks ago, that the Agriculture Department reconsider its decision, Pentz said. The company has not yet made a decision on whether it will sue the Agriculture Department, Pentz said.

The Arkansas City plant has already survived one brush with bankruptcy. Just seven months after it was opened by Future Beef Operations, the Colorado-based company filed for bankruptcy and by 2002, 900 workers were without jobs.

Last year, Creekstone Farms -- a company founded in 1995 by a Kentucky farming couple with just 37 head of purebred Black Angus cattle -- purchased the shuttered facility to produce its own brand-name beef products.

"There (were) a lot of industry people anticipating that Creekstone will not last a year," Pentz said. "We hit our anniversary last week. ... We are growing our business and looking forward to the opening the border, which will increase our operations immensely."

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