Madison County Awaits Butterball Buyer

Regardless of what company eventually purchases Huntsville’s Butterball plant, it’s likely that the largest employer in Madison County will still be talking turkey when the sale goes through.

ConAgra Foods Inc. of Omaha, Neb., the parent company of Butterball, announced its intention to sell its Butterball operations last month, including Madison County’s largest employer. The Huntsville plant employs more than 800 people. The second-largest employer in Madison County is Huntsville’s LaBarge Inc. plant, which has about 155 employees.

Companies such as Sara Lee Corp. in Chicago, Pilgrim’s Pride of Pittsburg, Texas, and Tyson Foods Inc. of Springdale have been mentioned as potential buyers. Most of those companies have kept a low-key profile as they await more specifics from ConAgra.

However, Smithfield Foods Inc. of Virginia, a company with $11.35 billion in sales in the last fiscal year, has hinted it is interested in the Butterball operations, which also include plants in Ozark and Jonesboro. Smithfield recently purchased ConAgra’s assets of the Cook’s ham business.

Smithfield CEO Joseph W. Luter III told the Dow Jones news service his company was looking at the possibility of buying ConAgra’s meat assets, as well as those of Sara Lee.

“I’ve always been hungry, and that will continue to be so,” Luter said. “We’ll look at ConAgra’s assets very, very seriously.”

In a March 16 e-mail, Smithfield told ConAgra it “will carefully consider” all of ConAgra’s brands that are for sale, but no final decision had been made.

ConAgra President and CEO Gary Rodkin, a former CEO of PepsiCo, said, “ConAgra Foods has a number of great brands and businesses to drive future growth. We will build on those strengths by coupling disciplined investments in well-positioned brands with a more streamlined operating structure.”

A ConAgra spokesperson said the plan is to sell the turkey operations by the end of the year. Some local ConAgra employees expect it to happen by this summer.

Tyson Foods spokesman Gary Mickelson said despite rumors to the contrary, the Springdale company is still interested in ConAgra’s turkey plants, but Tyson Foods wants to know more about what will be included in the sale.

“It’s really premature for us to provide much comment,” Mickelson said. “We have interest in learning more. We’re still waiting to learn more detail from them to inform us about what is being put up for sale. Until ConAgra gives a more detailed outline about what’s up for sale, we won’t say much.”

Asked if Tyson Foods would be interested in adding turkeys to its variety of meats, Mickelson said, “I’m not going to speculate. There is simply an interest.”

John McMillin, food and agribusiness analyst for Prudential Equity Group, has gone on record stating Tyson Foods could buy a better brand than Butterball.

Butterball sells only whole-bird turkeys, which McMillin noted is a highly seasonal business.

A Butterball employee in Huntsville said he was quite sure no one from any outside company had toured the Huntsville facility recently.

ConAgra reportedly wants to sell all of the Butterball plants as a group but may be forced to sell them individually or in smaller groups if a buyer for the bundle is not found.

Reportedly, there is also an investment group interested in making a bid for the plants. The group is headed by a former ConAgra vice president who was once president of the Butterball operations.

Meanwhile, Pilgrim’s Pride has reportedly been looking to purchase Atlanta-based Gold Kist Inc.’s operations.

ConAgra came to Huntsville in 2003 when it purchased the Cargill Turkey Products operation. Cargill, based in Minneapolis, Minn., is another company that is rumored to have a small interest in regaining possession of the Huntsville plant.

The eventual buyer of Butterball’s Huntsville plant could have a major impact on the mostly rural Madison County. Aside from those who actually work at the plant, there are dozens of turkey farmers in the county.

Just as the plant would need a major overhaul if it were to begin processing chickens rather than turkeys, chicken houses require much different equipment than turkey houses.

Working in the Huntsville plant’s favor is the fact that, during the last fiscal year, of all of ConAgra’s Butterball, Eckrich and Armour plants, only Huntsville was profitable.

A Huntsville plant employee said he has noticed morale deteriorating around the facility since the ConAgra announcement that it plans to sell its Butterball operations.

Lew Thompson of Lew Thompson & Son Trucking in Huntsville took his small fleet of trucks and became one of Huntsville’s greatest business success stories in the last decade, thanks to a sizeable contract from ConAgra to haul its turkeys.

There is concern that a new company, particularly one such as Tyson Foods that has its own fleet, would eliminate Thompson from its operations.

Fortunately for Thompson, he has diversified his business in the last couple of years and says his company’s business is now only 30 percent Butterball-related.

(Kyle Mooty is editor of the Madison County Record in Huntsville.)