Another Kings County food company announces layoffs
Del Monte Foods will not operate their huge tomato processing plant in the Hanford Industrial Park this coming season, workers with the Teamsters Union have been told.
Instead 400 to 500 full-time union employees will be laid off with the timing to be announced in a coming state WARN notice expected to be published soon.
“They told us they are getting out of the tomato business since they aren’t making any money, ” said a union official.
Pictured is the Del Monte plant on Jackson Ave in Hanford(with the solar panels), just a country block from the Faraday Future plant
The massive 670,000sf building constructed in the 1970s will be sold, officials say, although the Walnut Creek-based company has not offered much guidance to the local community, say county sources.
Privately-held Del Monte Foods and has $1.73 billion in annual sales.Their brands include Del Monte, S&W, and Contadina.The company was founded in 1886.
Too much capacity?
The tomato processing business has been shrinking in recent years and includes the closure of the Kingsburg Del Monte facilities and the shuttering of the Olam tomato plant in Lemoore.
“California has a surplus of processing tomato capacity,” says Central Valley grower Arron Barcellos who sits on an industry board.”We have less of an export market than in the past” he adds, leaving too many processors to fight it out for a share of what is now mostly a domestic market.
Our high costs have made California exports too expensive on the world market, adds Barcellos, although California supplies over 90% of the domestic market that includes Mexico and Canada with products including tomato paste,salsa and ketchup.
If the tomato canning business is shrinking Del Monte’s canned vegetable business- once a mainstay in the US – is shrinking as well. Earlier this year the company closed two big plants – one in Washington canning corn and peas and one in Wisconsin processing green beans.
Del Monte Foods, Inc. filed 8 WARN layoff notices from Jun 2004 to Apr 2024 in Alabama, Illinois, Indiana, New Jersey, Texas, Washington and Wisconsin. 1,067 employees were laid off in total from these layoffs.
Faced with bigger grocery bills, American consumers are increasingly turning to cheaper private label store-brand foods rather than branded products like those that Del Monte offers.
Sources say Del Monte is undergoing restructuring and faces a high debt load.
What does all this mean for the jobs that we are losing here in Kings County? The bottom line is that the overcapacity in the industry makes it unlikely this massive plant would again be a tomato processing facility.The section-wide property on Jackson Ave is one country lot over from the 1.1 million Faraday Future plant that also is a poster child for too much manufacturing space since they have made only 12 cars in the past two years.
Kings County just was notified that there is another food processing plant- Leprino East cheese plant in Lemoore – would close in the next year and also complained of high costs.The facility is to be closed and under a new owner could still process dairy products with all the infrastructure in place.
Meanwhile the Del Monte facility may not be another processing plant or even a food plant if it sells.That may not be all bad.
Lucky Kingsburg
In Kingsburg the Del Monte plants have been converted to other uses where there is demand. The former Del Monte plant has now been demolished and converted into a church. The company’s big warehouse facility in town has been purchased by a container making company offering steady employment to the workforce. Kingsburg Economic Development representative Jolene Polyack says there seems to be a local trend where bad news has turned into good news. Case in point is the city’s largest employer T-Mobile now employees over 1000 people in the former Kmart building in town.
“I feel like we have won the lottery in Kingsburg,” says Jolene.
Barcellos is worried about the Central Valley processing tomato industry facing profitability challenges like most other Central Valley crops these days.
Yield per acre
“What allowed the industry to thrive was that year after year we were able to produce more product per-acre” based on a continuing rising yield.
Now that trend is flat and even heading lower, he notes, as growers have converted to 100% drip irrigation and UC Davis research that helped increase yields in the past, is way down.
Yields have plateaued at 52 tons per acre in 2018 are now around 50 after rising exponentially in past decades for just 20 tons per acre in 1960.
“We are barely able to grow tomatoes under contract for a profit.” Water issues,the high value of the dollar ,disease and warming issues all compound the challenge.
Kings County remains one of the top production counties for processing tomatoes in California with plantings at 29,000 acres in 2022, falling to 17,500 acres in 2023 because of flooding in the lakebed and now rising this year to 26,200 acres. That’s still below the high of about 30,000 acres in 2018.
It’s not just growers but food processors in California have their own complaints about high cost and increasing regulatory pressure hurting their competitive advantage, says a rep with the League of California Food Producers.
Meanwhile, the workforce at the Del Monte plant here should get some help from the Kings EDC and job training program to adjust to the layoffs once the company informs them of just what is going on.
Caption: Del Monte plant on Jackson in Hanford is 670,000sf near the larger Faraday Future facility