Source: Lisa M. Keefe, MEATINGPLACE, 6/7/19


Sanderson Farms has marked several years of steady expansion across the Southeast, but the company plans to sit on its current capacity for now, CEO Joe F. Sanderson Jr. told Wall Street analysts at the Baird 2019 Global Consumer, Technology & Services Conference.

Tight labor markets and high steel prices, driven by tariffs in the ongoing trade war, are major deterrents, he said.

“We need to build another plant or two,” Sanderson said. But, “we have 50 to 55 items we have to check off before we say, 'This is where we’re going to build.’ And one of the first items is ample labor.”

Traditionally Sanderson looks to build in markets with 8% to 9% unemployment and underemployment, and those markets are not now available in Sanderson’s market area, he noted. The company is likely to look to build in the Carolinas next, due to its easy transportation into the Northeast Corridor, but “you can’t find a place that has ample labor,” he said.

Sanderson recently raised hourly pay rates across the company, but that’s all the company can do in terms of attracting workers, the CEO said.

“There are no other levers. After wages and benefits, with 3% unemployment you’re not going to attract labor,” he said.
Steel

In addition, the current elevated price of steel, affected by tariffs on incoming product in the ongoing trade war, has made the cost of building any poultry facility higher than normal.

“Steel prices are high, and when you build a [facility] it has a lot of steel in it,” Sanderson said. “It’s not a good time to site a plant today.”

In the end, he said, “We’re in no rush. We’ll be patient and it’ll happen but we can’t find it today.”

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