Shuttering the three plants, which are slated to close by mid-May, is expected to generate savings of $110 million a year as the company works to slash costs in an effort to emerge from bankruptcy, Pilgrim's Pride said. The plants are in Douglas, Ga., El Dorado, Ark., and Farmerville, La.

"The idling of these three plants is a painful reflection of the unprecedented challenges facing our company and our industry from an excess supply of chicken and weakening consumer demand resulting from a crippled economy," Pilgrim's Pride Chief Executive Don Jackson said in a news release.

Each of the three plants produces bulk fresh chicken sold on the spot commodity market. Their closing will reduce total pounds of chicken produced by the company by 9 percent to 10 percent, Pilgrim's Pride said.

"The actions announced today will reduce our production of low-value, commodity meat that is a financial drain on the company without affecting any of our core business lines or customers," Jackson said.

Pittsburg, Texas-based Pilgrim's Pride filed for Chapter 11 bankruptcy protection in December 2008 after struggling with high feed grain costs, low meat prices and a large debt.

The company operates 32 plants, and the three closings will affect roughly 7 percent of its total U.S. workforce.

The company's 900 workers in Douglas, 800 in El Dorado and 1,300 in Farmerville will be permanently laid off, Pilgrim's Pride spokesman Ray Atkinson told Meatingplace.

However, the plants are being idled, not permanently shuttered, and could re-open down the road if the production capacity is needed again, Atkinson said.

About 430 independent contract growers who supply birds to the three
plants also will be affected, the company said. But it noted there will be no disruption in supply to its retail, food service and industrial customers.

The company also will move production of its chicken and tuna salad prepared products from Franconia, Pa., to its facility in
Moorefield, W. Va., affecting an additional 100 employees, Atkinson said. The Franconia operation will be closed permanently as those operations are consolidated, he said.

J.P. Morgan analyst Ken Goldman said the moves by Pilgrim's Pride are welcome news for the U.S. poultry industry, removing about 2 percent of overall production.

As a result, egg sets should begin to decline by about 8 percent to 9 percent in a couple of months, assuming that no competitors ramp up production, Goldman said in a research note.

"This should help boosts prices and producer margins," he said.

Pilgrim's Pride expects to incur one-time, pre-tax restructuring charges of about $35 million, before any potential asset impairment charges, primarily in the second quarter of fiscal 2009.

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