Made In America - Sold Out

[Keith Outten]

Smithfield Foods To Be Sold To Chinese Firm For $4.72 Billion

The purchase values Smithfield Foods at $7.1 billion — a figure that would make the purchase "the largest Chinese takeover of a U.S. company," according to Bloomberg News.

In addition to Smithfield, the company's brands include Armour, Eckrich, Gwaltney, Kretschmar, and others. The company's roots stretch back to 1936, when the Luter family opened a packing plant in Virginia.

Is this what we get in return for patronizing American businesses that become so successful that they are sold to foreign interests?
We will be passing by their products in the grocery store from now on..........
.

[Joel Goodman]

And the Chinese firm has a great food safety record.... NOT! I'll be joining you.

[David Weaver]

I guess this is all just a fiscal lesson. Nobody saves any money in the US (as a whole, not saying there aren't anecdotal counter cases), not individuals and not businesses, and definitely not at the government levels - perhaps with the exception of state and local pensions. So when a company is bought out, it's western europe or asia coming up with the high bid. Domestic capital seems to be looking for higher gain in a shorter term and less old-line value companies. We'll be seeing this a lot for the next few decades, I'd bet.

I don't know anything about chinese ownership of those brands and what it will be like, but western european ownership was fairly kinds to relatives of mine who worked at companies bought out by continental europeans.

Those plants that process the animals, process the food and package it won't be going anywhere, though, and the ones that remain will still be staffed by domestic workforces, so the overall impact might not be as damaging as something like the loss of computer manufacturing was, and we can always look at the packages to see if they specify any foreign origin foods.

Right next to my grandparents' farm was an egg and broiler operation that was foreign owned 35 years ago, a huge one. I'd suspect a lot of us are buying products from locally located companies that are foreign or part foreign owned without knowing it. (strangely enough, the german ownership of that egg operation sold it back to US principals several years ago).

It's my opinion also that some of these ownership attempts from continental europe or asia don't yield what the investors think they will, and they end up taking a bath in everything more than we would've if we kept the companies domestically owned and ran them in the ground. You have to wonder what it is that the chinese see in the company to pay a 30% premium on the stock price. Their output is still going to have to go through the USDA, etc, for stuff grown and sold and packaged in the US. I think to some level, they're struggling just as hard to find decent places to put their money as we are struggling to save ours.

[Mike Cutler]

David

What they see, according to international newlines, is that they have a huge demand for pork products in China, in fact they can't keep up with demand, and Smithfield has a huge operation already in place. Not just domestic, but foreign markets also. So they will be exporting a lot of pork to China from the US to fill that demand. No operational start up. Just go.
That's a huge packing operation in Smithfield VA. I accidentally drove through their parking lot once, because a divided 4 lane road runs right through it. It's big.

[David Weaver]

David

What they see, according to international newlines, is that they have a huge demand for pork products in China, in fact they can't keep up with demand, and Smithfield has a huge operation already in place. Not just domestic, but foreign markets also. So they will be exporting a lot of pork to China from the US to fill that demand. No operational start up. Just go.
That's a huge packing operation in Smithfield VA. I accidentally drove through their parking lot once, because a divided 4 lane road runs right through it. It's big.

That makes sense. Input costs aside (due to speculating and commodity prices aside), there probably isn't a place in the world where you get more calories of food per unit of currency. We can grow hogs and chickens in the US CHEAP and fast.

[Brian Elfert]

A lot of people think this purchase will actually help farmers in America. The Chinese can't supply enough pork for their own needs so they need to import pork from the USA.

As long as the food is still made in the USA the plants will still be overseen by the federal government. Chinese ownership of American food plants doesn't mean suddenly quality control goes away and everyone gets sick from eating food processed there. I don't typically eat any of the brands mentioned by Keith, but they probably make store brands and generics too.

[Phil Thien]

David

What they see, according to international newlines, is that they have a huge demand for pork products in China, in fact they can't keep up with demand, and Smithfield has a huge operation already in place. Not just domestic, but foreign markets also. So they will be exporting a lot of pork to China from the US to fill that demand. No operational start up. Just go.
That's a huge packing operation in Smithfield VA. I accidentally drove through their parking lot once, because a divided 4 lane road runs right through it. It's big.

(1) So why not just buy the PORK from Smithfield, why buy the entire COMPANY?

(2) What are the implications for what we (in the US) pay for pork, and other animal proteins?

[Mike Cutler]

(1) So why not just buy the PORK from Smithfield, why buy the entire COMPANY?

(2) What are the implications for what we (in the US) pay for pork, and other animal proteins?

Phil

I don't claim to understand it fully,but the general gist was that they were buying control of the production, and not competing for an import contract. If they were to import in the amounts they stated,they would end up driving the prices up on themselves over time.
Apparently they expect their domestic pork consumption to increase by billions of pounds in the next decade.They are the largest individual consumers of pork in the world.
Never having raised a pig, I can only assume that it was more financially advantageous to purchase an already established production stream,than start one from scratch in China?

[Phil Thien]

Phil

I don't claim to understand it fully,but the general gist was that they were buying control of the production, and not competing for an import contract. If they were to import in the amounts they stated,they would end up driving the prices up on themselves over time.
Apparently they expect their domestic pork consumption to increase by billions of pounds in the next decade.They are the largest individual consumers of pork in the world.
Never having raised a pig, I can only assume that it was more financially advantageous to purchase an already established production stream,than start one from scratch in China?

Exactly.

I think Ross Perot would say the new giant sucking sound we will hear will be all our pork going to China.

Next we can all expect to pay more for pork, and other animal proteins.

[John Coloccia]

It's one thing to export a product. It's quite another to export the means of production. I'm as conservative as it comes, and I believe in free markets and capitalism, however that is WITHIN my own country. I don't want foreign interests in charge of our means of production of anything...and especially not my food supply. Frankly, I don't care what China's problems are. Companies, the US, and US citizens particularly should have a bit more sense when it comes to turning over our soil to foreign interests, and especially to countries which are hostile to us, launch cyber attacks on us, and otherwise undermine out interests domestically and internationally, including playing games with their currency. Our policy towards China in particular is rather suicidal and is doing nothing but setting us up for an inevitable war...either economically or otherwise.

You don't give away the farm hoping that you'll have a teat to suck off of when you want it. It's stupid and it does nothing but set up an inevitable conflict when the foreign interest conflicts with your own. We can't possibly be this stupid. If they need pork, we can export all the pork they want. There's no reason to own it. They know what they're doing...we don't or we don't care.

Just my humble opinion.

[Chuck Wintle]

Smithfield Foods To Be Sold To Chinese Firm For $4.72 Billion

The purchase values Smithfield Foods at $7.1 billion — a figure that would make the purchase "the largest Chinese takeover of a U.S. company," according to Bloomberg News.

In addition to Smithfield, the company's brands include Armour, Eckrich, Gwaltney, Kretschmar, and others. The company's roots stretch back to 1936, when the Luter family opened a packing plant in Virginia.

Is this what we get in return for patronizing American businesses that become so successful that they are sold to foreign interests?
We will be passing by their products in the grocery store from now on..........
.

i don't have a problem with foreign owned in most cases as we all buy products of foreign owned made in america, honda and toyota, bosch tools etc, the list is long. My problem is that chinese firms have a very slack attitude towards the consumer especially food producers. how can we be sure they will not start substituting chinese produced raw materials that are contaminated and then brought to north america?

[David Weaver]

i don't have a problem with foreign owned in most cases as we all buy products of foreign owned made in america, honda and toyota, bosch tools etc, the list is long. My problem is that chinese firms have a very slack attitude towards the consumer especially food producers. how can we be sure they will not start substituting chinese produced raw materials that are contaminated and then brought to north america?

It'll be pretty hard to do that here with the USDA and FDA. (maybe it's just the USDA that's relevant). If anything in the US, our food is so sterile and so tightly controlled that it's hard to actually get things to market that we would want. Joel Salatin's talks about how much it costs him to get bacon to market are a good indicator of this, and how the hoops to jump through make $3 a pound bacon cost $9, etc.

[Aleks Hunter]

I don't know about the Chinese being all that slack about food safety. Their inspections may be spotty, like ours are, but when someone uses tainted ingredients or adulterations in China, they get executed. Over here on the other hand, Stewart Parnellm the peanut guys whose peanut butter poisoned all those people five years ago, many of whom died, has yet to set foot in a jail.

[John Coloccia]

Is this what we get in return for patronizing American businesses that become so successful that they are sold to foreign interests?
We will be passing by their products in the grocery store from now on..........
.

Ditto. I'm proud to say that in the last year.....and probably 2 years, now....I have tried my best to avoid Chinese made products and US made products by Chinese companies. I think I had to buy some nail clippers made in China a few months ago because that's all CVS had, and I needed nail clippers now.

I'm pretty tired of exporting my companies and important garbage.

[ray hampton]

the names that Keith mention , the first two sell spam and bacon -sausage plus a numbers of other can goods