XL closes beef packing plant Sask 'til september

[per]

The answer I was expecting was no. When I first found this sit f_s was thoughtful and respectful in his posts. Now it is just bitter resentment. Snap out of it f_s, honey goes smoother than vinegar.

[Sawbones]

Just to add a little fuel to the fire, CCA and ABP are supporting the bailout of Nilsson and Cargill already by proposing that the $50 million that the feds have earmarked for packing plants be given to the major packers for SRM removal costs. On a similar note, despite the motion being passed at a local zone meeting and then one of the few resolutions passed at the general ABP meeting, the executive of ABP decided in their wisdom that a feasibility study was not justified on re-opening the Balzac plant. I guess GF you were once again correct on your comments regarding ABP. Contrary to your opinion FS, there are potential buyers for Lakeside and some of the other plants. We just need a review of the market situation. If you were buying a vehicle, wouldn't you want an independent mechanical check??
Closing the Moose Jaw plant is the tip of the iceberg. There will be more to come to control the cattle prices.

[grassfarmer]

Per I think that was a bit unfair - I don't think F_S's post are any less respectful than anyone elses on here. I certainly don't consider them less respectful than mine. I don't often agree with F_S but I do appreciate his postings here - without them there would be no voice for ABP.

[per]

I stand corrected. Sorry f_s.

[kato]

I think the bottom line is that we all saw it coming. And there's more to come that we can all probably see as well.

Things like.... Ten years from now, XL and High River as well will be ready for some major upgrading. Will this be paid for by said corporations? Bet not. Bet the plants are held up for ransom with a demand for govt. money, probably making use of the GM and Chrysler precedent. Anything not contributed by taxpayers will be topped off by lowering prices paid, while using the threat of shutdowns against producers. We can all see this coming, and no one should be surprised by it.

As well, small upstarts will continue to be shot out of the water as quickly as they have the gall to try and compete. They, on the other hand, will receive no bailouts, since they are not big enough to affect a sufficient number of voters. We can all see this coming, and no one should be surprised by it.

But in the long run, I don't think the "bigger is better" business model is sustainable. History will look back on it, and people will wonder "What were we thinking?"

Sooner probably than later, energy costs will soar even higher than the last run up. Food safety issues and antibiotic resistance issues will become more and more important. Encouraging a business model where a food safety recall involves millions of consumers in multiple countries is soon not going to be politically correct. Consumers are already starting to demand this, and it's only a matter of time before politicians pick up on it.

Until then, we can look forward to more and more maneuvering like we're seeing now.

[smcgrath76]

I don't think XL is too worried about cash flowing the new purchase. There were quite a few funds from the ALMA program that would have gone their way. As well, take the three big plants in AB running at 60%, and close one, sell the real estate and viola you have paid for the new aquisition.
Debt free, no competition (at least in the OTM trade) and away you go.

[grassfarmer]

So is the Calgary plant closed down already? I guessed that would be their intent but hadn't heard if it was proceeding yet.
Per was informing me that they do have a competitor on OTM kill with Cargill having been killing cows one day a week all winter. That was news to me and an interesting development.

[smcgrath76]

Still killing in Calgary. Actually since the purchase of Brooks, the tyson plant in NW USA has been bidding on cattle and driven the price up some.
As for the debt load, $100,000,000 even over 5 years is only $20,000,000 a year. If the plant only operates 46 weeks a year that is 435,000 a week. $72,500 a day or $18 a head at 4000 a day. They will be open more than that and can probably increase volume if other plants shut down. Plus they get the feedlot included in that price, and probably financed over 10 years at a very low interest rate.

[smcgrath76]

Still killing in Calgary. Actually since the purchase of Brooks, the tyson plant in NW USA has been bidding on cattle and driven the price up some.
As for the debt load, $100,000,000 even over 5 years is only $20,000,000 a year. If the plant only operates 46 weeks a year that is 435,000 a week. $72,500 a day or $18 a head at 4000 a day. They will be open more than that and can probably increase volume if other plants shut down. Plus they get the feedlot included in that price, and probably financed over 10 years at a very low interest rate.

[Sawbones]

The real cost Sean is operational. At 4500/day at Brooks, that's over $4.5 million per day. $90 million per month. XL Moose Jaw was less than 1/2 that. I'm sure they're scrambling for markets. It's all about cash flow and market share.