Pilgrim’s Pride fined $87K in safety violations

GREELEY — As Greeley-based chicken processor Pilgrim’s Pride Corp. (Nasdaq: PPC) considers new acquisitions, the company has racked up hundreds of thousands of dollars in fines from the federal government due to repeated safety violations.

Pilgrim’s Pride reached a settlement with the Occupational Safety and Health Administration in October to pay $86,500 in fines from safety violations at the company’s chicken processing facility in De Queen, Ark., Department of Labor spokesman Juan Rodriguez said.

Pilgrim’s Pride had disputed the original $170,000 fines it faced following a 2013 OSHA inspection at the Arkansas facility. OSHA reduced the fines by nearly half and closed the case in October after finding that Pilgrim’s committed “serious, willful and repeat violations,” Rodriguez said.

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The fine comes as Pilgrim’s Pride expresses interest in acquisitions following its failed bid for The Hillshire Brands Co. (NYSE: HSH) last year. Pilgrim’s Pride lost a bid to Tyson Foods Inc. (NYSE: TSN), which ended up acquiring Hillshire in a deal valued at $8.55 billion. Pilgrim’s Pride later ended up acquiring Tyson processing facilities in Mexico. Pilgrim’s Pride chief executive Bill Lovette said in a fourth-quarter conference call that the company’s interest in acquiring “remains very high.”

“The issue is making sure that we find the right target at the appropriate value,” Lovette told analysts.

As the company trains its sights on mergers and acquisitions, Pilgrim’s Pride’s safety issues remain. At the Pilgrim’s facility in De Queen, the company faced fines for allegedly exposing workers to hazardous chemicals.

“Safety issues are troubling in this industry because they remain so persistent despite the improving financial health of most companies in this sector, including Pilgrim’s Pride,” said Vicki Bryan, senior analyst who covers Pilgrim’s Pride for New York City-based Gimme Credit LLC.

Greeley-based JBS-USA owns controlling interest in Pilgrim’s Pride. JBS’ Cameron Bruett said in an email at the time that the company took the allegations seriously and was in the process of reviewing the citations internally.

“No Pilgrim’s employee has been harmed or injured as a result of the underlying allegations,” he said.

Bruett, head of sustainability for JBS USA, declined to comment for this story because of a quiet period ahead of JBS’ first-quarter earnings report.

Pilgrim’s Pride also faces $60,000 in fines from citations handed down by safety regulators accusing the company of operating an unsafe electrical system in Nacogdoches, Texas. The citations followed the death of a worker who was electrocuted at the East Texas plant in August. Pilgrim’s has disputed those fines.

Another Pilgrim’s Pride employee died in October when he was struck by a chunk of ice while working at the company’s chicken-processing plant in Mount Pleasant, Texas, east of Dallas.

In March, Pilgrim’s Pride settled a lawsuit from an employee who was burned when a barrel of hot water spilled onto her legs at the Mount Pleasant facility. The employee, whose job involved deboning chicken, contended that the barrel should not have been in her work area.

Details of the settlement were not disclosed in court documents.  Joe Newsom, the woman’s Texas-based attorney, declined to comment.

Despite the injuries, deaths and alleged safety violations, Pilgrim’s Pride had a banner financial year. In 2014 it earned $711 million, up from $550 million in 2013. The company posted $8.6 billion in sales in 2014 vs. $8.4 billion in 2013.

The company employs about 35,000 people and operates chicken-processing plants and prepared-foods facilities in 12 states, Puerto Rico and Mexico.

JBS has faced its own set of alleged safety violations and fines from OSHA. JBS USA agreed to pay $100,000 in fines to settle safety and health violations in May 2014.

The settlement in May followed an inspection by OSHA in December 2012 that revealed potential for conditions that could lead to amputations and fall hazards in elevated work areas, among others.

Two-and-a-half weeks later, JBS employee Ralph Horner, 54, of Wellington died June 10, 2014, at the company’s Greeley beef processing plant. Horner suffocated after he accidentally became trapped in a conveyer, according to an autopsy report from the Weld County Coroner’s Office.

OSHA later fined JBS $38,500, contending that JBS failed to properly guard the conveyer and exposed workers to crushed fingers, burns, amputations and blindness. JBS has contested the fine.

JBS USA has improved its safety record since OSHA stepped up inspections of the Greeley beef plant a few years ago, said Herb Gibson, OSHA’s area director in Denver.

“As a result of those inspections, we’ve seen definite improvements in their overall safety program,” Gibson said.