Meat Industry INSIGHTS Newsletter

970720 IBP Announces Closure of Recently Acquired Vernon Calhoun Plant

July 7, 1997 -- IBP, Inc announced that the recently purchased Vernon Calhoun Packing Plant in Palestine, Texas will be shut down after August 31, 1997. The 350 employed at the Palestine facility were given notice last week as well. IBP attributes the closure to environmental concerns. "We are voluntarily ceasing operations in order to avoid any unauthorized release of wastewater from the Calhoun plant or treatment system," said IBP Vice President - Cow Division Wes Hodge. "IBP has never intentionally operated a plant in violation of environmental laws, and we do not intend to do so now." Hodge also says that correction of the problems would cost over $7.5 million.

The plant was purchased hurriedly last year in spite of allegations of anticompetitive practices. However, IBP filed a federal civil lawsuit in April 1997 seeking to return the plant to its previous owners and to recover its investment. The federal suit alleges that the prior owners misrepresented the environmental condition of the plant and that the sale should be set aside on that basis. Cows normally purchased for processing at the Palestine facility will be routed to other IBP-owned beef boning facilities (Sealy, TX; Gibbon, NE; Tama, IA) after the Calhoun plant closes.

Calhoun Packing produces boneless cuts of beef that are sold primarily to the food service industry to produce hamburger, sausage and deli meats.

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