The company is pulling out all the stops to keep afloat, but some Wall Street analysts think it's just a matter of time.
Research firm CreditSights says credit extensions and loan grace periods only postpone the company's collapse.
"Although the temporary waiver provides Pilgrim's Pride with another 30 days of life, it appears to be more illusionary than substantive," the report said.
The company has been trying to stave off bankruptcy, negotiating loan extensions with it's creditors.
In a statement on Sep. 25th, it points to weak market demand for breast meat and losses on hedged feed grain positions as major contributors to it's current business woes.
We spoke with Ray Atkinson, Pilgrim's Director of Corporate Communications regarding the report. He said the company is working on a plan to avoid bankruptcy:
"We continue to believe that chapter 11 is not in anyone's interest"
With facilities across the southeastern US and Mexico, the company employs around 50,000 people. Mr. Atkinson didn't know how many of those employees were at the plant in Mount Pleasant. The company's published fact sheet can be found here.
Atkinson didn't directly comment on prospects for layoffs, saying instead the company's new plan would focus on increasing liquidity.
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In recent remarks, the Governor acknowledges the slowdown, and urges fiscal proactivity. Remarks came ahead of a new report by the Federal Reserve Bank showing Texas manufacturing on a downward trend.
Speaking recently to the Texas Chemical Council in Houston, and the Dallas Regional Chamber, Governor Perry has acknowledged that the Texas economy is feeling the effects of the worldwide economic crunch.
Speaking to the Chemical Council on the 16th, Perry commended the sector's 16 million dollars donations to Ike recovery, and then said
"Fortunately, the things that have been attracting businesses to Texas haven’t changed, but our state is not immune to the upheaval on Wall Street. As strong as it is, the Texas economy is interconnected with the economies of other states and nations, so a ripple effect is unavoidable."
Then on the 21st to the Dallas Regional Council, Perry said
"...this financial storm has left credit very, very tight. Whether you lead a business that was ready to expand, a family that was planning to buy a new home or car, or a local government that is recovering from Ike, we are all being affected by the current financial unrest."
The Governors remark foreshadowed a report released yesterday by the Federal Reserve Bank of Dallas, which showed Texas manufacturing indicators continuing a slide that began early this year.
The Texas Manufacturing Outlook Survey is issued monthly by the Fed. Considered important because the survey focuses on Texas manufacturing, which ranks second behind California in factory production and first in the nation as an exporter of manufactured products.
Movements in this sector can be particularly useful for understanding changes in the general economy. Swings in business activity are often felt more quickly and more intensely in the manufacturing sector, which tends to be more cyclically sensitive than the total economy. The report summary states:
"Texas manufacturing activity continued to decline in October, according to the Texas Manufacturing Outlook Survey.
Most indicators of current production and general business conditions remained weak. Nearly all indexes for future activity dipped considerably, and several manufacturers noted that the credit crisis had dampened their outlook."
Perry promised to keep pressure on FEMA to reimburse costs associated with Hurricane Ike, saying in Dallas:
"We won’t know Ike’s total cost for some time, but I expect it will far exceed the $11.2 billion that we requested from Congress. When you consider the resources devoted to dealing with the storm, the cost of countless lost business days, destroyed homes and shattered businesses, the price tag will be a hefty one, and that doesn’t even begin to address the tragic loss of life. To that end, we have kept steady pressure on FEMA to ensure we get reimbursements on par with those Louisiana received after Katrina."
In Houston, he also acknowledged fiscal measures the state government businesses are taking to weather the credit storm.
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Site clearing and grading has started on Duoline's 18 million dollar plant south of Gilmer.
"C" Construction out of Tyler has been awarded the general contract, and has started clearing and grading the site.
Jim Reyes, the site superintendent for C, says the job is scheduled to be completed in May of 2009.
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