Southwest Minnesota beef plant to shut down

The latest victim of overcapacity in the U.S. beef processing industry, PM Beef in southwestern Minnesota will close and eliminate about 300 jobs.

PM Beef in Windom announced Tuesday that the plant will close on Dec. 11 and that its last day of production was Sept. 25.

"Closing the facility was a very difficult but necessary decision based on years of deteriorating industry conditions, including rising cattle prices and limited cattle supply," Lisa Hernandez, president of PM Beef Holdings, said in a statement.

The company said it is searching for a buyer for the plant. Hernandez didn't respond to requests for an interview.

The beef plant has operated for decades in Windom and was known as Caldwell Packing before closely held PM Beef Holdings bought it in the early 1990s. The plant's employment was once significantly higher: The Worthington Globe reported a workforce of 550 in 2004.

Still, PM Beef is Windom's second-largest employer after Toro Co., which has 700 to 800 workers at a plant that makes lawn mowers and snowblowers. PM Beef's closing "is going to have a pretty significant impact on the local economy," said Steve Nasby, city administrator for Windom, which is about 175 miles southwest of Minneapolis.

The shutdown will also hurt Minnesota cattle ranchers, particularly those near Windom, said Ashley Kohls, executive director of the Minnesota State Cattlemen's Association. They'll likely have to pay more to transport cattle to slaughterhouses in Iowa, South Dakota or central Minnesota.

Several U.S. beef processing plants have closed in the past few years, as the U.S. cattle herd has shrunk to historic lows.

Last year, Dakota Premium Foods closed its beef operation in South St. Paul, axing 300 jobs. In August, Tyson Foods said it would shutter a western Iowa beef slaughterhouse that employs 400 people. National Beef closed a California plant with 1,300 workers last year, and Minnetonka-based Cargill in 2013 shut down a massive plant in Texas that employed about 2,000.

The shutdown wave "is probably not over yet," said Derrell Peel, a livestock specialist at Oklahoma State University's agricultural extension service.

The U.S. cattle herd by January 2014 had hit a low not seen since the early 1950s. This year, the herd expanded about 2 percent to just shy of 30 million.

But today's cattle processing infrastructure — slaughterhouses and feedlots — was built during a time when the U.S. herd had up to 20 million more cattle, Peel said. "Most of the infrastructure dates back to the 1970s and 80s."

Over time, demand for beef has declined while the beef industry has boosted production efficiency, raising bigger and leaner animals.

Plus, drought conditions in prime U.S. cattle growing regions have toasted grazing land, forcing some ranchers to liquidate herds. Fewer cows usually means more expensive cows for slaughterhouses.

Mike Hughlett • 612-673-7003