A Boise-area french-fry maker slashes jobs and leaves potatoes unused. This is why
It’s a tough time for the Boise-area french-fry maker that says it is the No. 1 supplier of “value-added” potato products in North America.
Lamb Weston Holdings Inc. is eliminating jobs, slashing $100 million in capital spending and leaving contracted-for potatoes unused as it loses market share and its sales suffer from menu-price inflation, the company said.
In a filing with the U.S. Securities and Exchange Commission, the company said it will close permanently an “older, higher-cost” processing plant in Eastern Washington and curtail production lines and schedules at plants elsewhere in North America.
“A supply and demand imbalance in North America and an ongoing inflationary environment necessitate these difficult steps,” President and CEO Tom Werner said Tuesday in a news release.
The cuts represent 4% of Lamb Weston’s global workforce of 10,700 people, the company said.
Lamb Weston employs more than 1,000 people in Idaho, according to the Idaho Department of Labor. Its headquarters are near the intersection of Eagle Road and State Street in Eagle.
The company, which counts McDonald’s as a leading customer, has two plants in Idaho, in Twin Falls and American Falls, that are supplied by area potato farmers.
The closure is a blow to the plant’s home, Connell, a city of 4,970 people about 35 miles north of Pasco, Washington, and 150 miles west of Lewiston, Idaho. Production ended Monday. A notice filed with the state of Washington said the job cuts will take effect Nov. 30.
“We take very seriously any job elimination and understand the impact these decisions have on employees and the communities in which they live,” Werner said. “… We thank all of our talented team members and the community of Connell for its partnership over the years.”
Lamb Weston has not notified the state of Idaho of any layoffs large enough to trigger 60-day advance warnings required by federal law.
The news came as Lamb Weston reported a 46% decline in net income in the quarter that ended Aug. 25. Werner told shareholders that restaurant traffic and frozen-potato demand would likely remain soft through the next three quarters.
The company, whose stock trades on the New York Stock Exchange under the ticker symbol LW, saw its shares fall more than 28% after it reported disappointing earnings in July for the fourth quarter of its 2024 fiscal year. Shares closed Wednesday at $66.58. The high point in the past 52 weeks was $111.88 in mid-January.
Lamb Weston became an independent, publicly traded company when it spun out from ConAgra Foods in 2017.
It is a significant buyer of potatoes in Washington’s Mid-Columbia region that includes the Tri-Cities. It is also one of the largest private employers in the Tri-Cities, with processing plants, a research center and corporate offices in Kennewick.
Share price slashed
The move to pull out of Connell comes as the company was hit by a series of setbacks.
On June 13, an Ohio pension filed a class action lawsuit against Lamb Weston and two senior executives, alleging they violated federal securities law in connection with the implementation of a new software system.
The Cleveland Bakers and Teamsters Pension Fund alleged the company’s stock price was artificially inflated when the company misrepresented problems it was having with its new software system.
The suit is pending in U.S. District Court for Idaho and aims to represent the pension fund and any investors who bought shares of the company’s’ common stock between July 2023 and April 2024. Share prices fell 30% in the wake of the news.
Executive earnings reported
Another Lamb Weston filing with the SEC shows that Werner, the CEO, earned $7 million in the year that ended in June, down from $20.3 million in 2023 as his stock awards and incentive compensation fell sharply.
The same filing said:
- Michael J. Smith, chief operating officer, earned $3.2 million, down from $6.2 million a year earlier.
- Bernadette M. Madarleta, the chief financial officer, earned $2 million, down from $5.2 million.
- Sukshma A. Rajagopalan, chief information and digital officer, earned $3 million.
- Mark J.P.H. Schroeder, international president, earned $2.7 million.
This story was originally published October 3, 2024 at 4:00 AM with the headline "A Boise-area french-fry maker slashes jobs and leaves potatoes unused. This is why."
CORRECTION: Lamb Weston’s stock trades under the ticker symbol LW. An earlier version of this story reported an incorrect ticker symbol.
