The End of Time for "Pink Slime"?

Hundreds of thousands have recently joined forces by signing an online petition, in an effort to remove ammonia treated meat fillers from schools. This isn't the first time "pink slime," dubbed so by a federal microbiologist for its unappetizing appearance, was the center of media attention. The lean meat trimmings first popped up on the news radar last year when fast food chains like McDonald's vowed to stop using it in its products. To further exacerbate issues for the the company that produces the so-called "pink slime," Beef Products Inc., major retail chains have yanked the meats containing the cheap filler off their shelves, and very publicly announced their discontinuation of carrying such products in the future. The financial impact of the media frenzy has forced the company to respond drastically, starting by suspending operations in three of their four production plants- as reported by this Associated Press article.

So what exactly is this "pink slime," and how does BPI make it? According to its website, BPI acquires their beef trimmings directly from USDA approved processing plants. From that point, the leftover fatty pieces are heated and spun to remove most of the fat. After that, the mixture is compressed into blocks, and treated with ammonium hydroxide to kill of bacteria. The product is then incorporated into ground beef, which consumers can get from their local grocery store or lunch cafeteria. It is estimated that 70% of all ground beef in the United States contains pink slime, and the pink slime to beef ratio is up to 1:3.

In response, BPI is currently doing damage control by attempting to dispel the misconceptions people currently have of their product- hoping to gain back most of their business by educatiing people about the purpose of ammonia treatment and the quality of their meet. Last week, BPI took out a 1 pg. ad in WSJ to promote their product, in addition to launching a new informational website on their product. But the strategy to rebuild the company's reputation is not enough to save it from its recent financial losses. Although BPI is unwilling to disclose specific numbers, it has responded to this crisis by stopping operations at its Texas, Kansas, and Iowa plants (the Texas plant currently produces 200,000 lbs per day, while the Kansas and Iowa plants come out with 350,000 lbs per day). Currently, the plant headquartered in South Dakota is the only one still resuming normal operations. The approximately 600 employees at the shut down plants will be fully compensated for the 60-day suspension.

Recent class discussions centered on business stress really relate to this current topic affecting BPI. As the company faces this big unexpected change, the actions that it chooses to take now and in the next couple of months will most likely determine its fate. By halting the majority of its production, BPI reduces its variable costs while it figures out what the next steps should be. Similar to the Kodak case that we studied, BPI cannot just leave the lean meat trim business and pick up something else instead (given their holdings of the production plants). Currently, BPI takes trimmings from processing plants, and mainly adds value to them by treating them with ammonia. The problem with that is that consumers misperceive their vale adding process as the root of the problem, and BPI needs to find a way to fix this issue. Informing consumers about the purpose of the treatment is challenging with more negative media light shone on pink slime than positive. Off the top of my head, BPI can consider altering their treatment processes to omit ammonia, and incorporate new treatments more accepted by consumers. The online petition and loss of business from major superstore chains are not the end of BPI's problems. Far from it, I think things are going to get worse for the company as they should expect to lose even more business in the times to come. As of now, it is important for the company to make preparations for when things do get worse, and set up a plan of implementation for the absolute worst case scenario. From the takeaways of our class discussions, how do you guys think BPI should approach this problem? Do you think there are any specific courses of action the company can take to combat the media uproar, or do you think the end of time for pink slime (and BPI) is near?