Tyson Foods Inc. is taking decisive measures to address the challenges posed by escalating costs and streamline its operations, including the closure of multiple chicken processing plants.
Last month, the company announced the shutdown of four facilities – those in North Little Rock, Arkansas; Corydon, Indiana; Dexter, Missouri; and Noel, Missouri. These closures are part of Tyson's broader strategy to enhance efficiency and reduce expenses in response to market dynamics. The decision to shutter these four plants in the first two quarters of fiscal 2024 is driven by a need to reallocate resources to more efficient facilities.
"The difficult decision to close four chicken facilities … demonstrates our commitment to bold action and operational excellence as we drive performance, including lower costs and improving capacity utilization, and build on our strategy of making Tyson Foods stronger in the long-term," said Tyson Foods President and CEO Donnie King.
The company's estimate for total charges associated with these closures ranges from $300 million to $400 million, underscoring the significance of these cost-cutting measures.
In fiscal year 2022, Tyson initiated a productivity savings plan with the ambitious goal of achieving $1 billion in savings by the end of fiscal 2024. Impressively, Tyson exceeded this target well ahead of schedule, achieving over $700 million in savings in the previous fiscal year. However, in May, the company reported an unexpected loss in the second quarter and had to revise its sales forecast downwards due to expenses tied to plant closures and workforce reductions.
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Tyson Foods tightening its belt amid rising food prices
While Tyson has been actively pursuing cost-saving initiatives, these efforts have become even more critical in the face of market challenges. Pork prices have experienced a substantial year-over-year decline of 16.4 percent, and chicken prices have also seen a 5.5 percent drop. The beef industry has also posed challenges for Tyson due to diminishing cattle supply. (Related: INFLATION NATION: Record-high meat prices in the U.S. unlikely to recede, experts warn.)
For the latest quarter, Tyson reported a net loss of $417 million, a stark contrast to the $750 million profit recorded during the same period the previous year. The market's response to Tyson's earnings call was immediate, with the company's shares experiencing a decline of over five percent.
The scheduled shutdown of Tyson Foods' Corydon plant on or around March 1, 2024 will affect 368 individuals, along with 45 contract growers in and around Harrison County, according to local officials. Tyson has pledged to support affected employees by encouraging them to apply for available positions within the company. The company will also provide relocation benefits where applicable.
While an email seeking confirmation of the workforce's exact size remains unanswered, a Worker Adjustment and Retraining Notification (WARN) notice detailing the impact on employees at the Corydon plant had not been posted on the Indiana Department of Workforce Development's (DWD) website. Despite this, Tyson is working to connect potentially impacted employees with resources and assistance during this transition – in coordination with state and local officials.
Lisa Long, president of the Harrison County Chamber of Commerce, expressed a commitment to making the transition as smooth as possible, with a focus on helping employees find local employment opportunities, potentially involving retraining efforts.
Southern Indiana Works (SIW), a career and training services provider, will offer assistance to affected employees in navigating unemployment insurance claims, determining eligibility for services and understanding available resources.
The news of the plant's closure has left Southern Indiana officials in disbelief, as Tyson's presence in Harrison County has been significant for many years. The closure will impact not only plant workers but also corn producers and farmers, resulting in a broader economic effect on the region.
Tyson's operations have encompassed substantial resources – including corn, water, sewer and potential property tax revenues – making the closure a matter of significant concern for the community.
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