Tyson Foods Inc. is closing four of its chicken-processing plants across the United States by 2024, the company announced during its third quarter 2023 on Aug. 7.
The plants being closed are located in North Little Rock, Arkansas; Corydon, Indiana; and the Missouri towns of Dexter and Noel, according to the company, which cited efforts to lower costs.
Tyson said it plans to move production from those facilities to other newer facilities closer to its customers. The plants will be closing in late 2023 or early 2024, according to Tyson.
Donnie King, president and CEO of Tyson Foods, called the decision to shutter the four plants a “difficult” one that “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.”
“While current market dynamics remain challenging, Tyson Foods is fully committed to our vision of delivering sustainable, top-line growth and margin improvement,” Mr. King continued. “I’m encouraged by the improvements we made this quarter, including our Tyson Core Business lines that continue to outpace our peers in volume growth.”
The four facilities set to shut down account for roughly 10 percent of Tyson’s chicken-slaughter capacity, CFO John R. Tyson told analysts on a call.
Closures ‘Going to Impact’ Hard
The Springdale, Arkansas-based company said it continues to evaluate the financial statement impact of the closures for charges related to contract terminations, impairments, accelerated depreciation, severance, and retention, but that based on its preliminary analysis, the total charges are around $300–400 million.It is unclear how many jobs will be impacted by the closures, but local officials said they will affect roughly 300 plant workers in north Little Rock, more than 500 jobs in Corydon, 1,500 workers in Noel, and 683 people in Dexter.
Noel mayor Terry Lance said the city’s total population is around 2,100 people.
“It’s going to impact the city pretty hard,” the mayor said.
Tyson said it plans to help relocate workers and urged them to apply for other positions with the company.
The latest announcement comes as Tyson has been moving to cut costs in recent months amid waning demand and soaring inflation.
In October last year, Tyson closed down its corporate offices in Chicago and South Dakota and relocated its workforce to its headquarters in Springdale, Arkansas, as part of what it said was a move to allow for closer collaboration, although the decision led to some employees quitting.
The company—the world’s second-largest processor and marketer of chicken, beef, and pork—also shut down two other chicken plants, in Arkansas and Virginia, earlier this year. Collectively, those plants employed nearly 1,700 workers.
Revenue Losses, Declining Sales
As of Oct. 1, 2022, Tyson employed approximately 124,000 workers in the United States, with roughly 6,000 of them corporate employees and 118,000 of them working in non-corporate positions, such as warehouses and meat plants, according to a filing with the U.S. Securities and Exchange Commission.Tyson posted a loss in its second quarter and cut its sales forecast, citing payments for plant closures and layoffs.
In its most recent financial results on Monday, the company posted an operating loss of $350 million, down 134 percent year over year, driven in part by a drop in sales among its beef and pork sales as well as increased costs.
The company reported revenue of $13.14 billion, down from $13.5 billion a year ago, and earnings per share of $1.18 for the third quarter ended July 1.
Starting in 2022, Tyson launched its “new productivity program” targeting an aggregate $1 billion in productivity savings by the end of fiscal 2024 relative to a fiscal 2021 cost baseline.
The company said Monday it realized more than $700 million of savings in fiscal 2022, which “partially offset the impacts of inflationary market conditions.”
It also surpassed its $1 billion target in the second quarter of fiscal 2023, more than a year ahead of its plan, the company said.
The company said Monday it anticipates fiscal 2023 sales to be $53–54 billion, more or less in life with analysts surveyed by FactSet who expect revenue of $53.74 billion.
