January 28, 2008

 

Tyson Foods closes beef plant in Kansas to cut slaughter capacity

 

 

Tyson Foods will cut 1,500 jobs as it ends beef slaughtering and restructures operations at its Emporia, Kan., plant.

 

About 2,400 people now work at the plant in two shifts. The facility will continue to be used as a cold-storage and distribution warehouse and will process ground beef.

 

Chief Executive Dick Bond said there continues to be far more beef slaughter capacity than available cattle and the problem will continue to afflict the industry for the foreseeable future.

 

Bond estimates overcapacity in the industry to be between 10,000 and 14,000 head of cattle per day.

 

Beef, which accounts for more than 47 percent of Tyson's sales, posted an anemic operating profit of US$1 million for the fiscal fourth quarter, ended Sept. 29.

 

While the segment lost money a year earlier, CEO Bond said the industry is processing too many cattle relative to supply and demand, severely compressing margins.

 

The continued closure of the Japanese market to US beef has also affected beef sales.

 

Tyson also has beef plants in seven other states. The company also has a beef complex in Canada and is involved in a vertically integrated beef operation in Argentina.

 

Tyson's shares traded recently at $13.35, down 14 cents, or 1 percent.