Tyson Foods ( NYSE:TSN ), a major player in the U.S. meat industry, has announced its plan to shut down four chicken plants in Arkansas, Indiana, and Missouri. This decision is aimed at reducing costs and comes on the heels of previous closures in Arkansas and Virginia earlier this year. These closures, which account for around 10% of Tyson's chicken-slaughter capacity, have come as a shock to local officials, especially given the long-standing presence of these facilities in their communities for over 50 years.
The company intends to shift operations from the soon-to-be-closed plants to newer establishments located closer to its customer base. This transition is slated to occur between late 2023 and early 2024. Tyson's move affects several small towns heavily reliant on the company for employment. For instance, in Noel, Missouri, the plant employs about 1,500 of its 2,100 residents, highlighting the significant economic blow such closures represent.
Besides direct employment, these closures will have a ripple effect on the local economies. Dexter's plans for an $18 million wastewater treatment plant are now on hold due to the impending shutdown. Furthermore, the closures impact local farmers who supply chicken houses and those producing chicken feed. Although Tyson has refrained from disclosing the exact number of affected employees, they have offered assistance in relocation and encouraged the workforce to seek other positions within the company.
Tyson's CFO, John R. Tyson, expressed the difficulty of such decisions but emphasized the necessity for the company's long-term efficiency and growth. CEO Donnie King pointed out that the targeted plants for closure were typically smaller and would require considerable capital investment to remain operational. While local officials and communities grapple with the ramifications of these decisions, they are gearing up to find alternative solutions for the affected workforce.
This article was originally published on Quiver Quantitative