Tyson Foods Inc. plans to close two poultry plants in the United States and lay off almost 1,700 employees on May 12, reports said.
The current scale and inability to economically improve operations is said to have led to the decision to close the facilities.
The plants in Van Buren, Arkansas and Glen Allen, Virginia will be closed as part of its cost saving measures. Tyson expects to shift chicken demand to other plants as it expects to utilize the full capacity at each of its facilities.
The Arkansas plant has about 1,000 employees, while the Virginia plant employs approximately 700 workers. Tyson is said to be helping affected employees apply for open jobs and offering relocation assistance to other plants.
CNBC quoted a company spokesperson as saying, “While the decision was not easy, it reflects our broader strategy to strengthen our poultry business by optimizing operations and utilizing full available capacity at each plant.”
For Tyson, restoring competitiveness in chicken segment is one of the the five key pillars of its strategy, as announced in its latest first quarter earnings call.
Donnie King, President and Chief Executive Officer, during the earnings call, had said that demand for chicken was not as expected, which resulted in higher cost, a lower price environment, and knock-on effects from a network standpoint. November and December were softer than expected or planned for in retail fresh chicken.
Tyson is focusing on operational and functional excellence, digital solutions, and automation and advanced technologies.
In November last year, Tyson had noted that its productivity program, announced one year ago and designed to deliver more than $1 billion in recurring annual savings by the end of 2024, had accelerated ahead of schedule and would be achieved by the end of fiscal 2023.
In its first quarter, earnings declined, driven by weaker results in chicken, pork, and beef, which more than offset strong performance in prepared foods. However, it delivered solid top-line results with year-over-year revenue and volume growth. Chicken revenue increased 9.6%, driven by volume growth from increased domestic production and pricing initiatives.
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