In order to increase efficiency and reduce production costs, Tyson has announced the consolidation of beef operations in northeast Nebraska.
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The company will close its beef processing plant in Norfolk and its slaughterhouse in West Point and production will be moved to Tyson’s site in Dakota City, where slaughter and production will take place. Tyson has estimated that the closures will increase the company’s beef production capacity utilisation by 6%.
“Given the expected efficiencies of the new processing floor at Dakota City and the anticipated improvements in capacity utilisation, we believe this is the right strategic decision,” said Noel White, group vice president of Tyson Fresh Meats. “The consolidation will enhance the performance of our beef business, both now during this time of challenging market conditions and later when these conditions improve.”
The reduction in costs from facility closures an increased efficiency is expected to generate pre-tax savings of US$40m per annum. The closures are expected to result in a one-time charge of US$46m, the company said. Accordingly, Tyson has altered its earnings outlook for fiscal 2006, dropping to between $0.42 and $0.72 per share.
The last day of production at West Point, where 365 jobs will be affected, will be today (16 February). The Norfolk plant will cease production tomorrow, with 1,300 jobs being lost. Workers will continue to receive pay for 60 days and meetings will be held to discuss benefits and job opportunities within the company.
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By GlobalData“We regret the disruption the closings will cause our Team Members and these two outstanding plant communities, which both have a long history in the meatpacking industry,” said John Tyson, chairman and CEO of Tyson Foods.
