In an effort to cut slaughter overcapacity in the US, the world's largest meat producer will end some operations and cut about 1500 jobs in Kansas.
Tyson Foods Inc said it will stop beef slaughter operations at its plant in Emporia, Kansas, over the next few weeks and instead will use it as a cold storage and distribution warehouse and ground-beef processing centre. It will also take over processing some commodity and specialty cuts.
About 1,500 of the 2,400 jobs at the plant will be cut, including people in the first and second-shift slaughter and second-shift processing.
At present the company has no present plans to use the slaughter area of the Emporia plant; however, the equipment there will be left intact.
CEO and President Dick Bond said it had been an extremely difficult decision, given the great team of people who work there and the company's investment in the plant.
"However, we must make changes to our commodity business model to effectively manage through challenging market conditions.
"There continues to be far more beef slaughter capacity than available cattle and we believe this problem will continue to afflict the industry for the foreseeable future. We estimate the current slaughter overcapacity in the industry to be between 10,000 and 14,000 head of cattle per day.
"This imbalance is especially a problem for Emporia," he said. Mr Bond said that cattle production has moved from eastern to western Kansas over the past 20 to 30 years, and the Emporia plant is no longer centrally located in relationship to where most of the cattle it slaughters are raised.
On top of this, the US cattle herd is not growing. Tyson sees no signs of appreciable growth in the fed cattle supply over the next two to three years, which is consistent with the opinions of various industry analysts. "The rising price of grain, caused in part by the use of corn for ethanol, has put pressure on feed costs, land costs and the use of farm ground." And the number of cows being retained for calf production continues to decline.
Group Senior Vice President Jim Lochner said at a time in the cattle cycle when cattle numbers should be at or near their highest, the level of production is not approaching its historic peaks. "We do not see any increases in fed cattle production in the foreseeable future."
"In light of the slaughter overcapacity and the outlook for fed cattle inventories, we have reviewed the operations of each of our facilities, their location relative to available cattle supplies, and have determined slaughter operations at the Emporia facility should be discontinued," Mr Lochner said. "By making this change, we'll be able to divert more cattle to our other facilities, which are more strategically located, and improve their capacity utilization."
In addition to Emporia, Tyson's US beef plants are located in Amarillo, Texas; Dakota City, Nebraska; Denison, Iowa; Finney County, Kansas; Joslin, Illinois, Lexington, Nebraska and Pasco, Washington. The company also has a beef complex in Canada, and is involved in a vertically integrated beef operation in Argentina.
By Rachel Richardson
http://www.farmnews.co.nz
