CHICAGO: US Tyson Foods Inc announced closing two chicken plants with almost 1,700 workers on May 12.
The shutdown shed light on the most prominent US meat company, in terms of sales, was still trying to figure out how to improve its chicken business which has struggled for years.
According to a statement, the company said that it will shut a plant in Glen Allen, Virginia, with 692 staff and a plant in Van Buren, Arkansas, with 969 staff.
The company said that chicken demand would shift to other plants as part of a strategy to utilise the full capacity at each of its facilities.
The company said that the current scale and inability to improve operations economically had led to the difficult decision to close the facilities.
The Arkansas-based Tyson said last year that it could only fulfill some of its orders for chicken owing to limited supplies and labour, and planned to improve production. The firm previously bought chicken from other producers to meet demand.
Tyson erroneously predicted last year that demand for chicken will be strong at supermarkets in November and December, Chief Executive Donnie King said on a quarterly-earnings call last month.
In January, the firm replaced the president of its poultry business.
Shutting down plants is difficult but justified as Tyson sought to improve performance, said Arun Sundaram, senior equity analyst at CFRA Research. He said that he was not surprised by the decision and expected Tyson may implement further restructuring.
“There has been a lot of investor pressure on management about improving the chicken margins,” Sundaram said.
