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SPRINGDALE, Ark. - Tyson Foods, based here, said yesterday that it will suspend operations at four beef plants and the second shift at a fifth, effective Monday, Jan. 10. The affected facilities, which are in the Upper Midwest and Pacific Northwest regions, have seen business suffer due to a combination of tight cattle supplies, lackluster domestic demand for beef, and the continued absence of key export markets, according to the company.
Tyson will suspend operations at plants in Denison, Iowa; Norfolk and West Point, Neb.; and Boise, Idaho. The company will also temporarily discontinue second-shift processing at Pasco, Wash. The suspension of operations, expected to last three to five weeks, will reduce the company's weekly cattle slaughter by 25,000 to 30,000 head, compared to pre-holiday levels.
"This is a difficult decision; however, we believe it's the right thing for us to do at this time, especially given the challenging market conditions and unfavorable operating margins our beef business continues to face," said John Tyson, chairman and c.e.o. of Tyson Foods, in a statement. "Our plants have been running at less than 75 percent of capacity over the past two months, which is 10 percent to 15 percent below historical levels."
U.S. cattle marketings were down more than 8 percent in 2004. "We anticipate cattle numbers will increase in the coming months," noted Gene Leman, senior group v.p. of Tyson Fresh Meats. "We also look forward to the previously announced reopening of the U.S. border to Canadian cattle in early March, which will especially benefit our plants in the Upper Midwest and Pacific Northwest."
Tyson estimates its fiscal 2005 earnings per share will be in the range of $1.15 to $1.40. The company still expects the majority of its earnings to occur in the last six months of the fiscal year.
About 2,100 workers are affected by the temporary suspension of operations, including 275 employees at Denison, 900 at Norfolk, 275 at West Point, 250 at Boise, and 400 at Pasco.
Tyson is encouraging affected employees to take paid vacation for the first week that operations are suspended. The company will then pay the equivalent of a 32-hour work week for each of the next three weeks workers are off the job. Tyson will also continue to offer benefits, including health insurance, to qualified employees.
Most management, management support and maintenance workers at the affected plants will remain on the job, working on various maintenance, sanitation, and training projects.
Tyson is the world's largest processor and marketer of chicken, beef, and pork. The company produces a wide variety of protein-based and prepared food products. Tyson has about 114,000 employees at more than 300 facilities and offices in the United States and worldwide.