Tyson CEO looks to repeat 2010
November 23, 2010
by Bryan Salvage
SPRINGDALE, Ark. — Tyson Foods today is a very different company than it was even two or three years ago, company executives have said in the past. When asked during a Nov. 22 teleconference how the company is different, Donnie Smith, president and CEO, was happy to oblige.
“Number one, we’re very much focused on our ‘Back to Basics’ approach. We’re better operators than we were a couple of years ago. We’re more focused on our customer, which means we’re doing a better job of being their ‘go-to’ supplier when it comes to quality, service and innovation.”
Regarding consumer products and foodservice, many of Tyson’s customers are looking for solutions on how to grow their business. “A lot of our customers are asking that question here in Springdale, Ark.,” Smith said. “We have a great R&D group with great R&D facilities and we’re applying that innovative approach we have to their business to help them find solutions on how they can grow their business.
“When they grow their business, that’s how we grow ours,” Smith continued. “So, we have our customer focus, our back-to-basics approach and the final one is our attention to our culture. Over the last couple of years, we have refined our culture at Tyson Foods. One, it’s a caring culture; we do what we say we’re going to do. We care about each other. We’re passionate about taking care of our customers. We have eight cultural tenets we live by every day. Those are the things that are helping us stay focused on the things that really matter and I think it’s had the biggest improvements in our results.”
When asked if he felt Tyson Foods may now be in a position to start growing through acquisitions again, Smith answered, “In the future, yes, but frankly I would not look for that to happen in a meaningful way in 2011. When we talk to our folks here, our game plan in 2011 is really to do 2010 again. That’s what this year is about for us. We’re not going to hurt our long-term growth, but again -- our number-one financial focus is to get back into investment grade. We think that opens up a lot better doors for us when acquisitions come about.”
Comments have been made in Tyson’s past earnings reports on in-plant efficiencies being made, primarily in chicken. When asked to elaborate on this, Smith used Tyson’s Wilkesboro, NC fresh chicken processing plant as an example.
“The second-processing part of that plant is down today and for the rest of this week as we’re making changes,” Smith said. “No. 1, we’re taking out mechanical deboning and we’re putting in cone line, hand deboning, which will get a better yield. That yield is a dramatic improvement in our efficiencies. We will simply get more breast meat off the [carcass] than we have been doing in the past.
“We’re also putting in some new cut-up equipment in that plant,” Smith added. “That new cut-up equipment will allow us wider flexibility and more cut-up parts will go into retail. In all of that, we’ll pick up a little bit of line efficiencies. We’ll also pick up some utilities savings --how much we spend on various parts of our business, such as packaging materials.
“This is one example how we’re using capital expenditures to improve yields, labor efficiency and line efficiency...coupled with some very good freight savings from year-to-year as we’re doing a better job of filling up the trucks and putting more weight per truck so our freight cost per lb. is lower,” Smith continued. “There are also live production efficiencies, where our feed-conversion rates are better. We’re getting better hatch percentages in our hatcheries. The number of eggs we set we actually get more chickens placed. More of those are available at the end of the growout to go into the plant to increase our line and labor efficiencies.”
“We have many small cap ex projects, as well as non-cap ex projects, that result in better overall yield and efficiencies,” COO Jim Lochner said addressing Tyson’s Beef and Pork businesses.