Tyson builds, strengthens its value-added business

by Bryan Salvage
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SPRINGDALE, Ark. – As Tyson Foods continues expanding its production of value-added foods, it must also ensure its production facilities can handle the capacity and throughput. As a result, Tyson has made capital investments of more than $40 million in four of its plants that could create as many as 490 jobs, said Donnie Smith, president and CEO of Tyson Foods Inc., during Tyson Foods’ first-quarter media conference call held on during the morning of Feb. 1.

Smith said that expansion projects are in progress at plants in Sherman, Texas, and Goodlettsville, Tenn.; an expansion in Glen Allen, Va., was recently completed; and The Bruss Company, a subsidiary of Tyson Foods and a manufacturer of portion-controlled steaks and chops for the foodservice industry, recently opened in Jacksonville, Fla. The Texas and Tennessee plants manufacture case-ready beef and pork. The Virginia facility makes rotisserie chickens, breast filets, tenders and thighs for national foodservice customers.

“These are major investments we believe will help us maintain our position as a leader in the case-ready business at two strategic locations, and in chicken and steaks with some of our key foodservice customers,” Smith said. “All of these are prime locations because of the existing facilities and access to an excellent workforce.”

Tyson’s Goodlettsville and Sherman projects involve installing new equipment and production lines as part of Tyson’s strategic effort to meet customer demand for case-ready beef and pork. Expansions, equipment installations and hiring for the new positions are expected to be complete by the end of April.

Tyson anticipates investing $7.7 million and hiring as many as 100 new people at the Goodlettsville, Tenn. plant. This facility manufactures pork cuts, ground-beef products and beef cuts, including closely trimmed steaks, chops and roasts. Meanwhile, the Sherman, Texas, facility processes beef, ground beef and pork products, including closely trimmed steaks, chops, roasts and spareribs. The company anticipates hiring approximately 70 new workers and investing $5.6 million at the Sherman plant.

Each of these case-ready plants employs approximately 1,500 people. The Goodlettsville plant had a 2012 payroll of more than $45 million while the Sherman plant had a 2012 payroll of more than $49 million.

“Tyson continues the strategy of adding value to our commodity products for retail customers and consumers,” said Gary Sheneman, senior vice president of case-ready beef and pork. “We’re pleased to be able to create jobs in both cities. They’ve been great supporters of Tyson Foods throughout the years.”

A third Tyson case-ready plant operates in Council Bluffs, Iowa, which makes case ready-beef and pork; ground pork; ground chicken; beef, pork, and chicken meal kits; vacuum-packed beef; and vacuum-packed retail steaks. Expansions at the poultry plant in Glen Allen, Va., which ended in late 2012, involved installing new equipment, which will increase production capabilities. Tyson spent more than $14 million on this project and is hiring approximately 120 additional people at this facility. The plant currently employs approximately 640 people and last year had a payroll of more than $23 million.

“The strategic location, local tax structure and available workforce made the decision to expand in Hanover County, Va. an easy choice,” said Tommy Waters, manager of the Glen Allen complex.

In 2012, Chicago-based The Bruss Company bought a 47,000-sq.-ft. processing facility in Jacksonville, Fla. The company spent $13 million on equipment and renovations, and plans to eventually employ as many as 200. The annual payroll, once the facility is running at full capacity, is expected to be approximately $8 million. More than 50 people are employed there now.

When asked what type of convenience store products Tyson is developing and what kind of growth Tyson is expecting in this category during the question-and-answer session, Smith said some new products are being developed around the type of cooking technology that’s fairly unique to convenience stores.

“Typically [convenience stores] have a roller-grill where you’ll find franks and other items,” he said. “We’re working on some roller-grill items to help convenience stores expend that offering. Other things [being offered are] prepared meals for a busy consumer who may want to stop by on the way home and pick up a prepared meal, take it home and quickly cook it. Other types of items might include soups, smoked meats, and we do a little bit if pizza toppings for that segment – there’s probably an opportunity to expand that offering.”

When asked if foreign acquisitions for cash were still a priority, Smith replied, “We’ve talked about smaller acquisitions that would take advantage of our strengths, which would revolve around food safety, quality assurance, distribution, customer penetration, customer relationships, that type of thing. [We’ll] be thinking about smaller acquisitions that we could put into our network and leverage our strengths. That’s really what we’re focused on right now. And yes, you should be able to assume some news about [such acquisitions] during this fiscal year.”

One journalist asked if Tyson Foods could confirm it was planning to cut back operating hours at all of its beef packing plants because of tight supplies, COO Jim Lochner answered, “The only time we’d cut back is when either if the demand balance puts us into a position where we don’t have good sales for the product – we’ll cut back…or if we think the front-end supply is tight, we may do it. We make those decisions on an ongoing basis.”

Rumors have persisted in recent months that Hillshire Brands might be ripe for a takeover. When asked if Tyson Foods was interested in acquiring any of Hillshire Brands meat businesses, Smith chuckled and responded, “We wouldn’t talk about that.” 
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