Tyson Foods has shifted its strategy from increasing market share to cutting back production. The company recently closed two plants and plans to shut down four more. The demand for its product has stabilized, and wholesale prices have fallen. Industry experts claim that Tyson’s aggressive production contributed to these trends.
According to Tyson CEO Donnie King, the company made a miscalculation last year in projecting chicken demand and the type of chicken needed. They ended up producing more chicken because they had to buy from external processors, even though prices were increasing. However, the prices for boneless, skinless chicken breasts dropped significantly. Tyson removed the president of its poultry operation and analysts believe that Tyson wanted to increase production to make up for the missed opportunity in the chicken market.
Tyson plans to close plants in North Little Rock, Arkansas; Corydon, Indiana; and Dexter and Noel, Missouri, affecting about 3,000 employees. The closure of plants in Glen Allen, Virginia, and Van Buren, Arkansas, was previously announced. Although Tyson expects trends to improve, they acknowledge that market conditions in the chicken industry are still challenging. The company anticipates a rise in chicken demand as the price of beef increases. (Read more Tyson Foods stories.)
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