Tyson Foods announced late Friday (July 25) plans to shutter three of its processing facilities as it streamlines its prepared foods segment ahead of the anticipated merger with Hillshire Brands.
The meat giant said a total of 950 jobs will be impacted with these closures by mid next year:
• 450 jobs Cherokee, Iowa, plant to be shuttered Sept. 27;
• 300 jobs Buffalo, N.Y., plant closing by mid 2015; and
• 200 jobs Santa Teresa, N.M., plant closing by mid 2015.
Tyson said in a press release that the closings will enable the meat giant to use more of the available production capacity at some of its other prepared foods plants.
“This is a very difficult decision since it affects the lives of our team members and their families,” said Donnie King, president, prepared foods, customer and consumer solutions for Tyson Foods. “However, these plants have been struggling financially. After long and careful consideration, we’ve concluded it no longer makes business sense to keep them open.”
The planned closures are due to a combination of factors including changing product needs, the age of the Cherokee facility and prohibitive cost of its renovation and the distance of the Buffalo and Santa Teresa plants from their raw material supply base in the Midwest. In addition, the closings will allow the company to shift some of the production and equipment to other, more cost-efficient Tyson Foods locations, according to the release.
All three plants have been part of Tyson Foods since 2001, when the company acquired IBP Inc.
The Cherokee plant, which Tyson Foods leases, has produced processed meats since 1965. It makes deli meats, hams, Canadian bacon and hot dogs.
The Buffalo facility produces hot dogs, sausage and hams. It first opened in 1969 and operated as Russer Foods until 1999, when it was acquired by IBP.
Santa Teresa makes a variety of cooked products including dinner meats, diced ham and roast beef. The facility was built by John’s Brothers and opened in the spring of 1982. It became part of IBP in 1994.
In the past year, Tyson Foods has expanded its deli meat capacity in the Houston, Texas plant. That was on top of the Hillshire Brands operations for deli meats and hotdog facilities in Kansas City, Mo.; St. Joseph, Mo.; Zeeland, Mich.; New London, Wisc.; and Claryville, Ky. Hillshire also operates sausage processing plants in Tennessee and Alabama. In total, Hillshire operates 11 separate meat processing plants on top of four non-meat facilities.
Tyson CEO Donnie Smith estimates that when the merger is complete, the companies will see $300 million in synergies in the first three years, which would be primarily gained from operational and supply chain efficiencies. Tyson has agreed to pay $63 per share for Hillshire Brands, a deal worth $8.55 billion.
Tyson management will answer questions about the pending merger and plant closures Monday morning during the company’s third quarter earnings call with analysts.
The meat giant noted in its release that affected workers will be encouraged to apply for openings within the company and also will be invited to job fairs Tyson Foods plans to host. In addition, the company intends to work with state officials to ensure employees are informed about unemployment benefits and any potential re-training opportunities.