Tyson to lay off 200 workers at Kentucky poultry plant as product mix shifts

Dive Brief:

  • Tyson Foods is laying off 200 workers at its poultry plant in Robards, Kentucky, beginning on Jan. 24. In a statement provided to Food Dive, the company said growing demand for its fully cooked, “value-added” chicken products has led it to shift its product mix at the site, resulting in the job cuts. According to local news publication The Gleaner, the facility has around 1,200 employees.
  • In a statement to The Gleaner, Brad Schneider, judge executive for Henderson County, where the Robards plant is locationed, said he understood that Tyson’s new products “involve automation so they need fewer people.” Tyson said it would provide affected employees with relocation assistance to its facilities in Humboldt and Shelbyville, Tennessee. It was also working with state and local government to connect workers who do not choose to relocate to additional job resources.
  • The layoffs come a little over a month after Tyson announced it would invest $1.3 billion over the next three years in automation to boost output and cut labor costs as part of its new productivity program. Meanwhile, the poultry giant plans to open 12 new plants over the next two years and looks to have 50% of its volume come from value-added products by the end of fiscal 2024.

Dive Insight:

Tyson defines “value-added” products in poultry as ready to eat, par-fried or its air-chilled, organic Smart Chicken brand, and case-ready and premium options in beef and pork. In a December investor day presentation, the company shared that 47% of its volume, or 28.0 billion pounds of product, fell into this area in fiscal 2021, showing that it doesn’t have much farther to reach its goal.

Demand — especially for poultry products that offer convenience — is high. About 45% of Tyson’s chicken product sales come from fully cooked and par-fried options. Rather, Tyson has been hamstrung by the same issue affecting other food manufacturers over the past year: supply. In its most recent earnings call back in November, CEO Donnie King noted that product volumes overall rose 3% in the second half of its fiscal 2021, but labor challenges were affecting that growth rate. 

“We’re taking aggressive actions to optimize our existing footprint, add new capacity, adjust our product mix by plant, and match our portfolio more closely with customer and consumer needs,” he said.   

On the added capacity side, Tyson announced in August that it would invest $300 million in a fully cooked chicken plant in Danville, Virginia. The facility, which will employ 400, is slated to open in spring 2023 and will pump out products including its frozen Any’tizer chicken bites and chicken nuggets. Tyson is also planning new lines for chicken products at existing plants over the next two years.

And for workers losing their jobs at the Robards facility, one relocation option was Tyson’s new poultry processing plant in Humboldt, Tennessee, which is its first such facility to open in 25 years

But another way to boost production — and control labor costs — is automation. The meat giant has already made several investments in AI technology and robotics to handle repetitive, difficult tasks in its plants, such as butchering and processing. While Tyson hasn’t specified plans for the Robards plant, it is expecting to eliminate more than 3,000 jobs companywide and realize $450 million in productivity savings by the end of fiscal year 2024 in part through its three-year investment in automation.

Chris Casey contributed to this report.

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