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Van Buren Tyson plant closure: What happened and why?

Tyson has been struggling to get its poultry business running right since the pandemic.

VAN BUREN, Ark. — After Tyson Foods's announced the closure of its Van Buren plant, a lot of people were shocked and left wondering why. The surprise announcement didn't just impact the nearly 1,000 workers in Van Buren, but a second plant in Virginia, which employs almost 700 people, will also close.

Arkansas Business has been following Tyson's recent business moves.

It's been a rocky stretch for Tyson's chicken business. What's been the problem?

Tyson has been struggling to get its poultry business running right since the pandemic. 

And those struggles are showing up in earnings reports, management changes and now moves like the one we saw this week, where the company is closing two long-running poultry processing plants.

One thing we know is that the company has had trouble just keeping pace with chicken demand, which has been huge.

Think about all the chicken restaurants out there, for example. It is wildly popular, and in some cases, Tyson has had to buy chicken from other processors in order to meet demand.

Meanwhile, prices for everything have gone up — so input costs like feed but also labor. So that's putting real pressure on profit margins in that segment.

Basically — chicken has become less profitable for Tyson, even as demand continues to be really strong.

What has Tyson been trying to do to fix the poultry industry?

Well, earlier this year it replaced the executive at the top of poultry.

In January, CEO Donnie King dismissed David Bray and replaced him with Wes Morris — who's a longtime veteran of both the company and the industry.

Morris had retired from Tyson's prepared foods division, but they have brought him back to lead poultry.

The company has also been exploring more investments in automation and efficiency.

In December, Tyson said it would spend $1.3 billion on automation — executives are basically trying to find ways to save money through robotics and other improved processes in order to improve profit margins.

King has actually cited what he called "inefficient moves and activities" when talking about the company's disappointing poultry financial results.

Would closing some plants also be part of that strategy?

It's possible, yes.

In its statement yesterday, the company said the moves aim to strengthen the poultry business by "optimizing operations and utilizing full available capacity at each plant."

This is a move that aims to improve how Tyson Foods uses its resources inside poultry.

We should note that in fiscal 2021, Tyson posted a $625 million operating loss in its chicken business. The first quarter of this fiscal year was a disappointment, too. Operating income fell 71% in the poultry segment.

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