Boston, MA 07/28/2014 (wallstreetpr) – Tyson Foods, Inc. (NYSE:TSN) is set for the closure of three of its plants in Iowa, New York and New Mexico ahead of the impending acquisition of Hillshire Brands. The closure is expected to affect up to 905 employees with the company citing financial struggles of the plants, as the reason behind the closure. Tyson Plants has said that the closure will allow it to move some of its equipment’s and operations to other cost effective plants.
Impact of Changing Consumer Tastes
The Cherokee plant is set for closure on September 27 with Buffalo and Santa Teresa Plants expected to close their doors in the first half of 2015. The three plants came along when Tyson Foods acquired IBP inc. in 2011. Tyson Foods as an effort of quelling anxiety in the company has advised the affected employees to apply for job openings in other plants and also invited them to attend job affairs that it will be organizing.
Tyson Currently employees 115,000 employees in 130 countries and is considered’ as the largest meat processor in the U.S. Changing consumer tastes and volatile meat prices continues to be the biggest challenge for Tyson Foods in the market. Despite the challenges, Tyson Foods, Inc. (NYSE:TSN)’s net income doubled in the last quarter benefiting from increased demand of chicken as well as higher prices for beef and pork.
Higher Costs Affect Revenue Margins
Higher costs affected the company in the last quarter consequently falling short of analysts’ estimates. Tyson Foods, Inc. (NYSE:TSN) has already signed a $7.75 billion deal to acquire Hillshire Brands, a maker of jimmy Dean Sausages and Ball Park hot dogs. A spokesman of the company has said that plans for the closure of the plants were already underway even before the acquisition of Hillshire.
The closure of some of the plants was attributed to the fact that they were far from Raw Material Base considerably affecting their profit margins. Severe drought in the U.S has forced the supply of Beef to be at its lowest in 63 years consequently affecting the supply of meat.
