Tyson Sells Two Commodity Poultry Operations In Alabama To Koch Foods Incorporated
As part of strategic efforts to reduce the production of fresh, commodity chicken, Tyson Foods, Inc. (NYSE:TSN - News) plans to sell two of its Alabama poultry plants and some supporting facilities, the company reported today.
Tyson has signed a letter of intent to sell its poultry plants in Ashland and Gadsden to Koch Foods Incorporated of Park Ridge, Illinois. The sale will include a feed mill in Talladega and hatcheries in Fair Knoll and Empire. Terms of the proposed transaction are not being released; however, the companies indicate they hope to complete the deal by the end of May.
Tyson began reassessing the future of these Alabama operations last year after fire destroyed the company’s poultry processing plant in Heflin. This led to a discussion with Koch, which has been a long-time, primary customer of the Heflin and Ashland plants, and more recently, the Gadsden facility, which has not been operating at full capacity due to production cuts Tyson initiated in 2006.
``Since both the Ashland and Gadsden plants are involved in the production of commodity chicken products, and Tyson has become more focused on value-added chicken production, we believe it makes economic sense to sell these operations,’’ said Bill Lovette, senior group vice president of Poultry and Prepared Foods for Tyson. ``While it’s difficult to leave these communities, we believe Koch is a good fit for these operations, especially since it’s already the primary customer of the fresh chicken produced at both plants.’’
Approximately 1,200 Tyson Team Members are employed at the Tyson locations involved in the sale, and many are expected to be given opportunities to work for Koch Foods. However, 400 of the 675 positions at the Gadsden plant will be eliminated by late May, as Tyson shifts the facility’s further processing activities to other company locations. The further processing involves the production of refrigerated foodservice and deli products, as well as some frozen foodservice and retail items, which Koch does not plan to produce at Gadsden. As required by the federal Worker Adjustment and Retraining Notification (WARN) Act, the affected workers are being given a 60 day notice of the job elimination.
``This decision to shift further processing from Gadsden to other plants is consistent with our strategic objectives, which call for additional improvements in operational efficiencies,’’ said Lovette. ``We have the existing capacity at other locations to effectively handle this work elsewhere.’’ Tyson does not plan to shift any production from the Ashland plant, which employs approximately 300 Team Members.
The Gadsden workers whose positions are being eliminated in late May will be encouraged to consider employment at other Tyson locations in Alabama, such as the company’s poultry complexes in Albertville and Blountsville. Following the transaction, Tyson will employ approximately 2,400 Team Members in Alabama.
As part of the transaction, Koch Foods will assume production contracts with approximately 350 growers who currently raise chickens for Tyson. ``We appreciate the outstanding work and support the poultry producers have provided Tyson’s operations over the years, and are confident they will have a positive working relationship with Koch,’’ said Lovette.
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