Tyson preparing to reopen fire-damaged Kansas plant

A Kansas beef processing plant that caught fire a few months ago is scheduled to reopen by the first week of December, Tyson Foods Inc. said Monday.

The fire damaged a critical part of the plant, causing it to shut down indefinitely, and caused concern among some insiders who feared market reaction to the closure.

Steve Stouffer, group president of Tyson Fresh Meats, said the company is well aware of the disruption the fire caused for its suppliers and customers.

“We are in the final stages of reconstruction,” Stouffer

said Monday. “Our team is ready to begin the process of ramping back up, recognizing that there will be testing and adjustments over the first few weeks to ensure equipment functionality while maintaining our commitment to team member safety and food safety.”

The Holcomb, Kan., beef complex owned by Tyson Fresh Meats, the parent company’s beef and pork subsidiary, has plans to resume “harvest” operations by the first week of December, and to be fully operational by the first week of the new year. Tyson has continued to pay its workers while repairs were being

made to the plant, company officials have said.

Fire heavily damaged the plant on Aug. 8, idling some 3,800 workers and resulting in an immediate loss of beef in wholesale markets. This left buyers scrambling and Tyson in a bind to meet contractual obligations, Derrell Peel, a Oklahoma State University livestock specialist, said in a cattle market report after the fire.

Since the fire, Tyson has been diverting cattle to other beef plants to offset some of the losses. According to a Stephens Inc. analysis, the Holcomb plant can process about 6,000 head of cattle per day, or 15 to 25% of Tyson’s total beef capacity. That is about 5% of the U.S. meat industry’s slaughter capacity, Peel has said.

Boxed beef prices rose sharply in August, peaking two weeks after the fire, before receding. The prices, or the estimated value of the carcass against the price of the cuts reported that day, increased from a weekly average of $2.16 per pound to a high of $2.40 before dropping below average into early October, according to Peel. Cattle futures took the biggest hit, with prices of fed cattle — those sent from the feedlots to the slaughterhouses — bottoming out at $1 per pound five weeks after trading at $1.12.

After the market price fluctuations, the U.S. Agriculture Department’s packers and stockyards division opened an investigation seeking any evidence of collusion, price manipulation or other unfair practices related to the Kansas beef plant incident.

The fire damaged important hydraulic and electrical systems that support the plant’s harvest and cooler areas, Tyson said. During reconstruction, the company replaced several support beams, the roof, hydraulic piping and pumps, and it installed more than 50,000 feet of new wiring, new electrical panel rooms and equipment.

Unlike before, Peel said he was not seeing much reaction in the cash or future markets after Tyson’s announcement.

“Most of the expectation of the plant reopening is already reflected in the market,” he said in an email Monday.

Shares of Tyson fell 35 cents, or less than 1%, to close Monday at $89.98.