Tyson updates facility for beef

Nebraska plant to spend millions

Tyson Fresh Meats, a subsidiary of Tyson Foods Inc., on Thursday said a multimillion-dollar restructuring project of its “flagship” beef slaughter and processing plant in Dakota City, Neb., will help its sales in domestic and international markets.

The Dakota Dunes, S.D.based arm of the Springdale-based meat giant fell short in saying that upon completion of the restructuring in Dakota City, a satellite, feeder plant in nearby Denison, Iowa, will close in 2013.

The Denison beef plant employs about 400 people.

“Unless area cattle supplies increase significantly or we find an alternative use for the facility, it may make economic sense to discontinue operations there [ in Denison] next year,” Noel White, senior group vice president of Tyson Fresh Meats said in a news release.

Improvements under way at the Dakota City plant will make it more cost competitive and “help optimize the value of the plant’s product mix,” White said in the release.

Tyson declined to provide an exact amount for the project’s cost, but spokesman

Gary Mickelson wrote that the work at the plant is expected to cost “tens of millions of dollars,” in an e-mail Thursday.

The Dakota City project includes a new beef slaughter floor and improvements to carcass coolers, rendering and box handling operations.

Construction is set for completion by mid-2013 and about 200 production jobs will be added, Tyson said.

About 4,000 people work at the company’s largest beef processing complex in Dakota City, where fresh vacuumpacked boxed beef is produced in addition to the recovery of bone, fat, trimmings and hides for use in food, pharmaceutical, cosmetic and clothing items.

Thursday’s announcement was not the first expansion noted at the Dakota City plant, which was built in 1966.

In early 2006, the plant grew by 84,500-square-feet after receiving production work from two shuttered beef plants in Nebraska.

Tyson got into beef packing in 2001, when it acquired Iowa Beef Processors Inc., or IBP Inc., of Denison, Iowa, in a $3.2 billion deal. At the time IBP Inc. was the nation’s largest packer of fresh beef and a leading pork processor, according to The New York Times.

Tyson has shuttered three beef plants, two in Nebraska and one in Boise, Idaho, since then.

Today, Tyson has nearly a quarter of the U.S. beef market and has experienced the same margin-lowering pressures that competitors such as Cargill and JBS Swift faced in 2011.

The high price of cattle during the October through December period was in part to blame for a 8.5 percent decrease in beef sales during Tyson’s first quarter.

Experts said fewer processed cattle and an inability to pass those increased prices along to domestic consumers hurt sales.

Packers, however, are expecting growth in 2012 to come from the export market, said Timothy Ramey, an equity analyst with D.A. Davidson & Co. in Lake Oswego, Ore., in a telephone interview Thursday.

Ramey said Tyson officials are focused on what cattle supplies will do in 2013 and 2014, and “cattle have tended to be better located north, than south.”

Dakota City, Neb., sits about 78 miles northwest of Denison, Iowa.

Exports sales have been boosted in part from a weak dollar and increased demand from Asian countries such as Japan, Korea and China, according to first-quarter data from credit rating company Fitch Ratings.

About 16 percent of Tyson’s beef sales come from the international market, according to 2011 company data.