Tyson Foods, the Arkansas-based processor and marketer of chicken, beef and pork, has announced that it is to cut 850 jobs as part of a US$200m cost-cutting programme aimed at returning the company to profitability.
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The cost-cutting programme significantly exceeds the $110m target originally set by the new CEO Richard Bond.
“We’ve taken an aggressive look at all aspects of our business and also reviewed suggestions from our team members on ways we can more effectively manage our business,” said Bond. “The result is a plan expected to generate significant savings for the company, principally in fiscal 2007.”
The company said that savings would be generated from reductions in areas such as staffing, recruiting, relocation, consulting fees, sales related expenses and supplies, as well as travel. Virtually all of the savings measures should be in place by the end of the calendar year, the company added.
“This has been a difficult process, especially since it involves the displacement of some of our team members,” said Bond. “However, we would not be doing this unless we believed it was absolutely necessary.”
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By GlobalDataThe company currently employs 114,000 people worldwide, and plans to cut some 420 jobs, primarily management and management support staff, in the cost-cutting programme. A further 430 positions that are currently vacant will not be filled as part of the initiative. All affected personnel will be offered severance payments and outplacement assistance, along with an opportunity to apply for other jobs in the company.
Severance payments and other costs related to this initiative are expected to result in a charge to Tyson’s fourth-quarter earnings of between $10m and $15m, or $0.02 to $0.03 per share.
Tyson said that some steps had already been taken to make immediate savings, including delaying annual merit increases for qualified management and management support staff from July 2006 to January 2007. The company has also temporarily suspended the company match on its Stock Purchase Plan for salaried management personnel for the remainder of 2006.
