Tyson Foods (NYSE: TSN) announced today that it will close its Ponca City, Oklahoma processed meats plant and shift its production to other company facilities. The poultry peddler announced this move as part of its continued attempts to improve its operating efficiency.
Reportedly, Tyson will attempt to find a buyer for the plant -- as it has been in contact with other companies but no sale has been completed.
The company expects to incur a non-cash charge to its second quarter earnings of roughly two cents per share. Dick Belsito, senior vice president of processed meats for Tyson, stated, "this is a very difficult decision because it affects the lives of our people, their families and the community; however, it is critically important to our business." Belsito continued, noting that the plant closure "is necessary to improve the viability of our overall processed meats operations."
Nearly 600 people will be impacted by the closure. Those affected will be given a 60-day termination notice, which will take place "gradually."
Tyson opened nearly 3% lower this morning, following up a run that had the shares trading at a year-to-date high near $10. It appears that the shares will retreat from this level and look for support in the $9 to $9.50 region. If the stock can weather the storm caused by the closure announcement, it could be well positioned for a run higher. The shares are performing a tenuous balancing act atop their 10-week moving average, which could help push the stock higher. The biggest hurdle for Tyson to clear is its 10-month moving average, which is descending through the $11 region. The last time shares of the chicken champ closed a month north of this trendline was last June.
Technically, it certainly appears that Tyson is poised for a short-term run higher, but its long-term prospects are shaky.
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Reader Comments (Page 1 of 1)
3-27-2009 @ 1:20PM
inteller said...
This is actually a win for Ponca City, their public services burden from the illegal population will go down.
3-27-2009 @ 1:33PM
BHarrison said...
One unequivocal FACT that comes out of all of this is that it is CRITICAL to have reasonable and prudent REGULATIONS and effective OVERSIGHT by competent and reliable regulatory agencies to maintain the INTEGRITY in our financial institutions and major corporations .
The use of "creative accounting practices" such as "off-the-books assets", etc. must be CRIMINALIZED with stiff penalties and prison sentences commensurate with the economic damages that are created.
"Creative business and accounting practices" (from Enron to AIG) are nothing moere than pseudo-sophisticated "marketing", or pyramid/Ponzi schemes, to suck in the naive investors to generate exorbitant salaries, bonuses, and "other commissions" for those in the financial industry.
The "standards" should be "Keep It Simple"; stick to standard, ethical business and accounting practices; and nothing major should go awry. Yes, there will be "less economic booms"; but it will be a "solid economy". this last phony economic boom is costing us OVER THREE TRILLION dollars. There's a lot to be said for the "slow and steady" in the long run.
Our lives and our economy will never be the same as it was, thanks to the "creativity" (sic. FRAUDS) of the old CEOs, and the vast majority of our Congressmen who enabled and allowed the undermining of our national economy.