Aberdeen boosters continue to wait for New Angus to reopen the EB-5 visa investment money pit known as Northern Beef Packers on the south side of the city. Last we heard, New Angus bosses Doug Cooper and Keith DeHaan were planning to have the barely used plant running again by the end of 2015.
Meanwhile, 360 miles away, Tyson Fresh Meats sends a signal that New Angus faces a bad market. Yesterday Tyson shut down its 54-year-old beef slaughter plant in Denison, Iowa, putting 400 people out of work in a town of 9,800. Tyson says the market can’t support the Denison plant:
Tyson, the largest U.S. producer of beef, blamed the shutdown on too few cattle and too much slaughter capacity in the region [Greg Forbes, “Tyson Shuts Down Denison, Iowa, Displacing 400 Workers,” Sioux City Journal, 2015.08.14].
Tyson’s closure of the Denison plant comes after the national cattle herd increased by 1% over 2014, reversing a seven-year decline that coincided with the drawn-out construction, brief operation, and swift demise of Northern Beef Packers. Beef cows were up 3% at the beginning of July from one year ago.
However, those extra hooves still leave us well below the historical peak beef supply of 1995. This year’s beef bounce also isn’t outpacing the excess slaughter capacity, a portion of which Tyson created by expanding its beef plant in Dakota City, Nebraska, just 292 miles from Aberdeen:
In 2012, Tyson warned the aging Denison slaughter plant could close following completion of a $90 million expansion and modernization at Dakota City. That work included a new kill floor, which significantly increased the slaughter capacity at the Northeast Nebraska plant.
Two years later, Tyson officials reversed course and said they had no current plans to close Denison, which is the company’s lone slaughter-only beef plant. Most beef carcasses from there are sent to the 4,000-employee-plus Dakota City plant, where they are converted into boxed beef and related products.
A majority of the cattle slaughtered at Denison are purchased from independent cattle producers who actually live closer to Dakota City, according to the company. The cities are about 80 miles apart [link added; Forbes, 2015.08.14].
Even if New Angus can fix everything the previous management did wrong, existing regional slaughter capacity and beef supply may hamper New Angus from reopening. The New Angus business plan may not make much more sense now than Northern Beef Packers’ business plan did a few years ago.
p.s.: Tyson is treating its laid-off Denison workers better than Northern Beef Packers treated its employees. The Denison crew will receive 60 days of pay under the Worker Adjustment and Retraining Notification Act, as well as opportunities to transfer to other Tyson operations. Northern Beef Packers bailed into bankruptcy, leaving its laid-off workers high and dry and having to fight in court for the money they were due.