Meat producers have been hard hit by the COVID-19 pandemic, and Tyson Foods Inc. of Springdale is no exception.
When the first wave of the virus swept through meat-processing plants nationwide, Tyson and other companies came under criticism for what were alleged to be lax safety protocols at their plants, protocols believed to endanger employees who worked in proximity to each other. Tyson Foods (and other meat producers) temporarily closed several production plants in the spring after outbreaks, and in an advertisement that ran nationally in April, Chairman John Tyson warned about the vulnerability of the nation’s food supply chain.
The financial toll on Tyson hasn’t been tabulated, although the company reported direct COVID-19 costs of $340 million when it released its third-quarter earnings report last week. More than $110 million of that amount was spent on bonuses to 116,000 frontline workers in May and June.
Indirect costs to the company — from things such as lower production totals because of worker absences — were unknown. The company reported its chicken segment lost $120 million in operating income in the third quarter compared with a profit of $230 million in the same quarter a year ago.
There’s “no specific way to give you a number on indirect costs, and that’s why we haven’t called them out,” CFO Stewart Glendinning said during a conference call with analysts and investors. “Obviously things like absenteeism cause a huge amount of disruption.”
The number of positive COVID-19 cases in meat plants nationwide changes daily, but the U.S. Centers for Disease Control said in its July update that there were 16,233 cases in 239 meat-processing facilities up through May.
That number was just the facilities in 23 states that reported their statistics. Of those positive cases, 86 had died. Twenty-one states reported the ethnicity of their positive cases, and 87% of those 9,919 cases were minorities.
The CDC estimated that meat-processing plants employ 525,000 people nationwide in 3,500 facilities. In a partial update for the month of June, the CDC said the death total was 91 out of 17,358 cases.
The death and economic devastation wrought by the virus have led to concerns about a potential second wave when and if states relax business guidelines and schools reopen.
Tyson Foods announced a safety program July 30 in “an offensive” against the virus, as Chief Administration Officer Donnie King said. The program includes the hiring of a chief medical officer and 200 nurses and enhanced testing. Symptomatic employees will be tested, as will randomly selected ones and any who have been in contact with positive cases.
The company said it had tested 40,000 of its employees and fewer than 1% of them have tested positive for the virus.
Tyson Foods also bought 150 walkthrough temperature scanners and personal protective equipment for its employees, part of the $340 million price tag the pandemic has added to the company’s costs. The company has hired monitors to oversee social-distancing practices and regularly deep-cleans all employee areas.
Tyson Foods also installed plexiglas dividers on its processing floor, where social distancing is not as easily achieved when dozens of employees are cutting up chickens disassembly-line style.
During the company’s earnings conference call on Aug. 3, CEO Noel White was asked how the company was prepared for a possible second wave of the virus. White will step down as CEO on Oct. 3 and be replaced by current President Dean Banks. White will remain as executive vice chairman of Tyson’s board of directors.
“[W]e’ve really implemented what I would consider a cutting-edge monitoring program,” White said. “What we get from that is to ensure that we’re assessing the health of our team members and making sure that we know what’s going on in our plants, but also helps better understand what’s going on in the communities. That’s really been the key is knowing what’s going on in the disease load in the communities. And we’ve been very open about sharing that with public health officials to make sure that they see what we’re seeing, and they’re working with us.
“Also putting a lot of effort to educate and inform our team members about what we’re learning about the virus and how it spreads, and we’ve seen them be very responsive and respond positively to protective measures at home and in their communities. And so I would say we’re as prepared as we can be.”
The CDC said the infection rates indicate a “disproportionate burden” on minorities in the food-processing plants.
Tyson employs many minority workers. The CDC said that based on available reported data, 39% of workers are white, 30% are Hispanic, 25% are Black and 6% are Asian, yet the CDC reported that 56% of positive cases are Hispanic and 12% are Asian.
Domingo Garcia, the national president of the League of United Latin American Citizens, wrote a letter to Tyson in April demanding safety measures to protect workers after receiving complaints from Hispanic workers.
Tyson Foods opened its Springdale plant for a tour by health, government and other officials, including Garcia, in July. The company had reported 199 positive cases out of 1,102 employees at the Berry Street facility in June.
“We discussed our concerns and they allowed us to do an inspection of that Tyson plant in Springdale,” Garcia said. “We were pleasantly surprised about the employee safety regs. By and large we have seen significant improvements and reduction in positive COVID-19 cases and a definite reduction in fatalities from March, April and May. You’re shoulder to shoulder with two dozen workers sometimes, depending on the assembly line. We demanded that the lines be slowed down because the workers said they can’t space out unless they slow down the line.”
The U.S. Department of Agriculture set a cap of 140 chickens a minute on the production line in 2014 but a generous waiver procedure allows 175 birds when requested. The United Food & Commercial Workers Union, which represents meat-processing workers, including those at two plants in Arkansas, filed a federal lawsuit to set aside the waiver, which the suit said has resulted in 175 birds a minute allowed at 43% of poultry-processing plants in the United States.
A Tyson Foods plant in Dardanelle and a Wayne Farms plant in Danville have received waivers to process 175 birds a minute at those facilities. Tyson Foods, through a spokesman, did not comment on the lawsuit against the USDA waivers.
“While we’ve worked hard to avoid the supply chain disruptions experienced by our livestock suppliers and customers, our top priority has appropriately remained the health and safety of our team members,” White said during the conference call. “We’ve made substantial investments in COVID-19-related safety measures for our team.”