2005 Processor of the Year: Tyson Foods

Despite the pitfalls of the animal protein market, North America’s biggest food processor for years has been adding value to meats, tightly running its plants and staying close to its Arkansas values.

By Dave Fusaro, Editor in Chief

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While Tyson's past and future lie in animal protein, the company is not 100 percent meat. The company's Prepared Foods division makes pizza crusts, flour and corn tortilla products, appetizers, hors d'oeuvres, prepared meals, ethnic foods, soups, sauces, side dishes, specialty pasta and meat dishes as well as branded and processed meats. More than half of the division's sales are to foodservice, 44 percent are consumer products and 2 percent are international.

The company became one of the leading suppliers of fully-cooked meat toppings to the U.S. pizza industry with its 2001 acquisition of IBP. This growing business includes such toppings as pepperoni, Canadian bacon and sausage, and it recently introduced such nontraditional items as steak products (Philly and Angus steak, meatballs). They are sold to both foodservice and retail customers. Tyson is a major manufacturer of pre-made pizza dough and crusts and sells to all the major pizza chains.

Tyson acquired Mexican Original Inc., essentially a one-plant company in nearby Fayetteville, Ark., in 1983. According to the book Tyson, From Farm to Market, "The initial synergy with poultry was in mass purchases of corn for torillas and chicken feed, but Tyson product-development teams soon created the Crispito, a trademarket product of rolled tortilla with fruit or chicken-based fillings."

Tyson also has bought into and sold out of a number of food categories in the past. Its biggest foray probably was into seafood, beginning with the 1992 acquisitions of Arctic Alaska Fisheries Corp., Seattle, and Louis Kemp Seafood Co., Duluth, Minn. Added in 1995 were Star of Kodiak, Multifoods Seafood Inc. and JAC Creative Foods. At its height, the seafood group accounted for sales of more than $200 million annually.

"We got into seafood on the premise the [National Marine Fisheries Service] would change the quota rules, from an Olympics style fishing system [boats collectively can bring in a limited number of tons] to assigned quotas [with each boat having a limit]," says John Tyson. "It didn't work out that way, so we got out. Even commercial fishing is fishing; you never know if you're gong to catch something. We're better when animals are raised under a system."

Managing the future

While no major acquisitions appear on the horizon, according to John Tyson, the company's reduced debt does allow it to make some strategic buys. Even with sales of $26 billion and such a heavy concentration on animal proteins, there are gaps in the product line, the execs say.

"We could use more barbecue items, in both pork and beef," says Bond. "We could grow in cooked ribs."

A lot of effort will be expended simply on managing what they already have. As a smaller, family-owned company, Tyson once was known for its nimbleness. How does it keep that edge when it's the largest food company in North America?

"When you're as big as we are, 300 facilities and 114,000 employees, you have to guard against bureaucracy," warns Bond. "You have to trust people and encourage them to make decisions without always having to work their way up the chain of command."

"We have a simple mantra around here: Respond and do whatever the customer wants done and we'll figure it out later," says John Tyson. "You can see our commitment to R&D and innovation," he said, pointing out the window at the new $52 million Discovery Center under construction (see following story).

With a commitment to promote from within, Tyson has a formalized leadership program to identify capable people in the company. The program trains them, moves them around and into different work situations and then upward when the time is right. Data on employees' abilities goes into a company-wide database. "Dick, Greg and I spend three to four days per quarter looking at people, thinking about who should be moved up, making adjustments in the organization," John Tyson says.

Every employee should know what the company stands for. All of them get a "core values" card, and employees are expected to carry these with them at all times. "We are a company of people engaged in the production of food, seeking to pursue truth and integrity and committed to creating value for our shareholders, our customers and our people in the process," it starts. It then lists nine bullet points under the headings of "Who we are," "What we do" and "How we do it." An effort to bring common purpose to a large and growing company, the card now is printed in seven languages.

One thing you can count on is the continued influence of the Tyson family at Tyson Foods. While this has been a public company since 1963, the Tyson family owns about 36 percent of the economic interest and controls about 90 percent of the voting shares.

"This is a good time to be Tyson," says John Tyson, reflecting on the health of the animal protein markets, both domestically and internationally. "There are plenty of opportunities out there, and we have positioned ourselves well."



To access infographics on Tyson's sales and overall financial picture, click the Download Now button below.

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