By Tom Polansek

CHICAGO (Reuters) – Tyson Meals Inc will shut two U.S. rooster crops with almost 1,700 workers on Could 12, the corporate mentioned on Tuesday.

The closures present that America’s largest meat firm by gross sales continues to be attempting to determine the right way to enhance its rooster enterprise which has struggled for years.

Tyson will shut a plant in Glen Allen, Va., with 692 workers and a plant in Van Buren, Arkansas, with 969 workers, in line with a press release.

Hen demand will shift to different crops as a part of a technique to make the most of the complete capability of every of its amenities, the corporate mentioned.

“The present scale and incapacity to economically enhance operations led to the tough determination to shut the amenities,” Tyson mentioned.

Arkansas-based Tyson mentioned final yr it couldn’t meet all of its rooster orders as a consequence of restricted provide and labor, and deliberate to extend manufacturing. The corporate beforehand bought rooster from different producers to fulfill demand.

Tyson incorrectly predicted final yr that demand for rooster can be sturdy in supermarkets in November and December, chief govt Donnie King mentioned on a quarterly earnings name final month. In January, the corporate changed the president of its poultry enterprise.

Closing factories is tough however justified as Tyson seeks to enhance efficiency, mentioned Arun Sundaram, senior fairness analyst at CFRA Analysis. He mentioned he was not stunned by the choice and expects Tyson to implement additional restructuring.

“There was numerous investor strain on administration to enhance rooster margins,” Sundaram mentioned.

Tyson shares had been barely decrease in afternoon buying and selling.

Total gross sales missed analysts’ estimates for the quarter ending Dec. 31, when whole working margins fell to three.5% from 11.3% a yr earlier. The corporate then mentioned the present quarter can be weaker than the tip of 2022.

“They’re determined,” mentioned Magaly Licolli, director of Venceremos, a company that defends poultry employees in Arkansas. “They’re attempting to economize, downsize and get others to do extra.”

Tyson had about 124,000 U.S. workers as of Oct. 1, together with 118,000 employees at non-commercial websites like meat crops, in line with regulatory filings. In October, the corporate introduced that it might transfer all firm workers to its headquarters in Springdale, Arkansas.

The United Meals and Business Employees Native 400 union, which represents workers on the Tyson plant in Virginia, criticized the choice to shut the power.

“These women and men risked their lives and the security of their households to maintain this manufacturing unit operational throughout the pandemic, and that is the thanks they get?” mentioned Mark Federici, president of UFCW Native 400.

Tyson mentioned employees who lose their jobs may apply for positions at different firm amenities.