Meat+Poultry - January 2019 - 32

INDUSTRY OUTLOOK

immigration policies that would allow more
foreign-born workers to enter the US, beef
processors will again struggle to run plants
at desired levels this year. Pork and chicken
processors will face the same issue.

SHIPPING HURDLES

The challenge of hiring and
retaining skilled laborers
to work in meat and
poultry processing plants
is expected to continue
in 2019 and beyond.

Two other clouds hanging over the industry
were present in 2018 and are likely to remain
this year. The first is the availability of skilled
workers to staff the industry's hundreds of
processing plants. This is the No. 1 issue facing
the beef industry, according to most of the
industry's 30 largest beef processors that this
author surveyed last November. Especially
revealing was that companies made it clear
that the shortage is hampering their ability to
operate at maximum efficiency. JBS USA CEO
Andre Nogueira cited access to and retention
of eligible, skilled labor to consistently
maximize operational efficiencies.
Brian Sikes, president of Cargill Protein,
said the labor shortage continues to be an
ongoing concern that Cargill is working hard
to address. "Changing immigration policies and
limited labor pools in many rural areas also
pose challenges. This combined with a strong
economy, competition from manufacturing as
well as agriculture, additional capacity coming
on line in the pork and chicken industry, and
unemployment under 4 percent all create
competition for both skilled and unskilled
labor," he said.
Labor continues to be the No. 1 issue,
said Brian Coelho, CEO of California cow
processor Central Valley Meats. "Being able
to retain a steady workforce is what keeps us
from reaching specific production goals and
company objectives."
Absent an enlightened development in

MEAT+ POULTRY | 01.19 | www.meatpoultry.com

©Renar - stock.adobe.com

32

LABOR PAINS

Another cloud is burgeoning transport costs
caused by a nationwide shortage of truck
drivers that appears to be worsening. In a
business where the old adage is "sell it or smell
it," getting meat and poultry to customers
and end users on a timely basis is critical.
Companies coped with the issue last year
but at significant added cost. The shortage is
likely to remain all year and continue to add to
processors' cost of doing business.
Should beef demand at home and abroad
remain strong, beef processors can expect to
repeat their record-breaking results of 2018.
Tyson Foods Inc., the industry's largest beef
processor in terms of sales, certainly thinks so.
It achieved in 2018 what seemed impossible
only a few years ago. It became the first beef
processor to make more than $1 billion in
a year. Its beef segment reported operating
income of $1.013 billion for fiscal 2018 ended
Sept. 29. This easily surpassed 2017's record
$877 million. It was also a stunning turnaround
from 2015 when Tyson Beef had a $66 million
operating loss.
The record profits meant the segment had
an operating margin of 6.5 percent, versus 5.9
percent in 2017. Tyson processed an estimated
6.895 million cattle in 2018 and made $148 per
head. It processed 6.760 million head in 2017
and made $130 per head.
Tyson's beef, pork and chicken results were
a microcosm of what the industry experienced
in 2018. Its chicken segment had income of
$866 million, versus $1.053 billion in 2017. Its
pork segment had operating income of $361
million, versus $645 million in 2017. But the
segment had better-than-expected results in the
fourth quarter (July-September), when pork
exports were hit by punitive tariffs and forced
wholesale pork prices lower in the US.
Tyson's Prepared Foods segment also
reported record operating income for 2018. It
made $868 million, versus $462 million in 2017.
This reflected lower raw material prices, which
other processed meat companies likely enjoyed
as well. 2019 promises more of the same.
http://www.meatpoultry.com
Meat+Poultry - January 2019

Table of Contents for the Digital Edition of Meat+Poultry - January 2019
