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Tyson Foods Pauses Facility Operations Due to Coronavirus

Zacks Equity Research

Tyson Foods, Inc. TSN is undertaking some concrete measures to ensure safety of its employees as the world continues to strive against the coronavirus menace. In this regard, the company announced that it will temporarily cease production at its beef facility located at Pasco, WA. This decision was caused by labor absenteeism, coronavirus cases as well as community concerns. The planned shutdown will enable Tyson Foods to test team members of the facility for COVID-19. Nevertheless, the members will be provided with compensation while the plant remains temporarily closed.

In an earlier press release, Tyson Foods had undertaken similar decision to halt production at its Logansport, IN-based production facility to enable COVID-19 testing for workers. Management expects to cease production in this particular facility on or before Apr 25. The Logansport facility which had suspended production for a day on Apr 20 for deep cleaning and sanitization has been operating at limited capacity since it reopened.

Earlier this week, Tyson Foods announced its decision to suspend production at its Waterloo, IA-based pork plant for an indefinite period. The decision was made as a result of worker absenteeism that led to reduced production amid growing coronavirus scares. Meanwhile, the workers will be undergoing COVID-19 testing.

We believe that the decision to pause production at these plants is likely to affect the overall production at a juncture where consumer demand is increasing in grocery stores. Nevertheless, the company’s other meat and poultry facilities are operational although a few of these plants are functioning at limited capacity due to labor absenteeism among other reasons.

Notably, Tyson Food has been implementing high-level deep cleaning and sanitizing at its facilities. Further, it has been installing infrared temperature scanners in several plant locations. Moreover, as social distancing is the key to contain COVID-19, it has installed dividers between workplaces to increase distance between employees. Additionally, Tyson Food’s workers are required to use personal protective equipment like face covers as a precautionary measure to contain the spread of the coronavirus.

Well, the coronavirus pandemic has jeopardized the global market and disrupted economic activities worldwide. Amid the crisis, several consumer staple companies remain highly committed toward employee protection, as part of which they have implemented various measures. These include travel restrictions, allowing work from home, calling off large gatherings, improving cleaning and sanitization as well as giving out bonus among others.

In the last month, Tyson Foods stated that it will pay around $60 million as bonuses to its 116,000 frontline employees and Tyson truckers in the United States. The eligible candidates will receive a bonus of $500 during the first week of July in addition to the other support announced by the company amid the pandemic. The company’s ‘thank you’ bonus is a response to workers’ commitment toward continued production to meet consumers’ demand for groceries in such challenging times.

Other consumer staple companies like Mondelez International MDLZ, Flowers Foods, Inc. FLO and United Natural Foods, Inc. UNFI, to name a few, are also giving out monetary benefits to their employees amid the coronavirus crisis.

Coming back to Tyson Foods, we note that shares of this Zacks Rank #4 (Sell) company have lost 27.2% in the past three months compared with the industry’s decline of 17.2%.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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