SEMO economist discusses Tyson shutdown in Dexter

Tyson Foods' decision this week to close its Dexter, Missouri, poultry production facilities effective Friday, Oct. 13, is "definitely a significant loss" for Stoddard County, economist David Yaskewich of Southeast Missouri State University said.

"By my calculations, if you compare the loss of 683 Tyson jobs to the employee base of the county, the layoff amounts to about 5% of the civilian workforce," said Yaskewich, who has been on SEMO's faculty since 2012 and is chairman of the university's Department of Accounting, Economics and Finance.

Tyson is not Stoddard County's largest employer.

According to the Dexter Chamber of Commerce, cabinet maker W.W. Wood Products, a family-owned firm based in Dudley, Missouri, has 978 employees.

A similar-sized workforce to Tyson is found at Faurecia Emissions Control Technologies' Dexter plant with 685 workers. FECT is an automotive parts manufacturer.

"Local suppliers supporting (Tyson's) operations is where we're going to see the bigger displacements at the individual level," Yaskewich said, a reference to vendors working with the world's second-largest processor and marketer of chicken, beef and pork.

According to www.bloomberg.com, Tyson exports the largest percentage of beef out of the U.S.

Along with subsidiaries, Tyson operates food brands such as Jimmy Dean, Hillshire Farm, Ball Park and State Fair.

"From the standpoint of economic development, this is a pretty big void created by this closure. We always cross our fingers and hope some type of home run could be hit and (another) large employer will come to the area. However, with the ongoing tightness in the labor market and the shortage of workers we've been reading about, this is not an area where we're seeing a lot of population growth. It's an uphill battle for local economic developers who must ask themselves if there are enough workers in their prime earning years who could really attract an employer. That's a difficult situation if you're in Dexter," Yaskewich said.

Jeff Pinkerton, chief economist with the state Department of Economic Development, recently told local leaders meeting in Perryville that the Southeast Missouri economy has "mostly flattened" since 2014 with regional growth mainly confined to Cape Girardeau, Perry and Scott counties. Economic growth in the three-county area is up nearly 9% in the past decade, but has "barely moved the needle" in the overall 14-county region which includes Stoddard County, Pinkerton said.

"Cape Girardeau, Scott and Perry counties have been strong (economically), but the larger Southeast region has been struggling, and we've got to start thinking more broadly. I think of it as a relay team. Cape Girardeau may be able to run the fastest split in the entire meet, but the rest of the region looks like it is struggling to keep up. We've got to change this," Rob Gilligan, president/CEO of Cape Girardeau Area Chamber of Commerce, said June 7.

Analysis

"When profit margins are shrinking, there are several ways a company can respond. A firm can grow its profits by, first, creating more value in the eyes of consumers. When it comes to a commodity such as poultry, there's only so much you can do in terms of impacting consumer interest aside from being more aggressive in advertising and hoping it has an impact. Second, you can also grow profits by leveraging prices, but that might be difficult for Tyson when there is market competition. The third thing that is done, and what Tyson did Monday, is cut costs by eliminating segments of the production process or production chain that may be less efficient," Yaskewich said.

On Monday, the same day it announced the coming closure of the Dexter facility and three other U.S. plants, Tyson Foods posted a third-quarter loss of $417 million on revenues of $13.14 billion, down from $13.5 billion at the same time in 2022.