For Tyson Foods, the onset of the summer grilling season and consumers' return to restaurants has the beef, pork and poultry processing giant preparing for strong demand for its protein-rich offerings.
But the upbeat outlook is being tempered by understaffed processing lines at some of its 140 plants amid struggles to attract and retain new workers — a snapshot of the ongoing labor shortages rippling throughout the food industry and other sectors of the U.S. economy.
"We definitely have some plants that are struggling a little more than others" when it comes to finding enough workers, said Hector Gonzalez, Tyson's senior vice president of human resources. "If people aren't there, our plants won't run, so it is more challenging these days to see the kind of applicant flow necessary to fill the gaps."
To minimize the disruption, Tyson has identified ways to stabilize the company's workforce and improve retention rates — some of which it is already testing out. At least four plants are piloting a work schedule with fewer days but longer daily hours so staff can spend more time at home, or providing employees with 40 hours of pay for 36 hours of work. Tyson also is looking to move more shifts into days or weekdays, rather than Saturday and Sunday evenings, to accommodate workers' preferences.
"We definitely have some plants that are struggling a little more than others" when it comes to finding enough workers. "If people aren't there our plants won't run so it is more challenging these days to see the kind of applicant flow necessary to fill the gaps."
Senior vice president of human resources, Tyson Foods
The beef, pork and chicken processor has opened six hiring centers in the past six months, and has seven health clinics on or near a plant where team members and their families can get primary care. The average pay, including benefits, has steadily increased during the past five years for Tyson's frontline workers to $22 an hour.
Gonzalez said these incentives, coupled with the use of chatbots and referral incentives for its existing employees, has increased the number of people applying to work at Tyson.
“Those are all things that are really helping to shape an experience we think is a differentiated experience from our competitors and really limit the need for us to have to burn too many calories trying to replace help that we’re not losing,” he said.
Spokespersons from JBS USA and Foster Farms declined to comment. Smithfield Foods and Sanderson Farms did not respond to multiple requests for an interview.
Joe Sanderson, the CEO of Sanderson Farms, told analysts last month that he was optimistic the labor situation would improve in the coming months, but for now said it remains difficult in some places to find enough workers. "We're tight on labor. No question about it," Sanderson said. "We have more absentees and we could hire a bunch of people right now."
Worker shortage worsened by pandemic
U.S. meat and poultry processors are just a few of the many industries across the country struggling to find enough workers. Restaurants, retail, construction and manufacturing are among the additional categories being hit the hardest. Food companies such as Kraft Heinz and Post Holdings also have highlighted their own staffing challenges.
The Labor Department said U.S. job openings in April, the most recent month of data available, surged by nearly 1 million to 9.3 million by the end of the month. This is the highest monthly total since the report began in 2000. The number of people who voluntarily quit their jobs also notched a new record of 4 million in April, providing fresh evidence that workers are optimistic they can find other forms of employment.
In most cases, worker shortages vary from facility to facility, or by geography, rather than being a problem across all facilities run by the processors — and meat and poultry processors are no exception. Tyson, the country's largest chicken processor, estimates on certain days as many as 15% to 20% of its 120,000 member workforce doesn't show up — a figure that factors in a host of reasons, including people who were sick, had a dentist appointment or needed to attend a parent-teacher conference.
"This industry has faced a limited employee pool before COVID that's arguably smaller today," said Chad Hart, an Iowa State University agricultural economist. "This longer-term issue of finding workers has been there for a while. COVID did not create that. COVID just exacerbated it."
Meat and poultry processing is a challenging and physically demanding job. Workers in some cases are required to perform the same task over and over, or work with machinery, both of which can be dangerous, Hart said. Plants often tend to be located in rural areas close to where the animals are raised, increasing the difficulty for companies to attract and keep workers, he said.
Surge in meat and poultry demand
The difficulties beef, pork and poultry plants are facing to keep their ranks fully staffed come as consumers look to the category for protein, restaurants welcome more visitors, and in the case of chicken, the popularity of sandwiches further stokes demand. The summer grilling season also is under way with warmer weather sending more Americans outdoors.
Even with the surge in plant-based consumption, demand for meat has been on the rise. The USDA estimated in May the average American will consume 223.9 pounds of red meat and poultry in 2021, compared to 204.6 pounds a decade ago.
The animal slaughtering and processing industry employs more than 515,000 individuals, according to the North American Meat Institute, citing Labor Department statistics. The data shows more than 330,000 of those work in production occupations, such as production line supervisors and operating workers, food processing workers, and butchers and meat cutters. Almost 78,000 people work as slaughterers and meat packers, the Labor Department estimated last month.
NAMI, which represents companies of all sizes throughout the meat industry, said the top concern for all its members is labor. "COVID proved just how reliant our companies are on their workforce," said Sarah Little, vice president of communications with NAMI. "It's not just lip service. Without them, production stops."
The meat industry has moved aggressively to retain and attract workers, including offering higher wages, bonuses and other benefits. Some companies are even paying college tuition for children whose parents work at the company.
Recent financial boosts and the ongoing pandemic have made it harder for many businesses to find and attract people who want to work. Many potential workers are afraid to enter the workforce over fears about getting or spreading COVID-19. Some economists have said stimulus checks, tax refunds and unemployment benefits also provide a disincentive for people to look for work.
Little said in the case of the state of Kansas, for example, an unemployed individual receives roughly $788 in unemployment and federal benefits each week. An entry-level worker at a meat packaging plant takes home $630.
The Wall Street Journal cited a University of Chicago study that found 42% of those on benefits receive more than they did at their prior jobs, and the amount is higher when factoring in temporary health insurance offered through relief bills.
B.J. Motley, president of the United Food and Commercial Workers International Union Local 304A in South Dakota, said the challenges people face working at a meat processing plant means that companies need to make the job more attractive to lure and keep them.
"If you had a meatpacking plant paying just $17 and you have McDonald's or Wendy's paying the same amount, where will you go?" he said. "You'll go to the less stressful job, easier job."
Fabio Sandri, the CEO of Pilgrim's Pride, told analysts in late April that the labor market seems tighter than before COVID-19 when the economy was considered to be in full unemployment. "We're staffed less than we were even before the pandemic," he said. "We have continued to consider all options, of course, and are aggressively addressing the situation."
Motley said he doesn't think meat processors are doing enough to attract and retain workers across the U.S. even with increases in pay and other improvements. The union leader said companies praised their workers as "essential" and "heroes" during the height of the pandemic, but now as conditions have improved many have "turned their back" on these individuals.
The UFCW Local 304A is mired in a tense labor discussion over a new contract seeking higher wages and other benefits for 3,500 workers at a Smithfield Foods plant in Sioux Falls, South Dakota — one of the hardest hit by the pandemic last year, with 1,300 people being infected by the coronavirus. The plant is responsible for about 5% of the country's pork output.
"We're not being unreasonable. We're just letting the company know if you want to be competitive and you want to keep running, you have to make it more attractive for people to come down there, and you have to take care of your existing workers," Motley said. "We just don't understand why, especially now, when they can't retain workers, why [Smithfield] is just being unreasonable."
Making automation more enticing
The shortage of workers has made the use of automation — which was seeing widespread adoption even before the outbreak — a more enticing option for many meat and poultry companies.
Sandri said while Pilgrim's Pride, the No. 2 U.S. poultry producer, spent more than $40 million on salary increases in 2020 to keep and attract new employees, automation is one of the major tools that can help alleviate the staffing challenges.
The Colorado-based company, part of Brazilian meat giant JBS, plans to spend more than $100 million on automation during the next year. So far, the chicken processor has reduced 2,200 positions through automation, and has plans to potentially trim thousands more jobs going forward.
Tyson has increased its use of automation to boost efficiencies and improve the safety of its workers. Gonzalez said Tyson, which has invested more than $500 million in new technology and automation during the past three years, considers it as "one of our solutions to what we are experiencing today."
Even though more plants are using automation, technology often doesn't work as a replacement for human labor. It's conducive to turkey, chicken and pork processing where animal sizes and health tend to be more uniform, Little said, standardization that doesn't exist as often with cattle.
With worker shortages taxing operations, some meat and poultry companies have had to curtail output in order to maximize efficiency without sacrificing quality or safety.
The cuts come even as companies like Perdue Farms tout their competitive salaries and benefits compared to other poultry and meat producers as well as industries outside their space like manufacturing, foodservice and retail.
"Amid national labor challenges in our industry and beyond, we have made adjustments in some locations as needed, such as streamlining our product mix, to ensure our facilities can remain operational in a safe manner," Diana Souder, director of corporate communications and brand public relations at Perdue, said in an email.
The adjustments have reportedly caused Perdue in some cases to focus on producing the most in-demand items.
Hart at Iowa State said it's uncertain whether the steps being taken by Tyson and others to find workers is enough or if companies will need to become more creative in their approach.
“When you look at the aftermath of what we went through with the COVID crisis here, we’ve had a lot of folks drawn out of the employment cycle and now we are trying to get them back in. It’s hard to find an industry that is not struggling with hiring individuals right now," Hart said.
"It’s really hard to tell if the meat industry, how well their efforts are being successful right now just because everyone else is struggling with a very similar sort of issue.”