Things aren't looking so rosy for workers at the country's various meatpacking plants. Tyson Foods (NYSE:TSN) is one of several large meatpackers facing scrutiny from public health officials for their failure to curtail the spread of the virus among their employees.

Calculations from the Midwest Center for Investigative Reporting, local media, and governments confirm that Tyson has been linked to 4,585 workers in 15 states who were diagnosed with COVID-19. At the time those numbers were compiled, 18 of those patients had died. Such a concentration of cases speaks to the severity of the virus hotspots growing in and around these meatpacking facilities. The fallout for Tyson and its peers could be substantial if this persists.

When Tyson's second-quarter earnings were released recently, they showed a 9% decline in sales, evidence of a struggling business amid the pandemic. Even with the support of the White House, Tyson projects nationwide shortages and more uncertainty moving forward. The company announced May 11 that after the completion of testing at one of its plants in Portland, Maine, 51% of the 403-person team had tested positive for COVID-19.

Image Source: Getty Images.

Image Source: Getty Images.

Investors should note that Tyson, as well as meatpacking peers JBS S.A. (OTC:JBSAY) and National Beef (owned by Marfrig (OTC:MRRTY)), are seeing both a broad decline in the market as a whole and an outsized effect on the condition of their industry. 

The Tyson Foods drama

Union numbers can serve as an indication of the actual challenges Tyson and others face. The United Food and Commercial Workers International Union represents 250,000 meatpacking workers, and it has tabulated a list of thousands of cases in which packing workers were exposed to unsanitary conditions, despite companies' claims that they are working to sanitize entire facilities.

Of the more than 10,000 meatpacking workers who have contracted the virus, some 30 have died, the UFCW said in a statement. The union went on to oppose the use of a Defense Production Act order to mandate the opening of packing plants, saying it further puts workers at risk. 

There's no reason to doubt that Tyson and others are trying to protect their workers. But investors might wonder whether their efforts -- e.g., cleaning facilities, on-site testing, and attempts to issue masks and personal protective equipment -- are being implemented fairly, and whether they were introduced too late in the persistent pandemic crisis. 

An "uphill battle"

U.S. Secretary of Agriculture Sonny Perdue has applauded the "safe reopening of critical infrastructure meatpacking facilities across the United States." But Michael Haedicke, an associate professor at Drake University and a research sociologist, wrote for The Conversation recently that the coronavirus will overtake the industry. "Despite President Trump's reassurances that closed plants will reopen safely, I expect that the pressures of efficiency and limits on workers' ability to advocate for themselves will cause infections to persist," Haedicke wrote. "In meatpacking as in other industries, the pandemic has revealed how people who do 'essential' work for Americans can be treated as if they are expendable."

Scandal or no scandal, stay away from Tyson for now

Tyson in particular is likely to face more challenges that make it risky for any investor considering buying in. Of course, there is the ethical aspect of investing in companies that mistreat workers. Even beyond that, potential investors should scrutinize the nature of Tyson's post-pandemic business practices and the way it treats employees. The specter of legal action against Tyson and companies under similar scrutiny is possible going forward, given the scope of the scandal.