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Tyson Foods' $500M Investment in Automation Not Enough, More to Come

By Rich Duprey – Jul 10, 2020 at 10:35AM

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The meat processing industry could be transformed as COVID-19 leads the push to adopt more labor-saving technology.

Tyson Foods (TSN 0.12%) has spent half a billion dollars on technology and automation over the last three years, but the coronavirus pandemic revealed it needs to spend even more to protect workers and meet consumer demand for beef, pork, and poultry.

Because protein processing facilities present conditions for the spread of COVID-19, robotics that can replace workers may become more commonplace.

Chickens at poultry farm

Image source: Getty Images.

An industry ready for transformation

The U.S. Centers for Disease Control and Prevention said over 17,300 meat and poultry processing workers in 29 states were infected in April and May, and 91 died as a result. The meat processing industry employs some 585,000 workers and Tyson, which is the largest processor by sales, employs about 122,000 of them.

That caused the industry to briefly shut down to deploy safety equipment and adopt new health measures, though that resulted in temporary shortages in supermarket meat cases. It even caused Wendy's (WEN 0.43%) to run out of hamburgers at a number of its restaurants.

Because processing is a physically demanding and dangerous job, companies like Tyson have been automating as many of the processes as they can, but CEO Noel White says that's now likely to accelerate.

"I believe it's not only us as a company, I think the industry will continue to look for solutions through automation," he told analysts in May. "So I think it will likely accelerate from this point."

Tyson produces about one out of every five pounds of beef, chicken, and pork produced in the U.S. Among the technologies it is developing is an automated deboning system that will be able to handle the approximately 39 million chickens processed every week at its facilities.

Rich Duprey has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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