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Tyson seeks to transform industry

Tuesday, November 14, 2006

Efforts to generate additional revenue for Tyson Foods are about to include more rapid product development, new joint ventures in South America and China and the creation of a new renewable energy division, Tyson executives said Monday.

Eight senior executives from Tyson made presentations to analysts and investors at a webcast event in New York City.

The steps will transform Tyson into an even more competitive, successful company, Tyson CEO Richard L. Bond said in a statement to the Pilot-Tribune. Tyson is Storm Lake's largest employer.

Tyson plans to open a new, state-of-the-art research and development facility, which is expected to boost the speed and efficiency of new product development by the company. According to Wendy Davidson of Tyson Food Service, "Our new Discovery Center will help bring new market-leading retail and food service products to life faster and more effectively."

The new facility, which will open early 2007 in Springdale, Arkansas, "will quite simply be the best food R&D facility in the world," she said, noting it will include 19 research kitchens.

The international market continues to provide growth opportunities for Tyson Foods, including the pork products produced out of Storm Lake.

"World population growth and dietary changes will drive increased meat consumption over the next 25 years, as more people in developing countries trade starch-based foods for protein," said Rick Greubel of Tyson International. "To capitalize on this growth, we will continue to expand our export business and we'll also establish more operations in other countries."

Tyson officials expect to complete two joint venture transactions in South America in early 2007. One involves a poultry operation in Brazil and the other a beef operation in Argentina. The company is also working on a joint venture in China.

Renewable energy is another area expected to add to Tyson's bottom line in future years. A cross functional team, lead by Tyson Corporate Strategy and Development, has been exploring ways to commercialize the company's vast supply of animal fat into biofuels. This work has resulted in the creation of a new business unit called Tyson Renewable Energy, which is expected to move forward on initiatives to produce these biofuels.

Tyson leaders say that using by-products as fuel replaces the use of some hydrocarbons, reducing the company plants' net carbon emissions into the environment.

The company plans to develop more convenience-oriented chicken, beef and pork products - for example, the company is using a greater percentage of its own pork bellies to produce bacon.

Expected are fresh meat meal kits, pre-cooked dinner meats and oven roasted meats. Tyson wants to see its products spread from the traditional grocery meat case throughout frozen foods, shelf stable product aisles and deli meat area.

Plant consolidation and other measures have helped the business unit enhance operational efficiency, while pricing and value added initiatives are improving revenues, said spokesperson Noel White. Giving customers the option of "natural" meat and poultry products should further assist the financial picture, executives said.

Tyson was founded in 1935 with headquarters in Springdale, Arkansas, and purchased its Storm Lake plant in a merger with IBP Inc. Tyson is the world's largest processor and marketer of chicken, beef, and pork, and the second-largest food company in the Fortune 500. Tyson products are now consumed in 80 countries, and the company employs 110,000 people at more than 300 facilities.

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