The Changing Face of Tyson Foods

Story By Barbara Young, Editor-In-Chief

Dick Bond, new president and chief executive officer of this Arkansas-based global food-business powerhouse, discusses the company’s outlook under his management in this exclusive report.
As the world’s largest commodity-based value-added provisions company with annual sales of $26 billion generated from a vast array of meat protein and prepared food products, Tyson Foods is an enviable marketer within the food-business realm. Although the Springdale, Ark.-based company’s roots are firmly planted in chickens, the tree that spawned that legacy cross-pollinated over the years to welcome other major center-of-the-plate meat proteins, including beef and pork. In the 1980s, Tyson pioneered value-added chicken by creating convenience foods for its retail and foodservice customers. That expertise enabled the company to add value to beef and pork by enhancing current product lines, expanding existing categories and creating new categories.
The firm’s products, marketed under its Powered by Tyson™ strategy, reach customers throughout the United States and more than 80 countries, thanks to an employee base of 107,000 team members responsible for operations at more than 300 facilities and offices in strategic locations throughout the world.
Tyson Foods dates back to its 1935 beginning as a poultry business under founder John Tyson , who sold live chickens on the open market. The company’s growth spurt was propelled under the leadership of his son Don, until the third-generation Tyson, also named John after his grandfather, took his turn at the wheel. Don Tyson stepped down as Tyson’s senior chairman the same year the company acquired IBP. John Tyson relinquished day-to-day responsibilities this year to concentrate on his duties as chairman of the board. The global affairs of the Tyson Foods business is in the hands of new leadership as of May 2006 — and his name is not Tyson. He is Richard L. “Dick” Bond, who, as president and chief executive officer, has responsibility for all operations and sales for the company.
“The new Tyson Foods is almost five years old now, and Dick has earned the opportunity to serve as our new chief executive,” John Tyson said in May. “He’s done an outstanding job of helping put the two companies [Tyson and IBP] together as we look forward to the progress our company will make under his leadership.”
In a recent one-on-one conversation, Bond discussed the future of Tyson under his guidance.
Five months into your new post, what do you know that you did not know at the outset about how to direct the future of Tyson Foods?
Going into the job, I believed our team would be willing to help make the tough decisions needed to improve our performance. However, I’ve learned our people are not only willing, but are anxious to do what it takes to return the company to profitability. For example, when I asked our management team to generate more than $110 million in cost savings, they came back with $200 million in recommendations. Our people are very competitive and very proud of Tyson Foods and our reputation as a leader in the food industry, and they want to see the company continue to win.
It’s also become more apparent to me just how much the person who serves as CEO has the opportunity to set the tone for the company. We have a great team, and I’m striving to foster an atmosphere of innovation, encouragement and inclusion, well as an intense focus on efficiency.
As John Tyson’s successor in charge of the day-to-day management of the company, is your role markedly different in its design or rather more inclusive in terms of responsibilities?
As CEO, as well as president, I now have full responsibility for the daily operation and direction of Tyson Foods. While we’re coming off a tough year, I’m excited about the opportunities we have to strengthen the profitability and the future of this company. I'm proud of the work our people are doing to turn the company around after a tough fiscal 2006. Their hard work is paying off. All of our business units have been trending in the right direction. Our cash flow is positive, and our debt is lower than it was just a few months ago.
We intend to continue to take a leadership role in addressing issues that affect our industry. In fact, this year I’m currently serving as Chairman of the American Meat Institute. We also plan to remain active in supporting charitable events and organizations in our plant communities, as well as the nationwide effort against hunger in this country.
In your view, what is the core strength of Tyson considering its evolution from a small regional operation into the global chicken, beef and pork enterprise that it is today?
I believe the core strength of this company is in our people and their ability to innovate. They’ve proven it over the years through the successful creation and marketing of value-added chicken, as well as the efficiencies and quality standards they’ve brought to the beef and pork business. These same skills and experience will continue to help Tyson Foods evolve, as we create more value-added foods, increase efficiencies and expand our international presence. Our efforts to innovate will also get a boost from our new Discovery Center scheduled to open in early 2007. This new R&D facility includes 19 development kitchens and a USDA-inspected pilot plant. We believe it will help bring new market-leading retail and foodservice products to life faster and more effectively.
New executives joined the Tyson team this year. Is there a concerted effort, in terms of management strategy, to recruit non-meat industry professionals to fill new and vacated positions? If so, how does this approach add value to Tyson’s strategic and tactical game plans? 
Tyson has historically maintained a very solid management team; primarily made up of meat- and poultry-industry professionals. This will continue to be the case; however, as we become more global and expand our production of consumer products, I also believe it’s important to infuse the company with the perspective and expertise of new executives who come to us from other industries. For example, Wade Miquelon [chief financial officer], Rob DeMartini [group vice president, consumer products] and Rick Greubel [group vice president, international] each have tremendous talent and bring their experience from other companies like Procter and Gamble, Gillette and Monsanto. I believe their involvement will benefit efforts to reach our strategic goals, which include increasing our production of value-added products and expanding our international presence.
What kind of company do you see in the Tyson looking glass?
As I recently noted at an investor conference, Tyson is the world’s largest producer and marketer of chicken, beef and pork, and an estimated 300 million times every day people around the world enjoy Tyson products. We’re going to leverage our scale to create long-term, sustainable shareholder value. One of the ways we’re going to do that is by thinking across channels, across customers and across proteins. Examples include the possibility of selling some new foodservice products to club stores or marketing a product originally developed for school cafeterias to retailers.
We see ourselves as a value-added food company with a commodity base, and we think this works to our advantage because we can internalize raw materials for our further-processed products. For example, 70 percent of the company’s mix of poultry products is value-added with such items as chicken nuggets, breaded strips and hot wings.
Tyson is also the leading supplier of protein to the foodservice business. For example, Tyson products are used by thousands of schools across the country, including 95 of the 100 largest districts. The company is also one of the largest U.S. makers of pizza crusts and flour and corn tortillas.
What are some operating challenges that must be tackled?
The commodity side of our business needs to be cost-efficient and cost-conscious at all times. We recognize we compete on price in this business. We probably won’t always be the lowest price, but we need to be close.
What strategies define various business segments, and how are they being addressed?
Product development is a highlight of our consumer products channel. Earlier this year the company launched 100-percent All Natural Marinated Fresh Chicken, which contains no artificial ingredients. Tyson has also started producing Certified Angus Beef® brand natural beef and Star Ranch™ natural Angus beef for retail and foodservice customers. In addition, the company is offering consumers two new convenience-driven product lines. They include Trimmed and Ready™ fresh chicken, which is hand-trimmed and ready to cook, as well as individually wrapped, boneless chicken breasts for consumers who choose to freeze some of the product for later use.
We’ve also been promoting chicken and steak strips with bagged salads, since 44 percent of people who buy such meat items put them in salads. Tyson pre-cooked bacon also continues to increase in popularity and won the American Culinary ChefsBest™ taste award this year. It was judged the best-tasting bacon in the fully-cooked category.
Renewable energy is another area expected to add to our 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. The new unit is also examining the potential use of poultry litter to generate energy and other products.
What’s on tap concerning international market expansion?
The international market continues to provide growth opportunities for Tyson Foods. 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. To capitalize on this growth, we will continue to expand our export business and we'll also establish more operations in other countries.
We 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 with a poultry company in China. We expect to close on this transaction in fiscal 2007.
How is Tyson positioned in terms of its corporate citizenship outreach?
Tyson made a formal commitment to the fight against hunger in 2000, in partnership with the national hunger relief organization Share Our Strength. Since that time, the company has donated more than 41 million pounds of protein to food banks, food pantries and disaster relief organizations across the United States. In May of this year, we added a partnership with America's Second Harvest, committing to donating 10 million pounds of products over a three-year period to America's Second Harvest Food banks. We’ve already provided six million pounds.
Dick Bond bio
Education: Business administration degree from Elizabethtown College in Pennsylvania
Birthplace: New Jersey
Career landscape: Bond held positions at a number of companies early on, including Pet Inc. before joining IBP in 1980 as administrative assistant. He subsequently served in several other management positions at IBP, including president of IBP’s Fresh Meats Division, vice president of Boxed Beef Sales and group vice president of Beef Sales and Marketing. He was appointed an IBP president and named a director in 1995, becoming chief operating officer in 1997. He was named co-chief operating officer and group president for Tyson and joined its board of directors after the firm’s 2001 IBP acquisition. He later became president and chief operating officer until this year’s new post as president and chief executive officer.