Denison Darkens with an Era

By John Harrington, DTN Livestock Analyst

When Tyson Foods announced this week plans to close its slaughter-only plant in Denison, Iowa, virtually no one who had been paying attention to beef industry trends over the last few years was very surprised.

In short, the news fell like an old worn-out shoe long anticipated to drop.

Think of the Denison facility as an aging Tyrannosaurus with a bad cough. Once upon a time, these carnivorous dinosaurs ruled the country, devouring thousands of cattle each day and spitting out whole carcasses to be shipped to other locations for fabrication.

But when IBP perfected the concept of boxed beef in the 1960s, the temperature in their jungle surroundings began to slowly chill. The new business model put a great premium on integration and efficiency. Any production monster failing to somehow evolve in the direction of extended fabrication was pretty much doomed for extinction.

Killing approximately 2,200 steers and heifers per day, Denison has long served as a "feeder" plant for the large processing center in Dakota City. Though never the perfect design in efficiency (i.e., kill/fab/portion-control under one roof), I suppose Denison "worked" for an extended period of time because fed cattle supplies remained large enough to justify a more sprawling network of procurement.

In February of 2006, when Tyson announced that it was pulling the plug on both the kill-only at West Point, Neb., and the fab-only plant in nearby Norfolk, only zealots at the local Chamber of Commercial failed to perceive the forces in play. And when the same management team closed the out-of-position plant in Emporia, Kan., several years later, the discouraging handwriting for Denison was pretty much on the wall.

We all know that small towns these days are fighting for their economic lives, and I'm saddened that the cold broom of corporate efficacy will soon sweep so harshly through the streets of Denison and northwest Iowa.

Yet given the glaring problem of excess slaughter capacity vis-a-vis a cattle herd essentially in decline since 1996, I almost can't believe that the bad news has been postponed this long.