It is always interesting when a company does something that just doesn’t make sense. Tyson’s announcement that it was closing its Chicago office is one of those decisions.
Last Wednesday, Tyson put out a press release announcing that it was closing its Chicago office and moving the positions to its global headquarters in Springdale, Arkansas. This affects about 500 people, including a large portion of Tyson’s marketing and innovation teams.
It is a big shift. Tyson has had a major presence in Illinois since it acquired Chicago-based Hillshire Brands in 2014.
According to Tyson, the move is to accelerate innovation. In the press release, CEO Donnie King is quoted saying “Bringing our talented corporate team members and businesses together under one roof unlocks greater opportunities to share perspectives and ideas, while also enabling us to act quickly to solve problems and provide the innovative products solutions that our customers deserve and value.”
The official statement is gibberish.
The move won’t bring the team together, for the simple reason that most of the Chicago employees will quit. People used to the vibrant life of Chicago won’t be moving to Springdale, the fourth largest city in Arkansas. It is hard to get talented MBAs to move to the great city of Cincinnati. Springdale? No.
So why did Tyson make this decision? It isn’t because financial results are terribly weak. Tyson had operating income of $3.6 billion in the first 9 months of 2022, up dramatically from 2021. Let’s consider some other options.
To accelerate creativity and innovation
No. Moving to Arkansas is not going to accelerate creativity. When you think of creative places, Springdale doesn’t jump to mind. Creative types live in New York, LA, Chicago, London, Tokyo, Miami and other vibrant cities.
To attract better talent
No. If you put the company in Springdale, you limit your selection of talent. Tyson can now choose from all the business leaders that are open to living in Springdale.
The trend has been just the opposite; in recent years, companies have been moving to urban centers to attract talent. Kimberly-Clark, Kellogg, McDonalds, Whirlpool, Abbott and other firms have all expanded in Chicago.
To shift to a less troubled city
No. Chicago has tax and crime issues, but Tyson isn’t moving to another urban center, like Boeing and Caterpillar recently did. It is moving to Arkansas.
To embrace remote work
No. Tyson isn’t moving to a remote format. Indeed, the company is going the other way; the firm will be expanding and renovating its headquarters building, a clear move to embrace in-person work.
To save money
Yes. This move will save money. That is guaranteed. Many of Tyson’s Chicago employees will quit. Real estate is cheaper in Springdale. Salaries, too, are lower in Arkansas.
Whatever way you look at it, this move suggests that Tyson’s outlook is grim. There are two possible scenarios.
If this is really a move to save money, then it indicates that Tyson is retreating from building brands with innovation and creativity and embracing life as a commodity meat producer focused on efficiency and low costs. This is a reasonable strategic choice, but it is not likely to lead to high margins and growth.
Of course, this might just be a bad decision, likely made by people who enjoy living in Arkansas and think the creative and dynamic business leaders of tomorrow will love that life, too.
If Tyson’s stock wasn’t already down so much this year I would sell.