Johnston helped usher in a new way at these companies: the Tyson way. Rather than get fat on the upswing, Tyson looked to strip out costs. The company minted millions of dollars in profit every year, but it was obsessed with cutting expenses whenever possible. Goodbye, coffee machine. Goodbye, extra travel expenses. Goodbye, extra secretary. It was the only way to survive.
As Tyson expanded, acquisition by acquisition, this culture spread and soon came to dominate the growing chicken business.
* * *
One of the slaughterhouses that Tyson bought during its acquisition spree was Valmac’s poultry plant in Waldron, Arkansas. After the deal was closed, employees at the plant began learning firsthand how Tyson did business. It was a hard lesson for people like Jerry Skeen.
Jerry Skeen had loved his job back in 1983, when Tyson bought the Waldron plant. A field veterinarian, Skeen was good at what he did, and he enjoyed it. He was the only field technician on staff who specialized in laying hens: the birds that laid eggs for the hatchery. Most other field men at the plant, like field veterinarian Tommy Brown, visited farms that grew so-called “broiler” chickens, bound for the slaughterhouse.
Skeen was jovial, a tall and gangly man with an easy way about him. He has a tattoo on his right arm that looks like a woman wrapped around a beer bottle, a leftover from his wild, younger days. Skeen had since settled down, and his wife is a devout Christian who liked the quiet life in Waldron. Skeen got along well with the farmers he visited. He got along with everyone. It was his nature. Only in retrospect was it clear that this joviality, this bond Skeen had with farmers, would end his career.
There was a change in tone that was unmistakable when Tyson’s Foods took over the Waldron plant. Tommy Brown noticed it right away. According to Brown, when Tyson’s manager over the field technicians arrived, he gave them one explicit instruction:
— Go out there and piss the farmer off! the manager bellowed at his field techs.
The bravado seemed bizarre to Brown, but the manager’s point was clear: Tyson’s field technicians needed to show quickly, and firmly, exactly who was in control. Tyson called the shots, not the farmers. If the company started to lose its grip, it might never be able to keep hundreds of farmers in line.
Skeen noticed the change play out in more subtle ways. The field technicians were asked to leave written tickets on the farms they visited. The idea was to outline all the things that needed improving. The tickets did more than simply replace the friendly advice that Skeen used to pass on to farmers in person. The tickets made a paper trail, a way for Tyson to prove farmers were doing things wrong if the company ever needed to cut them off.
Both Brown and Skeen noticed the overarching change that Tyson brought to their work. If anything went wrong, they were told to blame the farmer for it. It was inevitable that bad chicks would come out of the hatchery every now and then, inevitable that one batch of feed would be mixed improperly. Skeen used to acknowledge the slipups openly to his farmers. But under Tyson’s management, it was clear the mistakes could never be admitted. The story was told through the tickets the field men left behind, and the tickets blamed the farmer.
After a while, Skeen simply quit leaving the tickets. To hell with the company, he thought. I know how to do my job.
But ignoring Tyson’s direction wasn’t easy. Tension grew between Skeen and his managers until he became sure that he was close to being fired. He hated going into work every day. He found himself brooding and tense on Friday nights, already angry because he knew he had to go back to work Monday morning.
Still, Skeen refused to use the company’s playbook, blaming farmers for mistakes they hadn’t made and for bad results that were beyond their control. Skeen tried several times to get jobs outside of Waldron, but somehow they always fell through. He was supporting his family, and there was only one viable employer in Waldron. He was stuck, and the anger, the powerlessness, started to twist his insides. His wife worried he might have a stroke.
Then one day, the new manager at the complex, a young man named Gary Roper, called Skeen into his office. Roper informed Skeen he had two weeks left as a field technician. Skeen left the meeting assuming he’d been fired, but another manager told Skeen he could take a different job at the plant if he wished. Skeen ended up driving a forklift in the warehouse, for half the pay he made before.
For nearly a decade, Skeen ran the forklift and moved pallets of chicken products. He grew to enjoy the job over time. Skeen never had any hard feelings against Gary Roper for firing him, even many years later. Like a lot of people in Waldron, Skeen respected Roper as a hardworking family man. Skeen always felt like Roper was just doing his job. It wasn’t Roper’s decision alone to demote Skeen—it was just the way Tyson’s Foods operated. Besides, Skeen’s new job wasn’t so bad. At least he didn’t hate himself every morning as he headed into work.
* * *
When Tyson bought Valmac, it also bought the services of that company’s young head of operations, David Purtle. He was a man who spent his career in the poultry business, and he had almost a gut instinct about the way it worked. Within two years, Tyson promoted him to head of operations for the entire company.
Purtle’s job was to make sure all of Tyson’s complexes ran as efficiently as possible. If one complex spent more money to raise chickens than another, he had to know why, and how to fix it. But one thing made this hard to do. Even into the 1990s, each Tyson complex operated with a certain level of autonomy. Through its chain of acquisitions, Tyson Foods had stitched together a constellation of poultry plants with different management teams, making different products and raising different sizes of birds. It was nearly impossible to measure their efficiency because each complex had the freedom to choose what formula of feed it gave its farmers. Complex managers had their own special recipes, winning formulas they were convinced put the most meat on a bird’s bones. That made it hard for Purtle to figure out which managers were running a more efficient ship. Whenever he tried to judge their operations, they always blamed the feed mixes for the results.
Purtle put an end to it. He standardized the feed formulas that all of Tyson’s plants used. With all of them forced to use the same recipe, Purtle removed the most critical variable for their differing results. Now, Purtle made it clear to the complex managers, their management decisions alone accounted for how efficiently they ran. It was like putting each Tyson complex under a powerful X-ray, with Purtle able to see which ones could produce the most pounds of meat with the resources they were given. Slowly, a competition began between each complex. Managers were called to account for their shortcomings against complexes several states away.
This turned the managers’ focus outward, toward the networks of contract farms that provided the plants with chickens. Purtle thought the contract farms were the critical link in Tyson’s production chain that could keep the company efficient. And, dangerously, that was the one link in the chain where Tyson did not have direct control. Purtle wanted his complex managers pushing farmers to run as lean as possible.
The tournament system of Tyson’s chicken contracts was critical to this process. It eliminated the bad farmers and the older housing stock that wasted Tyson’s money as it fed millions of birds at each complex. During the 1990s, Purtle ensured that complex managers focused on running the tournaments among farmers, pushing the farms to upgrade equipment rather than toying with their feed formulas. And the results were clear. The company improved its efficiency across its complexes. The bad managers, and the bad farmers, were quickly rooted out.
By 1995, Purtle was executive vice president over all of Tyson’s operations, and he oversaw its network of poultry complexes and farms. He had no illusions about where this put him in the pecking order among Tyson’s executives. The marketing team ruled the roost at Tyson, because they generated all the company’s profits. Men like Buddy Wray and Don Tyson dreamed up the new products, the nuggets and tenders and boneless patties, and they signed the contract
s to sell them. Then the work was turned over to Purtle, whose job was to execute on the marketing team’s vision. He turned around and reverse-engineered Tyson’s farms and slaughterhouses to make the products.
Purtle saw firsthand how Tyson’s business model could remake small towns like Green Forest, Arkansas. Green Forest was an isolated hamlet in the Arkansas Ozarks in the mid-1990s, nobody’s destination for a daytrip. The decayed stone buildings along the north end of Main Street were cheerless and worn by the elements. There were a couple of antique shops, a bank and gas station, and a few remaining stores that catered to an economy built on the chicken business, like Country Rooster Antiques and Reliable Poultry Supply.
At Purtle’s direction, construction crews arrived in Green Forest from throughout the rural counties around town, hauling heavy equipment, machinery, and cement mixers. The crews worked seven days a week, and Purtle kept up avidly with their progress. He knew it was a priority for Don Tyson, and he didn’t want to disappoint.
The Green Forest plant was being transformed to make a product that would have been all but unrecognizable to consumers just fifteen years earlier. It was producing chicken-based products, not chickens. Purtle oversaw the installation of machinery worth millions of dollars that would mince, press, and reconfigure chicken meat, which was then breaded and partially cooked to form a handheld product called a “tender.” In a sign of the times, the product was to be sold exclusively to the hamburger chain Burger King.
Jealous of McDonald’s runaway success with the McNugget, Burger King felt that it needed a product to compete. Even though the business was built on charbroiled burgers, Burger King wanted diversity on its menu to draw customers through the door. Tyson landed the contract to make the tender, supplying both McDonald’s and Burger King as they battled for customers. Chicken was pushing its way onto more fast-food menus, even at chains that had resisted it for years.
Crews worked urgently to retrofit the Green Forest plant in time to meet Tyson’s delivery contract with Burger King. Construction crews tore out the old machinery and added new factory space in the slaughterhouse. They installed several new assembly lines, with conveyor belts and ovens and steel slides built into them, running up to three hundred feet long. The plant began operating full time, cranking out truckloads of chicken tenders shipped to Burger King restaurants nationwide. Consumers around the country began eating millions of chicken tenders without the foggiest idea that they were made in Green Forest. Although the businesses along Main Street in Green Forest didn’t do much better than before, the city became a remarkably profitable center for chicken production.
The Green Forest plant became the face of the modern poultry industry, and the foundation of a new American diet, where drive-through windows had replaced the dining-room table and chicken had become the cornerstone of fast-food menus. The plant reflected the poultry industry even in how it was built: from the marketing idea outward. It started with the contract to sell chicken tenders, and it reorganized production in small-town America to supply the new product on an industrial scale. In 1969 the average American ate about 39 pounds of chicken each year. By 1995 he ate an average 70 pounds of chicken a year, a transformation made possible, in part, by the efficiency and scale of Tyson’s factories.1
Projects like the plant in Green Forest generated millions in new revenue for Tyson, but they also served another purpose. The expensive complexes became the first line of defense against real competition, an increasingly high barrier to entry into the business of chicken production. Tyson was able to lock up the market through its very bigness, being one of the only companies that could viably deliver tens of millions of pounds of chicken a week to customers like Wal-Mart or Burger King. To compete with Tyson, an upstart would have to be willing to spend tens of millions of dollars or more to build plants like the one in Green Forest. With each new deal it signed, and each new plant it built, Tyson made that prospect increasingly unlikely.
* * *
In 1994 Tyson Foods made an acquisition that helped the company cement its place at the top of the chicken industry. It bought a relatively obscure company called Cobb-Vantress. Tyson didn’t win any additional market share through the deal, but that wasn’t the point. Buying Cobb-Vantress let Tyson absorb the very core of the chicken industry’s profits.
Cobb-Vantress was the premier poultry breeding company. It owned a flock of genetically elite birds that spawned the vast industrial flocks raised on farms around the country. Companies like Tyson bought hens from Cobb-Vantress to use as a kind of seed stock to supply their hatcheries. The exact genetic traits of elite birds were a closely guarded secret, and these were largely responsible for the historic drop in chicken prices of the last fifty years.
Cobb-Vantress and a handful of other companies used advanced breeding techniques to select birds that grew twice as fast as their ancestors, putting more meat on their bones for every pound of food they ate. The company created a breed of chicken that could be slaughtered at a far younger age, compressing the amount of time needed to raise it on the farm. In 1925, it took fifteen weeks to raise a chicken that weighed 2.2 pounds. By 1990, it took only about four weeks. Just as important, Cobb-Vantress developed a bird with a bigger breast, the ideal vehicle to make the highest-value meat.
These advances were the foundation of Tyson’s profits. Cobb-Vantress helped create the ideal industrial animal. The birds could grow comfortably in confinement, and their physiology could be changed in just a few short generations to meet the whims of the marketplace. If the chicken weren’t a willing biological partner, Tyson wouldn’t have been able to build a factory food system around it. But there were some problems as Cobb-Vantress developed a modern flock that met Tyson’s needs and supplied McDonald’s and Wal-Mart with meat. The demands of the marketplace eventually outstripped the chicken’s physical capacity to support them. The bird’s breasts became too big for its legs and skeleton to support. The animals grew so fast they couldn’t supply oxygen to all their tissue and muscle, causing fluid to build up in their body cavity. The chicken’s immune system suffered, and some birds simply keeled over after a few weeks. Many of these problems didn’t manifest themselves until the flocks of birds were on the farm and being raised in large numbers, puzzling farmers who were using the same techniques they always had, only to discover their birds were sick or dying off.
Over time, the genetic manipulation changed chicken meat itself. As the birds grew faster, their meat became more pale and soft, a problem that geneticists struggled for years to overcome. Ultimately, the softer, paler meat didn’t hurt the industry. Above all, the market demanded meat that was produced cheaply, at high volume, and on schedule. The taste of the meat was often covered over by breading, frying, and flavor additives.
With the purchase of Cobb-Vantress, Tyson Foods brought under its control the final component of chicken production: the animal’s very DNA. It owned the most coveted flocks of breeding birds, and it had now integrated the final chain of the marketplace. Now it controlled production from the genetics to the final shipment of breaded, partially fried McNuggets.
* * *
Tyson’s wave of acquisitions wasn’t easy on Jim Blair. He spent his time traveling to courtrooms from Delaware to North Carolina, arguing on Tyson’s behalf, fighting at every hearing to give the company an edge over competing bidders or owners who were reluctant to sell. Don Tyson was relentless in his search for new companies. It wasn’t just to win more market share. If a company looked like it might be vulnerable to takeover, Tyson felt obligated to buy it just to deny a competitor a chance to do so and get bigger at Tyson’s expense.
Between 1962 and 1997, Tyson Foods bought at least thirty-three companies. Some were relatively small, like Garrett Poultry; but deals like the Valmac purchase doubled Tyson’s size and made it the biggest chicken company in the United States by the mid-1980s.
In 1979 Tyson’s annual sales were $382.2 million. One short decade later the company had gro
wn almost sevenfold and was pulling in $2.5 billion a year.
As Tyson went on its buying spree, the company shaped the modern chicken industry into what it is today: a highly concentrated business controlled by four companies. By the mid-1990s, Tyson controlled about 25 percent of the U.S. chicken market and competed against just a handful of giant companies that controlled the rest. The top four chicken producers controlled over half the U.S. poultry business, supplying massive volumes of meat to the biggest national grocery chains and restaurants, like Wal-Mart and McDonald’s. The remainder of the market was controlled by smaller versions of Tyson, vertically integrated companies that were still enormous by historical standards. By 1992, 88 percent of all chicken in the United States was produced in the kind of large, heavily mechanized slaughterhouse that Don Tyson built in Springdale. In 1967, by contrast, just 29 percent of chickens came from big processing plants.
Jim Blair didn’t have much time to think about the way Tyson’s acquisitions were affecting the meat industry. He was working up to one hundred hours some weeks for Tyson, living in hotel rooms and spending his days arguing before judges. At one point years earlier, during the long buying spree, Blair had been all but exhausted, and as he and Don talked over their strategy, Blair looked up and asked a simple question.
— Don, what are we trying to do here?
Don looked at him, and he replied as if the answer were all but obvious.
— I want to be worth fifty million dollars by the time I’m fifty years old, he said.
Tyson’s father, John, always made sure he owned the newest Chevrolet in Springdale. Don, a child of poverty, seemed driven by the same calculus, just on a bigger scale. He aimed to acquire a great fortune, no matter the means.
Fifty million dollars would ultimately be a rounding error in Tyson’s personal worth. Over the next decade, Tyson Foods would grow by a factor of ten. This growth had an impact far beyond the fortunes of one corporation. As Tyson Foods bought competitors and solidified its grip over the nation’s poultry industry, it began to change rural America. The culture of one company became the defining culture of towns that Tyson Foods dominated. Tyson’s law became the law of the land in places like Waldron, Arkansas, where generation after generation would try to make a living in the system Tyson had created.
The Meat Racket: The Secret Takeover of America's Food Business Page 12