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2018 marked another record-breaking year for the U.S. poultry industry with over 41 billion pounds of chicken being marketed to Americans across the entire country.
While that increased demand is keeping chicken farmers busy, it is also raising some real concerns for chicken processors who need to hire and train more workers to cut, debone and package poultry products, tasks that have not been easily automated in the past. And in recent years, recruiting those workers has not been easy.
But now, automated technology is allowing us to drive efficiency, reduce waste and automate more tasks in the poultry processing line than ever before. And the timing couldn’t be better.
The U.S. poultry industry employs over 280,000 workers, but they could still use a few more good hands. Poultry processing plants are rarely fully staffed. The challenge is that fewer people are knocking on the doors of chicken processing plants than in the past.
One reason for that trend is the tight labor market in the United States today. The U.S. unemployment rate is now just 3.8 percent, the lowest since 2000 and expected to go even lower in the foreseeable future.
At the same time, the trained hands working on chicken processing lines today might not necessarily be there tomorrow. The annual turnover rate is estimated to be as high as 70 percent for the poultry processing industry.
Additionally, worker safety in poultry processing plants remains a top priority, and although poultry processors are reaching all-time industry lows for injuries and illnesses, those rates are still higher than the national average across all occupations.
The competition for the same workers is made fiercer due to the concentration of plants in the Southeastern United States: the top five chicken producing states are Georgia, Arkansas, Alabama, North Carolina and Mississippi. Spurred in part by the intense competition for labor, many companies have uprooted their plants and moved to neighboring states such as Nebraska and Arkansas.
That relocation driven by labor availability and costs demonstrates just how important labor is to the profitability of poultry industry. Recruiting and training workers for a job on the poultry line comes with a high price, so much so that the labor cost in the meat industry accounts for around 60 percent of the total variable cost of the products.
But now, a new wave of automation technologies is bringing the poultry processing industry into the future. Not only does such automation make workforces more efficient, but it also improves working conditions by eliminating repetitive tasks and cross contamination. When several people handle a contaminated chicken, the rest of the chickens become more susceptible to disease. Without a doubt, automation is key to reducing the incidence rates of injury and illness even further in the industry. Automation is a win-win solution for your workforce, making workers more efficient and reducing employee turnover.
Labor is a big challenge within the poultry industry that requires a lasting solution.
Greater automation is coming to the poultry industry, leading to less wasteful and more sustainable operations. The ends will soon begin justifying the means, particularly for segments like the whole bird market where slowing demand and steady supply has resulted in declining profit margins since the last recession in the United States. Chicken processors have had to rely on high chicken breast prices to compensate for the low margins for whole chickens within the industry.
But a chain is only as strong as its weakest link. If the weakest link in the poultry industry is the whole bird market today, then that is where the greatest need for innovation exists. Labor represents 60 percent of the cost, and wages continue to increase due to lower unemployment.
Automation combined with data analytics could help insulate poultry processors from the lack of and growing cost of labor. It could drive up margins for markets segments such as whole birds. It would strengthen operations and profits and make them more competitive within the industry as a whole.Without a doubt, chicken processors that increase profitability through automation can be more flexible with their pricing, lowering prices and growing demand for whole birds. If we see a resurgence in the whole bird market, processors with automated systems already in place will be the ones that profit the most.
Labor is a strategic challenge within the poultry industry that requires a lasting solution. Automation will not only provide a multifaceted solution to the labor challenge but also increase the profitability and allow the industry to continue to meet ever-increasing demand today and tomorrow.
Karl Deily is SVP, Chief Commercial Officer for Sealed Air. He leads the commercial organization, which includes the Food Care and Product Care businesses, and is responsible for the company’s Corporate Innovation and Sustainability strategy.