Fast Food Nation: What The All-American Meal is Doing to the World (21 page)

DURING THE
1970s
THE
cordial relationship between Monfort executives and workers at the Greeley slaughterhouse came to an end. The underlying source of conflict was straightforward. Monfort wanted to reduce labor costs, but its workers thought that wages should not be cut at a time when the company was earning profits and the nation’s annual inflation rate had reached double digits. In the midst of contract talks with Greeley workers in 1979, who were now represented by the UFCW, Ken Monfort purchased a slaughterhouse in Grand Island, Nebraska, from Swift & Company. Before handing over the plant, Swift shut it down and fired all of the workers, who also belonged to the UFCW. When Monfort took control of the slaughterhouse a few weeks later, he signed a sweetheart deal with the National Maritime Union — a group that had never before represented meatpacking workers and that quickly agreed to a large pay cut.

In November of 1979 the workers in Greeley went on strike. Monfort refused to meet their demands, and the dispute became ugly. The company began to hire scabs. Ken Monfort received death threats. Eight weeks after going on strike, the workers decided to return to their jobs without a contract, but riot police prevented them from entering
the slaughterhouse. When the company allowed workers back into the plant, many of them disobeyed supervisors and committed acts of sabotage. After a few months of industrial anarchy, Monfort closed the Greeley slaughterhouse and fired all its workers. The days of paternalism were over in Greeley. Ken Monfort was no longer a liberal Democrat. He had become a pro-business Republican.

In 1982 the slaughterhouse in Greeley reopened without a union, paying wages that had been cut by 40 percent. Former workers were not offered jobs. Instead Monfort transferred some employees from its Grand Island plant and hired new ones. Although Ken Monfort decided to follow IBP’s tough policy on labor unions, he strongly resisted the increasing consolidation of the meatpacking industry. During the early 1980s one independent meatpacker after another either went out of business or was purchased by a large corporate rival. In 1983, Monfort sued Excel — the nation’s second-largest beef processor — to prevent it from acquiring Spencer Beef, the nation’s third-largest beef processor. Monfort argued that the proposed acquisition would allow Excel to engage in predatory pricing and to reduce competition. A panel of federal judges ruled in favor of Monfort, but Excel appealed their decision to the U.S. Supreme Court. President Reagan’s Justice Department submitted a brief in the case — and argued on behalf of Excel, claiming it had every right to buy a rival company.

The Reagan administration did not oppose the disappearance of hundreds of small meatpacking firms. On the contrary, it opposed using antitrust laws to stop the giant meatpackers. In 1986 the U.S. Supreme Court overturned the earlier ruling and approved the merger of America’s second- and third-largest meatpacking companies. The following year, Monfort agreed to a friendly takeover by ConAgra. “It seemed to me that if the industry was going to be concentrated,” Ken Monfort explained, “there should be at least three large players instead of just two.” As part of the deal, he became a top executive at the company, head of the ConAgra Red Meat division, and his family received about $270 million in ConAgra stock.

By purchasing Monfort, ConAgra became the biggest meatpacker in the world. Today it is the largest foodservice supplier in North America. In addition to being the number-one producer of french fries (through its Lamb Weston subsidiary), ConAgra is also the nation’s largest sheep and turkey processor, the largest distributor of agricultural chemicals, the second-largest manufacturer of frozen food, the second-largest flour miller, the third-largest chicken and pork processor,
as well as a leading seed producer, feed producer, and commodity futures trader. The company sells its food under about one hundred consumer brand names, including Hunt’s, Armour, La Choy, Country Pride, Swiss Miss, Orville Redenbacher’s, Reddi-Wip, Taste O’Sea, Knott’s Berry Farm, Hebrew National, and Healthy Choice. Although few Americans have heard of ConAgra, they are likely to eat at least one of its products every day.

Twenty years ago, ConAgra — a combination of two Latin words whose intended meaning is “partnership with the land” — was an obscure Nebraska company with annual revenues of about $500 million. Last year ConAgra’s revenues exceeded $25 billion. The company’s phenomenal growth over the past two decades was driven by the entrepreneurial spirit of its longtime chief executive, Charles “Mike” Harper. When Harper took over ConAgra in 1974, it was losing money, the market value of its stock was $10 million, and the value of its debt was $156 million. According to the company’s official history,
ConAgra Who?
(1989), Harper promptly instituted a new corporate philosophy. “Harper told each general manager that he’d been given a bag of money,” the company history explains, “and that at the end of the year he’d be expected to return it – plus a little extra.” He gave each of his top executives a personalized, inspirational plaque. On it was a cartoon of two vultures sitting in a tree. “Patience, my ass,” one vulture says to the other. “I’m gonna go kill somebody.”

The intense pressure to return a bigger bag of money every year has prompted a number of ConAgra employees to break the law. In 1989, ConAgra was found guilty in federal court of having systematically cheated chicken growers in Alabama. During an eight-year period, 45,256 truckloads of full-grown birds were deliberately misweighed at a ConAgra processing plant in the state. ConAgra employees tampered with trucks and scales to make the birds seem lighter. The company was forced to pay $17.2 million in damages for the fraud.

In 1995, ConAgra agreed to pay $13.6 million to settle a class-action lawsuit that accused the company of having conspired with seven other firms to fix prices in the catfish industry. For more than a decade, ConAgra executives allegedly spoke on the phone to, or met at motels with, their ostensible rivals to set catfish prices nationwide. According to the plaintiffs in the case, ConAgra’s price-fixing scheme gouged independent wholesalers, small retailers, and consumers.

In 1997, ConAgra paid $8.3 million in fines and pleaded guilty in federal court to charges involving wire fraud, the misgrading of crops,
and the addition of water to grain. According to the Justice Department, ConAgra cheated farmers in Indiana for at least three years by doctoring samples of their crops, making the grain seem of lower quality in order to pay less for it. After buying the grain at an unfair price, ConAgra employees sprayed water on it and thereby fraudulently increased its weight, then sold it and cheated customers.

HAVING BROKEN THE UNION
at the Greeley slaughterhouse, Monfort began to employ a different sort of worker there: recent immigrants, many of them illegals. In the 1980s large numbers of young men and women from Mexico, Central America, and Southeast Asia started traveling to rural Colorado. Meatpacking jobs that had once provided a middle-class American life now offered little more than poverty wages. Instead of a waiting list, the slaughterhouse seemed to acquire a revolving door, as Monfort plowed through new hires to fill the roughly nine hundred jobs. During one eighteen-month period, more than five thousand different people were employed at the Greeley beef plant — an annual turnover rate of about 400 percent. The average worker quit or was fired every three months.

Today, roughly two-thirds of the workers at the beef plant in Greeley cannot speak English. Most of them are Mexican immigrants who live in places like the River Park Mobile Court, a collection of battered old trailers a quarter-mile down the road from the slaughterhouse. They share rooms in old motels, sleeping on mattresses that cover the floor. The basic pay at the slaughterhouse is now $9.25 an hour. Adjusted for inflation, today’s hourly wage is more than a third lower than what Monfort paid forty years ago when the plant opened. Health insurance is now offered to workers after six months on the job; vacation pay, after a year. But most of the workers will never get that vacation. A spokesman for ConAgra recently acknowledged that the turnover rate at the Greeley slaughterhouse is about 80 percent a year. That figure actually represents a decline from the early 1990s.

Mike Coan candidly discussed the whole subject during a 1994 interview with
Business Insurance
, an industry trade journal. At the time, he was the corporate safety director of ConAgra Red Meat. “There is a 100 percent turnover rate annually,” Coan said, in an article that applauded Monfort’s skill at keeping its insurance costs low. Another
ConAgra meat executive agreed with Coan, noting that “turnover in our business is just astronomical.” While Monfort did keep some long-term employees, many slaughterhouse jobs needed to be filled several times every year. “We’re at the bottom of the literacy scale,” Coan added; “… in some plants maybe a third of the people cannot read or write in any language.”

During a federal hearing in the 1980s, Arden Walker, the head of labor relations at IBP for the company’s first two decades, explained some of the advantages of having a high turnover rate:

Far from being a liability, a high turnover rate in the meatpacking industry — as in the fast food industry — also helps maintain a workforce that is harder to unionize and much easier to control.

For more than a century, California agriculture has been dependent on migrant workers, on young men and women from rural villages in Mexico who travel north to pick by hand most of the state’s fruits and vegetables. Migrant workers have long played an important role in the agricultural economy of other states, picking berries in Oregon, apples in Washington, and tomatoes in Florida. Today, the United States, for the first time in its history, has begun to rely on a migrant industrial workforce. Thousands of new migrants now travel north to work in the slaughterhouses and meat processing plants of the High Plains. Some of these new migrants save their earnings, then return home. Some try to establish roots and settle in meatpacking communities. And others wander the country, briefly employed in one state after another, looking for a meatpacking plant that treats its workers well. These migrants come mainly from Mexico, Guatemala, and El Salvador. Many were once farm workers in California, where steady jobs in the fields are now difficult to find. To farm workers who’ve labored
outdoors, ten hours a day, for the nation’s lowest wages, meatpacking jobs often sound too good to be true. Picking strawberries in California pays about $5.50 an hour, while cutting meat in a Colorado or Nebraska slaughterhouse can pay almost twice that amount. In many parts of rural Mexico and Guatemala, workers earn about $5 a day.

As in so many other aspects of meatpacking, IBP was a trailblazer in recruiting migrant labor. The company was among the first to recognize that recent immigrants would work for lower wages than American citizens — and would be more reluctant to join unions. To sustain the flow of new workers into IBP slaughterhouses, the company has for years dispatched recruiting teams to poor communities throughout the United States. It has recruited refugees and asylum-seekers from Laos and Bosnia. It has recruited homeless people living at shelters in New York, New Jersey, California, North Carolina, and Rhode Island. It has hired buses to import these workers from thousands of miles away. IBP now maintains a labor office in Mexico City, runs ads on Mexican radio stations offering jobs in the United States, and operates a bus service from rural Mexico to the heartland of America.

The Immigration and Naturalization Service estimates that about one-quarter of all meatpacking workers in Iowa and Nebraska are illegal immigrants. The proportion at some slaughterhouses can be much higher. Spokesmen for IBP and the ConAgra Beef Company adamantly deny that they in any way seek illegal immigrants. “We do not knowingly hire undocumented workers,” an IBP executive told me. “IBP supports INS efforts to enforce the law and do[es] not want to employ people who are not authorized to work in the United States.” Nevertheless, the recruiting efforts of the American meatpacking industry now target some of the most impoverished and most vulnerable groups in the Western Hemisphere. “If they’ve got a pulse,” one meatpacking executive joked to the
Omaha World-Herald
in 1998, “we’ll take an application.”

The real costs of this migrant industrial workforce are being borne not by the large meatpacking firms, but by the nation’s meatpacking communities. Poor workers without health insurance drive up local medical costs. Drug dealers prey on recent immigrants, and the large, transient population usually brings more crime. At times, the meatpacking firms have been especially brazen in assuming that public funds will cover their routine business costs. In September of 1994, GFI America, Inc. — a leading supplier of frozen hamburger patties to Dairy Queen, Cracker Barrel Old Country Store, and the federal
school lunch program — needed workers for a plant in Minneapolis, Minnesota. It sent recruiters to Eagle Pass, Texas, near the Mexican border, promising steady work and housing. The recruiters hired thirty-nine people, rented a bus, drove the new workers from Texas to Minnesota, and then dropped them off across the street from People Serving People, a homeless shelter in downtown Minneapolis. Because the workers had no money, the shelter agreed to house them. GFI America offered to pay the facility $17 for each worker and to donate some free hamburgers, but the offer was declined. The company’s plan to use a homeless shelter as worker housing soon backfired. Most of the new recruits refused to stay at the shelter; they had been promised rental apartments and now felt tricked and misled. The story was soon picked up by the local media. Advocates for the homeless were especially angry about GFI America’s attempt to misuse the largest homeless shelter in Minneapolis. “Our job is not to provide subsidies to corporations that are importing low-cost labor,” said a county official.

The high turnover rate in meatpacking is driven by the low pay and the poor working conditions. Workers quit one meatpacking job and float from town to town in the High Plains, looking for something better. Moving constantly is hard on their personal lives and their families. Most of these new industrial migrants would gladly stay in one job and settle in one spot, if the wages and the working conditions were good. The nation’s meatpacking firms, on the other hand, have proven themselves to be far less committed to remaining in a particular community. They have successfully pitted one economically depressed region against another, using the threat of plant closures and the promise of future investment to obtain lucrative government subsidies. No longer locally owned, they feel no allegiance to any one place.

In January of 1987, Mike Harper told the newly elected governor of Nebraska, Kay Orr, that ConAgra wanted a number of tax breaks — or would move its headquarters out of Omaha. The company had been based in the state for almost seventy years, and Nebraska’s tax rates were among the lowest in the United States. Nevertheless, a small group of ConAgra executives soon gathered on a Saturday morning at Harper’s house, sat around his kitchen table, and came up with the basis for legislation that rewrote Nebraska’s tax code. The bills, drafted largely by ConAgra, sought to lower the state taxes paid not only by large corporations, but also by wealthy executives. Mike Harper personally stood to gain about $295,000 from the proposed 30 percent
reduction in the maximum tax rate on personal income. He was an avid pilot, and the new legislation also provided tax deductions for ConAgra’s corporate jets. A number of state legislators called Harper’s demands “blackmail.” But the legislature granted the tax breaks, afraid that Nebraska might lose one of its largest private employers. Harper later described how easy it would have been for ConAgra to move elsewhere: “Some Friday night, we turn out the lights — click, click, click — back up the trucks and be gone by Monday morning.”

IBP also benefited enormously from the legislation. Its corporate headquarters was located in Dakota City, Nebraska. One study has suggested that after the revision of the state’s tax code every new job that ConAgra and IBP created there was backed by a taxpayer subsidy of between $13,000 and $23,000. Thanks to the 1987 legislation, IBP paid no corporate taxes in Nebraska for the next decade. Its executives paid state income taxes at a maximum rate of 7 percent. Despite all these financial benefits, IBP moved its headquarters out of Nebraska in 1997, relocating in South Dakota, a state with no corporate taxes — and no personal income tax. Robert L. Peterson, the chairman of IBP, said that moving to South Dakota was like giving his employees a 7 percent raise. “The move shows you how ungrateful corporate tax-break beneficiaries are,” Don Weseley, a Nebraska state senator, told the
Omaha World-Herald
. “They take whatever you give them and then, if there’s a better offer, leave you hanging and move on to the next best deal.”

IBP had been based in Nebraska since 1967. From its inception, the company that started the revolution in meatpacking — by crushing labor unions and championing the ruthless efficiency of the market — has made ample use of government subsidies. In 1960, Currier J. Holman and A. D. Anderson launched Iowa Beef Packers with a $300,000 loan from the federal Small Business Administration.