- On Monday America's largest chicken processor, Arkansas'
Tyson Foods, announced its plan to buy America's largest red meat producer,
Iowa Beef Processors (IBP), for $3.2 billion dollars, in a deal that has
trustbusters' eyebrows raised at even the Clinton Justice
Department.
-
- But the sheer size of the bargain that will make Tyson
the dominant meat producer in the U.S. isn't the only aspect of this
takeover
that might interest investigators.
-
- There's a curious history between these two corportate
giants that's certainly worth exploring, now that they've consumated a
relationship that began with another Tyson takeover in 1997.
-
- Back then it was Arkansas neighbor Hudson Foods, a rival
chicken processor with its own beef division, that Tyson had its eye on.
But Hudson wasn't interested - until the Clinton Agriculture Department
stepped in to police an E. coli outbreak at one of Husdson's plants.
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- On August 12, 1997, Hudson issued a recall for 20,000
pounds of frozen hamburger when 16 people were sickened - none fatally
- after eating undercooked burgers. Clinton Agriculture Secretary Dan
Glickman
later determined the meat was contaminated by a potentially deadly strain
of E. coli.
-
- The Arkansas Democrat-Gazette described what happened
to Hudson Foods next:
-
- "Agriculture Secretary Dan Glickman used strong
terms to characterize the Hudson investigation, which started with five
investigators dubbed a SWAT team. It culminated in a 'non-negotiable'
gauntlet
for Hudson to recall that product and close the Columbus plant - an action
that the USDA had no power to enforce.
-
- "The agency can only withdraw its inspectors, but
that has the same hostage holding results for companies who can't sell
their products without a government inspection seal." (Arkansas
Democrat-Gazette
- Aug. 31, 1997)
-
- By the time Glickman's crew was finished, Hudson had
to recall a crippling 25 million pounds of beef, costing the company its
largest customer, Burger King.
-
- The Wall Street Journal also took note of the Clinton
administration's heavy-handed tactics.
-
- "Hudson's rapid talispin has stunned some meat
industry
executives, who blame the record beef recall pushed by the Agriculture
Department for breaking the back of Hudson. .... 'What happened to Hudson
Foods doesn't make sense,' said Patrick Boyle, president of the American
Meat Institute, a meatpacking trade group. ..." (Wall Street Journal
- Sept. 5, 1997)
-
- The Journal also noted that Hudson's brush with
Glickman's
gang made Tyson's buyout bid an offer the company couldn't refuse.
-
- "Hudson and Tyson, which are neighbors in Northwest
Arkansas, had spoken casually about a merger 'for about ten years,' but
the decision to sell out now was prompted by the beef recall. ... The move
by Tyson of Springdale, Arkansas would enlarge its position as the nation's
largest poultry producer. ... The acquisition 'adds beautifully to Tyson's
distribution and production system,' said Leonard Teitlebaum, analyst at
Merrill Lynch & Co."
-
- The only problem was that Tyson didn't want to absorb
Hudson's beef-processing division - the now-shuttered operation that made
it necessary for Hudson to sell in the first place.
-
- Enter meatpacking giant IBP, which took the defunct beef
plant off Hudson's hands for what the Journal described as "an
undisclosed
amount."
-
- In the intervening years, IBP's "good deed"
seems to have been rewarded, often through the good graces of the Clinton
administration's Immigration and Naturalization Service.
-
- One way the beef giant had become dominant in its field
is by recruiting low-skilled non-union foreign workers to staff its
slaughterhouses,
where the work is always arduous and often dangerous. IBP had been actively
recruiting laborers from all over the world for years.
-
- A little more than a year after IBP helped facilitate
Tyson's takeover of Hudson, the Journal explored the company's practice
of hiring foreign workers under the headline: "With Help from INS,
U.S. Meatpacker Taps Mexican Work Force."
-
- "So why isn't the INS turning its searchlights on
IBP's Mexico campaign?," the Journal asked. "Why, instead, is
the federal agency hailing IBP as a model of cooperation?"
-
- "The answer reflects the complex interplay between
public policy, a company's economic needs and a government agency's
poltical
interests," reported the paper.
-
- Complex interplay? Basically, in 1996 the Clinton INS
offered the beef giant a program called Basic Pilot, which was designed
to help big employers of foreign labor avoid undocumented workers and
comply
with immigration laws.
-
- But in practice, Basic Pilot often meant that immigration
laws were ignored altogether. The meatpacking giant, which was hit by INS
raids six times between 1994 and 1997 (the year of the Hudson buyout),
hasn't had a single INS raid since.
-
- John Nathan, the INS official overseeing the program,
told the Journal that "the INS assumes a high degree of
compliance"
with Basic Pilot.
-
- And IBP's good fortune didn't end there. Turns out the
Clinton administration's Bosnian refugee resettlement efforts also helped
to keep labor costs down.
-
- Since 1995, for instance, the town of Waterloo, Iowa
- population 65,000 - has been swamped with 6,000 Bosnian refugees, many
of whom wound up working for the No. 1 local employer, IBP.
-
- Until recently, IBP's 2,000-strong Waterloo workforce
was one-third Bosnian. Most refugee families that settle there have a
family
member who at one time or another worked for the meatpacking giant.
-
- In fact, the meatpacking industry has a history of
recruiting
on the ground in Yugoslavia. But during the Clinton years, companies like
IBP haven't had to travel that far.
-
- Since 1995, the Clinton INS has resettled over 80,000
Balkan refugees, mainly Bosnian Muslims, primarily in America's Midwest.
The immigrant deluge has earned Iowa the distinction of being the only
state in the union with its own refugee bureau.
-
- So perhaps it's fitting that IBP should finally be
absorbed
by Tyson Foods, with its long history of financial backing of both Bill
and Hillary Clinton.
-
- Especially since it was the Clinton Agriculture
Department's
heavy hand that brought the two meat processing giants together in the
first place.
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