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'Armand Hammer's Meat Plant in Nebraska'

May 09, 1987

On May 2 The Times published a letter by David T. Barry, a Los Angeles official of the United Food and Commercial Workers Union, "Armand Hammer's Meat Plant in Nebraska," in which he provided an erroneous and misleading picture of labor relations within Occidental Petroleum Corp.

Occidental is in many businesses: oil exploration and production; chemicals; coal mining; natural gas transmission; and meat processing. We deal with many different labor organizations across the United States. Overall, our relations with our employees and their unions are excellent.

Occidental has some 52,000 employees. We are party to nearly 40 labor contracts. Rarely has Occidental had a disagreement in a bargaining unit that has led to a strike. Armand Hammer, the chairman and chief executive officer of Occidental, places great importance on positive, progressive employee relations and he is committed to cooperative labor-management relations.

For example, Occidental's Island Creek Coal subsidiary recently entered into an innovative mutual agreement with the United Mine Workers of America, which provides greater job security to UMW members and stands as a very positive example of a labor agreement beneficial to both the company and the union.

Another Occidental subsidiary, IBP, Inc., operates 14 meat processing plants in eight Midwestern states. Only one of these plants, in Dakota City, Neb., is represented by the United Food and Commercial Workers Union. This one plant has a history of violent labor disputes dating back to the 1960s. It is the only one of IBP's 14 plants with a history of labor disputes. The others, some union and some non-union, have operated with no strikes and no labor strife, for more than 15 years.

Of IBP's 18,000 employees, some 2,500 are involved in the Dakota City dispute. Of these, a substantial number of the strikers have returned to work, having accepted IBP's wage package, which meets or exceeds the industry average.

Barry's letter made outrageous allegations about the working conditions and safety record at IBP. These are untrue. The IBP safety and illness record is as good or better than the rest of the meat processing industry. The union did not raise safety as a serious issue during months of negotiations at Dakota City. This leads to the conclusion that the union prefers to make spectacular but unfounded public charges rather than to represent its members by negotiating the real issues across a bargaining table.

The facts: This is a difficult industry in a difficult environment. Historically, the profit margin in the meat processing industry similar to ours has been very low. IBP, which has the largest market share in meat processing and the most modern plants, has been able to achieve over a long period of efficiency improvements, a margin that is only 1 to 2% before taxes. That means that for every dollar taken in revenue, the company actually earns only 1 to 2 cents in profits before taxes.

It is therefore demonstrably in IBP's interests to take care of its employees, since each sick day, each employee who resigns or leaves, costs the company money. Each time an employee must be replaced, the new employee must be trained, which is an investment by the company ill afforded in such a tight margin business. Of course IBP is profitable based on volume production. This is sustained because IBP takes care of its employees.

IBP must remain competitive or the company will close plants, even bankrupt itself, resulting in the loss of all 18,000 jobs. That means costs must receive constant scrutiny and waste must be eliminated. But never does IBP sacrifice worker safety, for that would be shortsighted management.

Barry's statements about specifics of the working conditions also are not true. For example, the floors in the meat processing area must be kept clean and as with virtually every aspect of the operation cleanliness is consistently monitored by federal inspectors and IBP's own worker safety committees. For instance, the Dakota City plant has 36 full-time employees assigned just to maintaining safe and sanitary floors in work areas.

Those IBP employees whose tasks demand are required to wear protective equipment, including steel-mesh gloves and aprons, safety helmets, plexiglass shields, earplugs, steel-toed boots, and safety glasses. New employees are given extensive safety training.

Barry's statements about cold work conditions are also untrue and misleading. Nearly all the employees, more than 97%, work in temperatures of 50 degrees or higher. The few who work in the meat coolers because of federal meat temperature standards, are provided proper clothing and equipment.

As for Barry's allegations about worker turnover, in fact until the strike the average length of employment at IBP's Dakota City plant was well over five years.

Finally, while Barry questions our philanthropic activities, Occidental is proud of its record as a corporate good citizen making numerous contributions to worthy causes around this nation and throughout the world. We are fortunate to have as our chairman, Armand Hammer, whose dedication to good works is well known, appreciated and respected in all quarters.

We believe that the labor situation at this one IBP plant is an aberration and it presents a picture of failed union leadership. Nevertheless, Occidental's corporate management, and the management of IBP, will continue in good faith in our attempts to resolve this unfortunate labor dispute.


Vice President

Employee Relations

Occidental Petroleum Corp.

Los Angeles

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