Arkansas' Tyson Foods To Buy
Biggest US Beef Producer
For $3.2 Billion
By Carl Limbacher and Staff
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.
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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