Appendix #2. U.S. FOOD PACKERS PICKING UP MEXICAN EXPANSION ENTHUSIASM The money is looking greener on the other side of the border to U. S. fruit and vegetable packing companies worried by farm labor troubles and generally rising production costs at home. To move or not to move substantial components of the multibillion dollar industry to Mexico is the question being considered. With the Mexican Government offering tax credits, Mexican weather offering an earlier ripening season and Mexican labor offering substantial reductions in production costs, the obvious answer seems to be "Why not?" Eight U. S. companies already have made the move, although their Mexican operations remain relatively small compared to the giant U. S. packing industry--worth $15 billion per year in California alone. Latest company to take the step south of the border is Green Giant, whose headquarters is in Le Seur, Minnesota. The company has made a relatively modest $250,000 start at Huatabampo, in the potentially rich desert state of Sonora. In a joint operation with Hongos de Mexico, Green Giant will pack about 300 tons of mushrooms this year. But this is only a pilot project. If it goes well, Green Giant intends to buy into the Hongos operation and expand the investment to more than $1 million with a new plant at Guaymas, Sonora, 225 miles from the Arizona border. The plant would supply both Mexican and U. S. markets. Other companies already operating in Mexico are H. J. Heinz of Pittsburgh, Campbell Soup of Camden, N. J., California Packing of San Francisco, Corn Products of New York, General Foods of White Plains, N. Y., Gerber Products of Freemont, Michigan and Anderson-Clayton and Company of Houston. All were drawn to Mexico even before the end of the U. S. bracero program 18 months ago. The troubles that have resulted from the bracero cutoff may be the final straw, tipping the scales to a "go south" decision for other companies and expansion for those already here. The failure of local U. S. labor to step into the exhausting field work left by the barred Mexican workers is costing the companies money and adding to shortages caused by dwindling farmland acreage in rapidly urbanizing states Like California. The bracero cutoff expired just ahead of the last big U. S. tomato crop--uch of which was left to rot in the fields," said Herbert Wallace, Jr., General Manager of Heinz operations in Mexico. Statement on S. 1861 by J. H. Tony Price, Executive Vice President Texas Cotton Ginners' Association, Dallas, Texas This statement is presented for the Texas Cotton Ginners' Association, a trade organization representing the 1,004 cotton gin establishments in Texas with headquarters at 3724 Race Street in Dallas, by J. H. Tony Price, executive vice president of the Association. This Association strongly urges the Senate Subcommittee on Labor to amend S. 1861 in its present form so as to retain the exemption from overtime authorized in Section 13(b)(15) of the Fair Labor Standards Act (as amended), and to retain the partial exemption from overtime authorized in Section 7(c) for certain seasonal agricultural processing industries. This request for retention of the overtime exemptions is made for the following reasons: the conditions which originally justified the exemptions in Section 13(b) (15) and Section 7(c) still exist in the cotton ginning industry. Obviously, ginning is a seasonal process directly related to the harvest of the cotton crop. A cotton gin cannot be used for any other purpose than to separate lint from seed, and plants are idle up to 10 1/2 months per year. The rate of ginning is directly responsive to the harvest rate of the crop and ginning employers have no control over the volume of cotton received. Nor does the ginning employer have any control over weather interruptions. These two factors make inapplicable employment practices used in other industries and through the years have seriously eroded the quantity of labor supply available to do this seasonal, sometimes intermittent work. Cotton gins in the past have drawn heavily from labor on surrounding farms. With mechanization and the sharp drop in number of jobs on farms, this source of labor is no longer stable. Since the gins operate only a short period each year, only one or two employees are maintained on a yearround basis. Thus, the bulk of the labor currently used by cotton gins in Texas comes from "moonlighters" and the migrant labor stream. The latter also continues to dwindle, according to Texas Employment Commission reports. To sum it up, our industry is affected by a severe labor shortage that can be resolved by an increase in wages, or payment of overtime. Historically, the payment of overtime has been to encourage increased employment by dividing work into shifts. With the shortage of seasonal labor, this concept isn't applicable in the ginning industry. Less than 20% of the gins in Texas now operate with two shifts as opposed to over 65% five years ago. The decline in two shift operations is directly caused by the shortage of seasonal labor. page 2 Thus, the removal of overtime exemptions in the cotton ginning minimum wage structure would not accomplish the objective of this particular concept of overtime. The elimination of overtime exemptions would cause many gins co close conservatively, we estimate 15 to 20 percent of those now Operating in Texas and thus abolish extra income jobs for that segment of our work force which we describe as "moonlighters." This source of workers usually are individuals who supplement income from other seasonal obs or use vacation time from other full time jobs. The industry also employs many individuals 60 years old and older who would be affected by any change in employment practices. Also, it should be recognized that cotton ginning, unlike most other agricultural processing establishments, is a service business. Cotton gin nanagement does not take title to the commodity being processed. Ownership emains with the producer of the cotton throughout the process and is sold only after it is "ginned." History has shown that it is difficult, and often works hardships, for service industries completely responsive to customer lemands to operate on other than straight time labor arrangements. Under present ginning practices, labor costs based on overtime payments and minimum wages proposed in S 1861, would increase by at least 85%. Although there has been some misunderstanding on this point, the cotton in receives no federal government subsidy in any form. The payments hade to cotton producers do not pass through to the cotton gin and here should be no confusion on this point. Charges for ginning service would remain the same regardless of payments to customers from any -utside source. Much of the ginning industry's processing capability was installed 5 to 12 years ago and was designed to handle a much larger rop than now exists under federal programs. When the current Agricultural ct went into effect in the 1960s, ginning volume was automatically ecreased nearly one-third. On the basis that removal of overtime exemptions would not accomplish ny beneficial purpose to the employee, or employer, this Association espectfully requests the inclusion of exemptions now authorized under ection 13(b)(15) and Section 7(c) in any new amendments to the Fair abor Standards Act. We believe these exemptions are justified under resent conditions more so than they were when the Act was passed in 938 and amended in 1966. nank you, ## AFL-CIO MARITIME COMMITTEE THE VOICE OF MARITIME LABOR 100 INDIANA AVENUE, N.W.. WASHINGTON, D.C. 20001 ● (202) 347-5980 June 151973 The Honorable Harrison A. Williams, Jr. Senate Labor & Public Welfare Committee Dear Senator Williams: In 1958 the United States Government committed itself to wage equality for all Panama Canal Zone workers "Section 1 (b), Public Law 85-550, The basic wage for any given wage level will be the same for any employee eligible for appointment to the position without regard to whether he is a citizen of the United States or Republic of Panama." This section of the law was taken from the 1955 Memorandum of Understanding } between the United States and Panama. The 1966 Fair Labor Standards Act amendment that applied the minimum wage to the Panama Canal Zone constituted a policy commitment by Congress on minimum rates to be paid these employees. To exclude the Federal employees in the Canal Zone from the increases in the proposed minimum wage law would be tremendously demoralizing to them. These employees would feel that they are the victims of the deteriorating relations between the United States and Panama over the Canal Treaty issue. It is our understanding that the Government of the Republic of Panama supports the inclusion of the Canal Zone workers in the pending minimum wage legislation. We urge that you retain the amendment in the current Fair Labor Standards Act that applies full coverage to the workers in the Panama Canal Zone. 259B AFL-CIO MARITIME COMMITTEE THE VOICE OF MARITIME LABOR 100 INDIANA AVENUE, N.W., WASHINGTON, D.C. 2000 K202) 347-5980 The justifications for increasing the minimum wage for the workers in the Panama Canal Zone are the same as for the workers in the States. You will recall that during efforts to cover the workers in the Panama Canal last year, the State Department misled you by informing you that the Republic of Panama was opposed to increasing the wages for the workers in the Zone. After the Panama Canal Zone workers were excluded on the floor of the Senate from the main minimum wage bill, you were informed by the Republic of Panama that the State Department was in error and that they favored increasing the minimum wage for those workers. There are many charges emanating from the Republic of Panama that we discriminate against them. If we pass a minimum wage bill that, in fact, does discriminate against them we are adding credence to their charges. In 1955, the Treaty between the United States and the Republic stated that the citizens of Panama were to receive the same treatment as those from the States. |