Cargill, Tyson Foods, and JBS have all terminated contracts with Packers Sanitation Services Inc., or PSSI, since it paid fines of $1.5 million for child labor violations. Losing contracts to provide sanitation services to the meat industry A-list players might be enough to break PSSI’s long growth history.
Further, PSSI President and CEO Dan Taft opted to retire this week.
And breaking PSSI is going to hurt The Blackstone Group, which is the latest in a series of so-called private “equity funds” to own the 53-year-old contractor of sanitation services. Blackstone, the world’s largest private equity fund, acquired PSSI in 2018 for an undisclosed price from Leonard Green & Partners, which had paid $1 billion for it.
Blackstone’s slaughterhouse cleaning company paid the $1.5 million fine for employing more than 100 minor children, as young as 13, at 13 plants in Arkansas, Colorado, Indiana, Kansas, Minnesota, Nebraska, Tennessee, and Texas. The child labor jobs also embarrassed an industry that claims to put food safety first as the young people were found doing dangerous cleaning, often at night and involving such equipment as bone saws.
PSSI has depicted itself as a victim of the child labor problem while tightening up its hiring practices, which includes using the government’s E-Verify system. Job-hunting migrants coming across the Southern border are also said to be finding bogus identity documents.
There has been a 69 percent increase since 2018 in the number of children being employed illegally nationwide, and it has more than 600 child labor investigations underway, according to government reports.
PSSI was founded in 1970 with a customer in Joslin, IL. It grew steadily through mergers and acquisitions. Its private equity ownership today by Blackstone means little more than it’s been the subject of an old-fashioned leverage buyout. Private equity raised from individual and institutional investors buys companies and then runs them on the cheap, often for a quick sale.
Before its major customers began canceling their contracts with PSSI, the contractor claimed to be servicing more than 700 facilities and boasting “more than 16,500 skilled food sanitors, microbiologists, technical experts, equipment engineers, and safety specialists are committed to protecting people and brands by keeping USDA, FDA, and CFIA processing facilities clean, safe and audit-ready.”
Some PSSI contracts have been canceled by Cargill, Tyson Foods, and JBS with industry reports focusing on the facilities fined for using child labor. Also, Smithfield Foods reports its PSSI contracts are under review. PSSI cleans about one-third of Smithfield’s 45 plants.
In total, the companies that may sever ties with PSSI represent about 80 percent of the beef market and 60 percent of the national pork market when National Beef has included the mix.
“We will not tolerate the use of underage labor within our facilities or supplier network,” a Cargill spokesman said. JBS and Tyson also cited a commitment to eliminating child labor in their plants for canning PSSI.
In a letter to Congress, Tyson senior VP Dan Turton said: “Tyson Foods is committed to compliance with all labor laws and holding those we do business with to the highest standards of accountability,”
Tyson is looking at bringing more cleaning work in-house rather than using PSSI or other contract services.
(To sign up for a free subscription to Food Safety News, click here)
