Private equity firm seeks to eliminate Iowa workers’ pensions

Pinnacle Foods, owned by the Blackstone Group, the world’s largest private equity firm, wants to eliminate workers’ pensions at its food processing plant in Fort Mason, Iowa. The workers, members of United Food and Commercial Workers Local 617, recently voted to authorize a strike to protect their pensions.

Pinnacle and Local 617 began negotiating a new contract in September. The old one expired in October, and the two sides agreed to continue negotiating while the old contract remained in effect. That agreement expired January 13. So far, there have been no reports of a strike or lockout.

“From the get go, the company said it wanted to eliminate pensions,” said Darin Boatman, president of Local 617 to the Daily Gate City. “Basically, they don’t want to fund it anymore.”

Boatman also said that the company has not offered anything in exchange for eliminating pensions: “No increase in pay, no 401(k) contribution. They just basically want to take it away,” he said to KHQA Channel 7 news.

Pinnacle is a New Jersey-based corporation that owns a number of national food brands including Birds Eye, Duncan Hines, and Log Cabin. Among other products, the more than 400 workers at the Fort Mason plant make Armour beef stew, beef hash, and chili. They also make Vienna sausages and Nalley’s chili.

Pinnacle Foods, which had net sales totaling $1.7 billion in the first three-quarters of 2012, was acquired by Blackstone in 2007 for $2.1 billion. Two years later Blackstone purchased the Birds Eye brand for $1.3 billion and folded it into Pinnacle’s product line.

Since acquiring Pinnacle, Blackstone has moved to reduce labor costs by closing and consolidating Pinnacle plants. In 2011 it closed a Birds Eye plant in Fulton, New York eliminating 270 jobs, many of which paid more than $17 an hour. It also closed a plant in Tacoma, Washington eliminating what the Seattle Times describes as 160 “stable, middle-class jobs.”

One of the products made at the Tacoma plant was Nalley’s chili, a Pacific Northwest regional brand. Pinnacle moved its production to Fort Mason.

Before it did so, Pinnacle and Blackstone received generous tax incentives and tax credits to finance an expansion of the Fort Mason plant, so that the plant could begin making Nalley’s chili and other products. In order to receive this public subsidy, Pinnacle and Blackstone agreed to hire 65 new employees at the expanded plant.

One of the tax credits Blackstone and Pinnacle received is called the Targeted Job Withholding Tax Credit, which allowed Pinnacle to divert to the City of Fort Mason a portion of the state income taxes that the company withheld from its workers’ paychecks. The city then matched every dollar diverted to it, and the combination of the diverted withholdings and the city’s match was used to pay for Pinnacle’s plant expansion. Pinnacle also received a rebate on sale taxes it paid to contractors and subcontractors for the expansion project.

Despite this generous public support, Blackstone and Pinnacle want to eliminate the pensions of the workers whose taxes were diverted to finance the plant’s expansion.

Blackstone isn’t just interested in eliminating retirement security for its Fort Mason workers. Blackstone’s founder, Peter Peterson, has been instrumental in the campaign to reduce US safety net programs.

According to Source Watch, Peterson is “a Wall Street billionaire who uses his wealth to underwrite PR campaigns against Social Security, Medicare, and Medicaid, citing concerns over the federal deficit.”

Peterson’s latest project is called Fix the Debt, a group of corporate executives, who are lobbying Congress to cut Social Security, Medicare, and Medicaid as part of their debt reduction program. Peterson and other Fix the Debt corporate executives want workers to lower their expectations about having a secure retirement.

However, workers at the Pinnacle plant in Fort Mason don’t seem to be ready to lower their expectations. A safe and secure retirement remains a priority for them.

“The company is wanting to take away our pension benefits,” said Boatman to KHQA. “That’s a very serious issue for us, because that’s what we look forward to live off of once we get older and retire.”

“I hope this (unanimous)  strike vote sends a strong message to the company and moves the negotiation process to a successful conclusion,” he added.

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