Experts: Postville meat plant may have financial problems
By TONY LEYS • tleys@dmreg.com • August 23, 2008

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National observers of the kosher- food industry say reports of a brief work stoppage by rabbis at the Agriprocessors plant in Postville could be a sign of financial problems there.

Dozens of rabbis assist in the ritual slaughter of animals and oversee meat-processing to ensure it follows kosher rules. Plant leaders have acknowledged that several of the rabbis stopped working Wednesday morning amid complaints about their pay. The rabbis, who usually avoid commenting to reporters, made sure the local press knew about the dispute.


The plant has been the focus of controversy since May, when federal authorities raided it and arrested nearly 400 undocumented immigrants working there. It also faces charges of violating worker-safety and child-labor laws.

Joe Regenstein, a Syracuse University professor who works with the kosher-food industry, said he was surprised to hear that rabbis stopped work over a lack of pay. Regenstein said he has no inside information about Agriprocessors' operations, but he noted that the plant could not continue producing kosher meat without the rabbis' cooperation. Friction with them is a bad sign for company leaders, he said. "It certainly suggests they have at least a cash-flow problem."

Plant leaders have acknowledged that they face a challenge in rebuilding their business since the raid.

Menachem Lubinsky, a company consultant and spokesman, said the rabbis' concerns focused on the fact that they are making less money because the plant is not yet back to running at full capacity. Lubinsky described the incident as a "brief, 30-minute walkout to air their grievances." He said they returned to work after discussing the matter with plant executives and the leader of the New York-based rabbinical agency that employs them.

"The rabbis are, of course, hoping for a resumption of pre-May 12th production, which would again offer them the opportunities they had before," he wrote in an e-mail. "Agriprocessors is committed to make every effort to restore full production so that the rabbis can again enjoy the working conditions that attracted them to Postville in the first place."

When asked Friday about speculation that plant owners had a cash-flow problem, Lubinsky said he was unsure. "It may very well be the case, but when it comes to finances, they keep the cards extremely close to the vest," he said.

Company Vice President Chaim Abrahams said he has not been at the plant this week because he is on vacation, but he described conditions there lately as "business as usual."

Regenstein said he is skeptical of the company's claims that it is making steady progress in rebuilding its business. "My sense is they're covering up how badly they're bleeding," he said. He added that the incident is another reason why the company should fulfill its promise to hire an outside chief executive officer to take over from Sholom Rubashkin, son of the company's founder.

Although the company has denied most of the ethics allegations against it, some Jewish groups have urged observant Jews to consider buying meat from other producers. Company managers say they have not noticed a drop in demand, however.

The rabbis could not be reached for comment. They work for a New York agency run by Rabbi Menachem Weissmandl, who told the Jewish Star newspaper that Wednesday's incident amounted to a conversation between his employees and plant managers. He acknowledged that there have been delays in paying some of the rabbis, but he said that they said such things are commonplace in the industry.

The characterization of the situation as commonplace was disputed by Elie Rosenfeld, a spokesman for Empire Kosher, Agriprocessors' largest competitor in the poultry market. Rosenfeld said the rabbis at his company's Pennsylvania plant are paid through their agencies, but his company makes sure the payrolls are on time. He said he had never heard of rabbis walking off a job.

Food industry consultant Avram Lyons said he also had never heard of rabbis walking off the job in a pay dispute with a meatpacking plant. Lyons is working with the union trying to organize Agriprocessors' workers. He said kosher-plant managers usually work hard to keep the rabbis happy because the rabbis are much harder to replace than line workers. Wednesday's incident shows Agriprocessors' leaders "are in trouble," he said. "When your rabbis don't support you, the plant stops."

However, Lyons said he did not believe the incident indicates the plant is in immediate danger of closing. "They have lots of friends in lots of places who do not want this place to go under," he said. "These people have very deep pockets."


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