Congressman Faleomavaega announced today that he has called upon StarKist to do right by American Samoa’s workers. In a letter to Mr. Don Binotto, President and CEO of StarKist, Faleomavaega responded to the company’s recent announcement to eliminate the jobs and benefits of cannery workers employed at StarKist Samoa. Faleomavaega copied his letter to Senator Daniel Inouye, Governor Togiola, and Dongwon Chairman and CEO Kim Jae-Chul, and included a copy of his 2005 minimum wage statement before Special Industry Committee No. 26. The full text of the Congressman’s letter is included below.
Dear Mr. Binotto:
I am writing in response to StarKist’s recent announcement, effective January 1, 2009, to introduce alleged cost-saving measures in American Samoa by eliminating twenty full-time salaried positions; hourly employee pension benefits; seven paid holidays; paid vacation for hourly employees; and additional activities that benefit hourly workers currently employed at StarKist Samoa.
Like Governor Togiola, I have already requested a meeting with Dongwon Chairman and CEO Kim Jae-Chul who I had the opportunity to meet in South Korea. As a matter of courtesy, I am copying the Chairman on my letter to you because I believe it is important for him to understand American Samoa’s history with StarKist.
As you know, StarKist and Chicken of the Sea are first in line to ask for federal and local handouts and last in line to do right by their workers. For the past two years, my office worked to obtain a $33 million federal income tax break for both canneries at a time when the United States is faced with an unprecedented financial crisis. By the same token, the American Samoa Government offers both canneries local tax breaks, the terms of which I believe should be made public, as the people of American Samoa deserve to know how their taxes are being spent.
Given that StarKist and Chicken of the Sea are being subsidized by hard-working taxpayers, it is disappointing that in your new capacity as President and CEO you chose not to consult with our elected leaders before making a decision to layoff management and cut the benefits of hourly employees at your canneries in American Samoa. Rather, you chose to inform us of your decision only hours before your statement was made public. While you are not required to consult with American Samoa’s elected leaders, you also cannot have it both ways. On the one hand, you cannot request our assistance for federal and local tax breaks and, on the other hand, eliminate the jobs and benefits of our workers without the courtesy of having a discussion with us. Informing us beforehand of your intentions is of no consequence when you have already determined your course of action.
What is most troubling about your course of action is your reasons for it. In your public announcement, you stated that StarKist must eliminate the jobs and benefits of American Samoa’s cannery workers due to minimum wage increases and the uncertain federal tax treatments of your revenues, namely 30A tax breaks. Let me remind you that in StarKist’s pre-hearing statement submitted under oath to the U.S. Department of Labor’s Special Industry Committee No. 25, StarKist stated that “favorable local and federal tax treatment makes little difference to our canneries.” Having sworn under oath that tax breaks make little difference to your operations, it is dishonest for StarKist to now tell the people of American Samoa that it must cut the jobs of our Samoan workers due to the uncertainty of federal tax breaks.
For your information, the federal government does not owe StarKist, or any other private corporation, tax breaks to conduct business. As you can appreciate, the American taxpayer is fed up with bailing-out corporate fat cats, like the CEOs of your former parent companies, who paid themselves salaries and bonuses in excess of over $30 million per year while robbing their workers of decent wages. The American economy is collapsing as a result of this kind of corporate greed. This is why the days of extending tax credits for ten years at a time are long gone. Tax credits, if extended at all, will be extended for two-years at a time, as was the case with the tax credits extended by the 109th and 110th Congresses.
Regarding minimum wage, I am enclosing my 2005 statement before Special Industry Committee No. 26 so that you may have a better understanding of American Samoa’s relationship with the U.S. tuna fishing and processing industries. To be clear, from the day StarKist arrived in American Samoa some 50 years ago, StarKist has worked to suppress the wages of Samoan workers. In fact, before every Special Industry Committee convened by the U.S. Department of Labor to determine minimum wage rates for our workers, StarKist submitted testimony claiming that it could not afford wage increases even during times when the company was exporting billions of dollars of canned tuna from American Samoa to the United States. Because neither StarKist nor Chicken of the Sea could be trusted to do right by our workers, the federal government finally stepped in and increased wage rates for our hourly workers making less than the federal minimum standard. The increased wage rates you now pay are still less than the federal minimum standards and equate to an increase of only ten cents per hour over the course of the past ten years, or pennies on the dollar over the course of the past 50 years.
So, I would very much appreciate it if StarKist would stop hiding behind flimsy excuses about why you are cutting the jobs and benefits of our Samoan workers. Be truthful and tell our workers that the real reason you have to cut their benefits is due to corporate mismanagement and greed. If we begin from that premise, then perhaps we can find our way to the middle and resolve this situation in a manner that is mutually beneficial. For example, if you inform our people that you and your top management are willing to give up your paid vacation and pension benefits, and that your salaries will be also cut and some of your jobs will be eliminated, then I am sure that you will find that our Samoan workers will be willing to make similar sacrifices to help StarKist remain profitable in American Samoa. But, if you and your top management insist on retaining your benefits and your extravagant salaries, then you will not find the support you need as you attempt to manage StarKist under the terms of your two-year contract with Del Monte and Dongwon.
It is my understanding that as part of Dongwon’s purchase of StarKist, Chairman Kim had to retain a Del Monte/StarKist management team for a two-year period, and I question why this was the case. After all, Dongwon paid $363 million to buy StarKist and there should be no further reason for Dongwon to pay out additional money to a Del Monte/StarKist management team that now publicly admits that it must introduce cost-saving measures to keep StarKist Samoa afloat. If StarKist really must introduce cost-saving measures in American Samoa after having received $363 million from Dongwon, then either Del Monte misled Dongwon about StarKist’s worth, or StarKist is trying to take advantage of Chairman Kim and our Samoan workers by squeezing every last nickel out of us. I believe it is a combination of both and that your two-year management contract is just another example on the part of StarKist to continue a policy of having Samoan workers carry the burden of your corporate mismanagement and poor marketing initiatives that have led to StarKist’s unprofitability. I also believe that StarKist’s only loyalty is to its investors whose profits you wish to maximize at the expense of Dongwon and the people of American Samoa.
Since your loyalties lie elsewhere, I am hopeful that Chairman Kim will step in and accept our offer to come to American Samoa or San Diego to further discuss this matter. While I am aware of Governor Togiola’s media comments, I stand prepared to work with him and include him in our discussions.
Faleomavaega concluded his letter by stating, “At best, I am hopeful that Chairman Kim will offer up a course of action that is more respectful and appreciative of our Samoan workers who made StarKist the number one brand of canned tuna in the United States.”
STATEMENT OF THE HONORABLE ENI F.H. FALEOMAVAEGA
BEFORE SPECIAL INDUSTRY COMMITTEE NO. 26
U.S. DEPARTMENT OF LABOR WAGE AND HOUR DIVISION
REGARDING THE MINIMUM WAGE IN AMERICAN SAMOA
FAGATOGO, AMERICAN SAMOA
JUNE 20, 2005
I am very disappointed that StarKist is opposing an increase in minimum wage for cannery workers based on what it calls “guiding economic principles.” If you will recall, StarKist submitted identical testimony in 2003 to Special Industry Committee No. 25 and once again states on page 5 of its pre-hearing statement before Special Industry Committee No. 26 that “one basic idea guides the actions of all major businesses [and that is] a business has an economic, legal, and moral responsibility to maximize the return it gives to its investors or shareholders.”
I, too, would like to talk about guiding principles and state, as I did before Special Industry Committees No. 24 and 25, that I believe higher laws should guide our actions and that we have a moral responsibility to do unto others as we would have them do unto us. I also believe all major businesses, including those of the tuna industry, have an obligation to be fair when applying their “guiding economic principles.”
For example, if StarKist is going to ask Special Industry Committee No. 26 to oppose a minimum wage increase for our cannery workers because it has an obligation “to maximize [its] profits” then StarKist must also review the salaries of its top executives to be sure it is acting “in the interests of its investors and/or shareholders” as stated on page 5 of its pre-hearing statement.
On the one hand, StarKist says it cannot afford to pay our people more than $3.26 per hour because it would be unable “to attract needed investment dollars” or “generate the best return possible” for its investors. On the other hand, Del Monte, which owns StarKist, paid its CEO $1.7 million in salary, bonuses and other compensation in FY 2004. With stock options, Del Monte’s CEO earned almost $2.65 million in FY04.
In other words, Del Monte’s CEO is making 200 to 300 times more per year than the average cannery worker in American Samoa. This said, can an intelligent person really believe that an increase in minimum wage is going to hurt StarKist’s ability to maximize its profits? If StarKist wishes to maximize its profits for its investors, let Del Monte begin by cutting the salaries of its top management including its CEO, and let Chicken of the Sea do the same.
Let StarKist also be upfront about the salaries of its President and Vice Presidents. Let those testifying before Special Industry Committee No. 26 tell our people how much StarKist and Chicken of the Sea are paying them to procure protein or to oversee seafood, soup and infant feeding operations. Until they are willing to make their salaries known, how can we fully gauge whether StarKist or Chicken of the Sea are doing right by their stockholders or even more importantly by the cannery workers of American Samoa?
Quite frankly, these proceedings are a sham and an insult to the intelligence of the 5,000 workers employed by our canneries. To paraphrase President Franklin D. Roosevelt, it is a mockery for calamity-howling executives with million dollar incomes to tell us that wage increases will have a disastrous effect on our economy or that we must exploit labor in developing countries to remain competitive. Neither will I accept the idea that businesses are to maximize their profits without a moral obligation to also increase the wages of our cannery workers.
As I said before Special Industry Committees No. 24 and 25, I also believe that the right to live is higher than the right to own a business. Furthermore, I believe a business has an economic, legal, and moral responsibility to pay its employees enough to enable them to live and I believe this should be the basic idea that guides the actions of all major businesses, including those of the tuna industry.
Nevertheless, the U.S. Department of Labor picks and chooses its Special Industry Committee and, for the most part, the outcome is determined before we testify. In some ways, it is unclear to me why the U.S. Department of Labor bothers to hold these hearings. If the Department of Labor was serious about minimum wage then it would be serious about conducting a study to determine the cost of living in American Samoa. If it was serious about minimum wage it would be serious about making the tuna industry declare its margin of profit. Simply put, until we know what the canneries are making we cannot determine what a fair wage is for our workers.
Having spent the past four years fighting to protect American Samoa’s tuna industry in the U.S. Congress, I can tell you that I understand what our canneries are up against when it comes to competing against countries with low wage rates. I understand the realities of supply and demand. I understand that production will leave high cost locations when low cost alternatives exist. I also understand that these are the same words the U.S. tuna industry has been regurgitating for the past 50 years.
In 1956, as part of its lobbying effort to suppress wages in American Samoa and pay Samoan workers only 27 cents per hour, Van Camp (now Chicken of the Sea/Samoa Packing) said that “a minimum wage of $1 per hour, as required under present laws, is unrealistic, unwarranted, and unquestionably will have a deleterious effect upon the economic and social structure of the islands.” Almost 50 years later, there has been no change in the way StarKist or Chicken of the Sea view the worth of our workers.
In our 50 year history with the tuna industry, not once has StarKist or Chicken of the Sea offered profit-sharing incentives or stock options to our workers. Instead, our cannery workers are given a case of wahoo at Christmas and a turkey at Thanksgiving. And now we’re told that our wages must remain below the federal minimum wage rate because cannery workers in Thailand and the Andean countries are cleaning fish for $0.60 an hour.
Well guess what? Autoworkers in China are building cars for less than autoworkers in Detroit. And garment workers in India are making clothes for less than factory workers in New York. And farmers in Mexico are growing food for less than farmers in the Midwest. And McDonald employees in Taiwan are flipping hamburgers for less than McDonald employees in the United States. So what is the tuna industry’s point?
We are not here before Special Industry Committee No. 26 to discuss the wage rates of third world countries. We are here to discuss U.S. wage rates. American Samoa is a U.S. Territory and our cannery workers should be entitled to American pay. If our corporate executives wish to discuss wage rates around the world, then let us also discuss the global wage rates of corporate executives. I believe such a discussion would show that a CEO in Thailand or Ecuador makes nothing compared to the CEOs of StarKist and Chicken of the Sea and I again make the point that if our canneries are interested in maximizing their profits, let them begin by cutting corporate salaries and make adjustments on corporate profits.
Let me also address the issue of international trade agreements. It is well-known that StarKist, under the management of the H.J. Heinz Foundation, opened a pandora’s box in 2001 when it went against the entire U.S. tuna fishing and processing industries and attempted to include canned tuna in the Andean Trade Preference Act. StarKist did this for one simple reason, to displace $3.26 workers in American Samoa and exploit $0.60 labor in Ecuador.
At the time, StarKist said this would not affect its business in American Samoa. Today, at these minimum wage hearings and at the minimum wage hearings in 2003, StarKist testified that the Committee must not increase minimum wage rates because an increase would affect its business in American Samoa and its ability to compete against Ecuador, Thailand and other low wage rate countries. StarKist cannot have it both ways and, in fairness to our cannery workers, I believe Special Industry Committee No. 26 has an economic, legal and moral responsibility to make sure that StarKist testifies truthfully before this federally constituted committee.
I also want to address the issue of IRS Section 936. Again, in its pre-hearing statement submitted to Special Industry Committee No. 25, StarKist stated that favorable local and federal tax treatment makes little difference to our canneries. Before this Committee, StarKist says IRS section 936 does make a difference. While agreements are in place to extend section 936 benefits to American Samoa, I question why StarKist continues to contradict itself before this Committee.
Regarding tuna loins, I would like to publicly state that I am deeply concerned about the number of loins that are being shipped to American Samoa for processing. It is an insult to our intelligence for both StarKist and Samoa Packing to assume that Samoans do not understand what this means for the Territory. Samoans understand that the use of precooked tuna loins as a raw material in canning operations could significantly influence the amount of labor needed in the production process. Samoans also understand that the production of loins, including the butchering and cleaning steps, accounts for up to 80% of the cost of labor in a full-scale cannery.
This means that if a cannery buys loins instead of whole fish it can substantially reduce its labor costs. In other words, the more loins you send to American Samoa, the less labor you need in our canneries. Less labor means downsizing and downsizing means many of our cannery workers will be out of jobs if StarKist and Samoa Packing continue to ship loins into American Samoa. Furthermore, our U.S. tuna boat owners who not only contribute more than $22 million per year to our economy but also supply 70% of the tuna processed in our canneries will also be out of business.
As I have said before, I cannot and will not support an increase in loins being shipped from foreign countries into American Samoa for use in our canneries. This trend must stop or American Samoa must be compensated for revenue lost as a result of this backdoor attempt to reduce our labor force, suppress our wages, and allow foreign countries to send their tuna into the U.S. exempt from duty.
I am also disturbed by a recent letter received in my office regarding Project Nemo, an alleged “plan by Chicken of the Sea and StarKist to consolidate their tuna canneries in American Samoa.” The letter states, “The objective of this plan will be to substantially reduce tuna production, which will allow the companies to increase prices. The effect will be closure of one of the two canneries in Samoa and the elimination of more than 2,000 jobs.”
This letter, dated May 27, 2005 and received in my office on June 15, 2005, is unsigned and was copied to Governor Togiola, the U.S. Federal Trade Commission, the U.S. Department of Justice and Samoa News. The letter is addressed to me. While I cannot and will not act on an unsigned letter, I will take steps to forward this letter to the proper officials at the U.S. Federal Trade Commission and the U.S. Department of Justice.
I am also including this letter as an attachment to my written testimony. Should anything ever come of this, this letter will be on file as a matter of record. However, I am hopeful today, under oath, and before Special Industry Committee No. 26, both canneries will deny any knowledge of a plan to reduce American Samoa’s production or to increase prices.
In conclusion, I would like to state that I believe workers in American Samoa are the backbone of the U.S. tuna industry. I also believe that men and women of conscience will agree that businesses are obligated to act not only in the interest of their shareholders but also in the interest of their workers. I also believe that after 50 years in our Territory, and having exported over $7 billion worth of canned tuna to the U.S., I believe it is time for our canneries to work with us.
I am pleased that the U.S. tuna industry has united in support of H.R. 629 -- a bill I introduced in Congress to make permanent or extend the federal IRS section 936 tax credit to American Samoa for another ten years. I am also pleased that our local Senate issued a Concurrent Resolution in support of H.R. 629. However, I need to understand why StarKist stated before Special Industry No. 25 that favorable local and federal tax treatment makes little difference to our canneries. Since our tax incentives make little difference, I would suggest that a 10% duty on loins coming into this Territory will be a good source of revenue for our local government and a minimum wage increase should be supported.
Finally, if the minimum wage cannot be increased, I believe our canneries should subsidize the medical care of their workers. In any other U.S. location, the tuna industry would be required to provide health care benefits for its employees. In American Samoa, however, ASG subsidizes the tuna industry by providing health care for sick or injured employees and their families. In itself, this is a savings of at least $5 million per year to our canneries and it is time for our canneries to return this money to LBJ and assume responsibility for the medical care of its employees.
It is also time for our canneries to increase pensions for our workers and I believe something needs to be said on and in behalf of Samoans who stand for 8 hours a day cleaning fish and after 20 years of service only get a pension of approximately $160 per month. This is not right and this is simply un-American.
For 50 years, the U.S. tuna industry has told us it would leave American Samoa if wages were increased. Fifty years later, both canneries are with us and only three years ago StarKist erected a sign and declared that American Samoa is the permanent home of Charlie the Tuna. Maybe I missed it but I did not see any fine print beneath the sign stating that Charlie the Tuna’s home is conditional on whether or not we raise the minimum wage. In fact, as I recall, StarKist’s Vice-President was emphatic in stating that StarKist had no intention of leaving American Samoa. However, he also said StarKist was not up for sale and only a few months later it was sold to Del Monte.
Given that the industry often contradicts itself, I have come to believe that the only thing we may know for certain is that our future with the industry is uncertain. But I am hopeful that we will settle our differences and work together to protect American Samoa’s tuna industry.
To this end, I support business and the need for business to make a reasonable profit. To this end, I also support an increase in minimum wage for our cannery workers. I believe this is what fair trade demands and I am hopeful that this is what men and women of conscience will thoughtfully consider.