Congressman Faleomavaega announced today that, in response to Samoa Packing’s recent announcement to relocate its operations to Lyons, Georgia, Faleomavaega has requested Senator Daniel K. Inouye’s assistance in providing $20 million in the supplemental appropriations bill for purposes of helping soon to be displaced workers in American Samoa. The full text of Faleomavaega’s letter, which was copied to the Governor, Lieutenant Governor, the President and Senators, and the Speaker and Representatives, is included below.
Dear Chairman Inouye:
I am writing to request your support of an emergency set aside of $20 million in the FY10 appropriations for soon to be displaced workers in American Samoa due to Chicken of the Sea/Samoa Packing’s recent decision to close its tuna canning operations in the Territory by September of this year. Enclosed for your information is a copy of Chicken of the Sea’s announcement made public on Friday, May 1, 2009.
While some have suggested that the cannery is leaving due to minimum wage increases, the company has made it clear that minimum wage is only one of many reasons that influenced its decision and, frankly speaking, I believe minimum wage was the least of its reasons, especially considering that the company is relocating to Lyons, Georgia where effective July 24, 2009, minimum wage rates are $7.25 per hour, compared to American Samoa’s current rate of $4.26 and American Samoa’s projected rate of $4.76 per hour effective July 2009.
Put another way, upon leaving American Samoa, Chicken of the Sea will immediately pay tuna cannery workers in Georgia almost twice as much as it paid Samoan workers, and this is disappointing given that Samoan workers spent the last 50-years making Chicken of the Sea one of the most profitable brands of canned tuna in America.
Yet, given our history with the tuna industry, I am not surprised. More than 50-years ago in 1956, Chicken of the Sea’s once parent company, Van Camp Seafoods, actively lobbied the U.S. Congress to suppress wage rates in American Samoa. Commenting on the company’s desire to pay Samoan workers 27-cents per hour as opposed to the then prevailing minimum wage rate of $1 per hour, Van Camp stated, “The company has found that it takes from 3 to 5 Samoan workers to perform what 1 continental worker in the United States will do. It is therefore felt that this justifies a lower rate for Samoans.”
Over 50-years later, Chicken of the Sea leaves American Samoa with the same attitude, justifying lower rates for Samoans while soon to be paying workers in Georgia almost double the money. Therefore, I am not one to believe the hype that minimum wage increases drove Chicken of the Sea to do business in another location. Truth is, Samoans have not received a significant wage increase for more than a decade, until the recent enactment of P.L. 110-28.
With the enactment of P.L. 110-28, I fully supported a one-time increase of 50-cents per hour for our Samoan workers. From the outset, I also opposed escalator clauses, or automatic increases, as mandated by P.L. 110-28, given the uncertainty of the economic status of the Territory. As you are aware, per the mandate of P.L. 110-28, the U.S. Department of Labor (DOL) conducted an 8-month study of the Territory’s economy and concluded that automatic increases would be harmful, but the report was harshly criticized by Chairman Miller and Senator Kennedy for not addressing the issues raised in the law.
In response to the DOL’s findings, Governor Togiola and, I with the support of the Fono, sought your assistance in 2008 and 2009 to include, in the omnibus or supplemental appropriations bills, language to eliminate escalator clauses. Regrettably, neither Senator Kennedy nor Chairman Miller would support your efforts or ours. This is why last year I also requested your support of a one-time set aside of emergency funds for American Samoa and CNMI to offset the automatic minimum wage increases. Unfortunately, it was not possible for this request to be supported by the House or Senate.
Now, with the announcement of Chicken of the Sea/Samoa Packing’s closing, I am once more seeking your assistance in setting aside emergency funds for American Samoa. The reason for this request is because other factors including rising energy and fuel costs and the crash of the global economy are severely impacting any company’s ability to do business in the Territory. Corporate greed and mismanagement are also factors that have affected both tuna canning operations in the Territory.
For years, StarKist and Chicken of the Sea have paid their executives top-notch salaries with benefits, but not once in our 50-year history has StarKist or Chicken of the Sea ever offered profit-sharing incentives or stock options to our workers. Instead, our cannery workers were given a case of wahoo at Christmas and a turkey at Thanksgiving and told that their wages must remain below the federal minimum wage rate.
While suppressing Samoan wages, both tuna canneries employed poor marketing strategies, in part, enabling Bumble Bee to become the number one selling brand of tuna in the country. In a December 9, 2008 meeting with Mr. Kim Jae-Chul, Chairman and CEO of Dongwon, who recently purchased StarKist for some $363 million, he informed Governor Togiola and I and other local leaders that figures showed a 20% decrease in production due to a 20% drop in sales after Dongwon took over from Del Monte, a drop that Del Monte officials who are managing StarKist through an agreement with Dongwon attribute to marketing reasons.
On Sunday, May 3, 2009, Chicken of the Sea executives went on Donald Trump’s reality game show and asked a playboy model, a poker player, a country singer, and a comedian to come up with a new marketing jingle to promote the company’s products. When a company has to turn to celebrity apprentices, not to endorse its products, but to re-write its marketing campaign, something has gone terribly wrong in the marketing department.
Since Samoan workers are not responsible for marketing or sales, my suggestion to both companies was to cut the jobs and benefits of those at corporate headquarters who are responsible for bottom line losses rather than the jobs and benefits of Samoan workers who are the backbone of the industry. Also, I suggest that both companies be honest with ASG regarding their reasons for job cuts and/or relocation. Both companies recently reported to the U.S. Department of Labor that the tuna market is presently focused on sealed foil packages rather than traditional canned tuna. However, to my knowledge, neither cannery has shifted production in American Samoa from cans to pouches so that we could grow with the industry, and it is clear that the tuna industry as we once knew it in American Samoa is coming to an end.
So that American Samoa would be prepared for this day that years ago I warned would come, I encouraged our local leaders to put a plan in place to diversify American Samoa’s economy, in accordance with the recommendations of the American Samoa Economic Advisory Commission which issued its historic report in 2002. In 1999, at my request, and at a cost of $600,000 from Congress, a U.S. Department of the Interior Secretarial Commission was established to examine American Samoa’s economic condition and make recommendations to ASG and the Department of the Interior on how to diversify and expand American Samoa’s economy. This was the first time in American Samoa’s 100-year relationship with the United States that a Secretarial Commission was established.
This Secretarial Commission was supported by Presidents Bill Clinton and George W. Bush, chaired by the former Governor of Hawaii John Waihee, and administered by the U.S. Department of the Interior. Governor Togiola served as a commission member. I served as an ex officio member.
In conjunction with the people of American Samoa, the Commission, over about a two -year time period, developed an economic plan which offered specific recommendations on how to diversify the Territory’s local economy based on the will of the people. In fact, over 8,000 people were surveyed at the request of the Commission by the American Samoa Community College. In April 2002, the Secretarial Commission issued its final report. To date, the U.S. Department of the Interior has failed to move forward on this plan and I must say our local government officials have also not acted.
This aside, at a minimum, I was hopeful that ASG would have required more of both tuna canneries as lease agreements were negotiated during the course of the past 20 years. I had especially hoped that ASG would have included at the heart of its lease agreements unemployment packages for our workers in the case of layoffs or closures.
After all these years, ASG has chosen not to participate in the federal Unemployment Insurance (UI) program. Under terms of the UI program, when eligible workers lose their jobs, the UI program may provide them with income support for 6 months based on certain calculations. These unemployment benefits are paid out of a federal trust fund. However, the money for the trust fund comes from taxes States impose on employers.
The State of Hawaii, for example, has protected its workers by taxing employers like Hawaiian Air. The State of Hawaii then sends a portion of those taxes to the federal government to hold in trust for workers who may become unemployed should Hawaiian Air lay off some of its workers. Once a worker is laid off, that worker can apply for unemployment benefits and the federal government will send that worker a check from the trust fund.
When workers in American Samoa get laid off, they are not eligible for UI benefits because ASG has not sent any money to the federal government to hold in trust for our local workers. Since ASG chose not to have the federal government hold money in trust for our workers, I am hopeful that ASG has held those funds in trust at the local level from the taxes it has collected from StarKist and Chicken of the Sea so that our workers can seek immediate relief and unemployment checks come September.
To supplement whatever local trust fund ASG may have in place, I am working with the federal government to see what additional benefits we can provide for our workers, including those who have legal status in American Samoa. But given that the federal government has spent the past 50-years subsidizing both tuna canneries, I am not sure how successful federal efforts might be. 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. Prior to this extension, each cannery received over $5 million per year in federal tax breaks for almost 20 years, which equates to well over $200 million, not to mention the tax breaks they got for the 20 or so years preceding this.
It is also my understanding that ASG offers both canneries local tax breaks, the terms of which I believe should be made public and to which I have not been made privy. If, on the other hand, our local tuna canneries paid taxes to ASG, I am hopeful that these records will be made public so that our workers will know whether or not ASG set aside some of these funds in trust for our workers in case of unemployment. With the tuna canneries present in American Samoa for more than 50-years and extracting billions from our Territory, I am very hopeful that ASG established a local trust fund for our workers, and that our canneries paid taxes.
I have always believed our canneries should have been required to pay local taxes to help build our schools and medical facilities. I also do not believe our canneries should have ever been permitted to deny our workers’ health care benefits. But every Special Industry Committee appointed by the U.S. Department of Labor to determine wage rates in American Samoa voted against our workers and in favor of the tuna canneries.
Despite the federal and local favoritism shown our canneries, Chicken of the Sea has now announced that it will leave American Samoa and make a $20 million investment to revamp an existing factory in Georgia. And despite having been provided every incentive to stay in American Samoa, Chicken of the Sea will now pay tuna cleaners in Georgia twice as much as the company ever paid our Samoan workers. As for the minimum wage increase our workers recently received, the increase equates to a raise of only ten-cents per hour every year for the past ten years. On this point, our people deserved better. At a minimum, our workers deserved equal pay to that of their Georgia counterparts.
Nonetheless, I deeply regret that I have to inform you of Chicken of the Sea’s closure in American Samoa. In response to this bad news, I am hopeful that you will be able to set aside $20 million in the FY2010 appropriations bill to be used to provide emergency financial relief to affected workers and to offset higher energy, food, and fuel costs that will be associated with the plant closure. Given that more than 80% of American Samoa’s private sector economy is dependent either directly or indirectly on StarKist and Chicken of the Sea which employ more than 5,150 people, or 74 percent, of the workforce, and also considering that “a decrease in production or departure of one or both of the two canneries in American Samoa could devastate the local economy resulting in massive layoffs and insurmountable financial difficulties,” I am certain that this request will be supported by our local leaders who I have copied on this letter.
I have also contacted the House Ways and Means Committee to request how we can bring ASG under the umbrella of the unemployment insurance program. If ASG has failed to establish a trust fund for our unemployed workers, then I am hopeful that Congress will step in and mandate that ASG establish such a trust fund for Samoan workers who deserve protection.
I am also contacting the U.S. Department of Labor to request national emergency grants. What the outcome of these requests will be, I do not know at this time because Samoa Packing’s current workforce consists of 2,172 active employees of which 274, or 13%, are American Samoans, 87%, or 1,821 workers are Western Samoans, and 3.5%, or 77 employees, are other foreign nationals. The total payroll for all workers for the cannery including benefits annually is approximately $22-$23 million.
Before any action can be taken, I have been informed that ASG will have to certify the legal status of our workers at Chicken of the Sea/Samoa Packing. Even though most of our tuna cannery workers are from Western Samoa, many of them are married to U.S. nationals and U.S. citizens and, for purposes of helping these families, I will ask Governor Togiola and the Fono to send me the necessary immigration documentation showing that these workers do have legal status so that we may move forward with a request for federal assistance.
I will also ask Governor Togiola what local measures ASG has in place to provide assistance for our workers since ASG opted out of the federal UI program. Whatever challenges we may face, I am certain that our people will pull together in this time of crisis. Even so, we would deeply appreciate your support as we work to build a bridge to a new future.