“StarKist Execs Earn 300 Times Wage of Cannery Worker”ff

Employee representative to the minimum wage hearings in American Samoa, Bridget Martin, argued at the Federal Special Industry Committee No. 26 that StarKist executives currently receive 200 to 300 times the pay of cannery workers while StarKist Samoa (SKS) representative Susan Jackson testified that an increase in American Samoa’s minimum wage would have a direct impact on StarKist’s ability to compete.

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.

Jackson is the vice president for Protein Procurement for Del Monte Corporation and her duties include the purchase of all tuna, round fish and frozen loins for StarKist Samoa and StarKist Seafood. Employee representative Martin is a registered lobbyist nominated to the committee by the International Brotherhood of Boilermakers, and serves as the assistant to the International President and Director of Government Affairs for that organization.

Jackson who presented the first testimony before the six member committee said that “ongoing efforts to eliminate or reduce US tariffs on imported tuna products, processed and canned in low wage countries, will result in additional competitive pressure on American Samoan tuna products,” and she reminded committee members that IRS tax benefit section 936 will expire at the end of this calendar year.

A pre-hearing statement issued to each member of the committee recognized that SKS is the largest private sector employer in American Samoa, employing 38% of the workforce. It reported that the current number of employees is 2,696, a drop from the number recorded in the United States Department of Labor's (USDOL) 2005 Economic Report of 2,859.

The Economic Report stated, “The StarKist Samoa cannery is the largest tuna cannery in the world. It produces more than 60% of American Samoa's canned tuna. StarKist is the leading brand of canned tuna sold in the U.S., followed by Bumble Bee and Chicken Of the Sea. StarKist’s market share in the U.S. increased from below 30% in the late 1980s to 45% in 2000.”

Jackson explained, “As a leader in the U.S. tuna industry, StarKist Samoa struggles to compete against low labor cost competitors from Southeast Asia, Latin America, and other areas of the world. An increase in American Samoa's minimum wage, which would be an increase in SKS’s cost, would have a direct impact on SKS’s ability to compete.”

Addressing supply and demand, Jackson said that there is a downward trend of tuna consumption in the U.S. market, where SKS sells their products. At the last hearing in 2003, SKS anticipated an increase in sales which did not happen, according to Jackson's printed statement. The statement said, “Over the last three years, SKS’s chunk light 1/2s and solid albacore 1/2s are down 3% and 2% respectively. This negative growth trend has been influenced by many factors. This tells us that the demand for tuna products and particularly the demand for SKS tuna in the U.S. market are declining. When demand for a product is declining, the marketplace will prohibit an increase in the price charged to the customer.”

According to the statement, when presented with a choice between branded tuna or private label tuna, the US consumer will usually choose the private label tuna because it is usually cheaper. The private label tuna comes from low wage producing countries like Thailand and Ecuador, Jackson said. “The most critical factor influencing their purchase decision is price. Given the aggressive operating tactics of lower cost competitors, including inroads they have made as manufacturers in the private label business, these countries set the market for all products including branded product. As they have benefited from low wage rates in their countries, they have continued to drive down their operating costs which have a direct impact on US retail prices. Contrary to the dated information relied upon in the 2005 Economic Report, U.S. suppliers have little, if any, competitive advantage over foreign producers in the US retail tuna market,” Jackson's written statement said.

The statement also reports that global canning capacity dropped 2.1% from 1995 to 2001 while US canning capacity dropped 37.1%, however, "Where labor costs are low, there were increases in capacity" and the statement explained that there was an increase of 7.7% in Southeast Asia and 11.2% in the Africa/Indian Ocean region. In the low wage producing companies of Latin America, Indonesia, the Philippines and Thailand which “increased its export of tuna by 22% in 2003 over the previous year and its capacity has grown from 300,000 tons in 2001 to 400,000 tons in 2003...it tells us that production will leave high cost locations when there exists low cost alternatives.”

Jackson’s written statement also said, “Where US tuna production capacity and volume have declined due to high labor costs, production has been moved to low cost locations.”

Furthermore, the statement said, “Past increases in the Federal Minimum wage and the growth of low labor cost competitors contributed to the failing economics of the US tuna industry. The result was the closure of factories, the curtailment of operations, loss of employment, a transfer of production to low wage rate countries and/or an increase in the use of loins processed in low wage rate countries. All of these factors have resulted in a very significant decline in employment in the US tuna industry.”

Andean countries and Thailand are working on “multi-faceted, broad free trade agreements” that may allow them to share the same benefit of SKS, which means no tariff on the tuna going into the U.S. Currently, Ecuador does not pay a tariff on tuna pouches. Jackson said that maintaining the current rate that the canneries now pay, which is $3.26 per hour is “vital.”

COS Samoa Packing also appeared before the committee. Chaiphorn Wangnitayasuk, who is COO testified that he worked 29 years in the tuna industry, which included working in COS plants in Thailand, one of the industry's low wage rate competitors. Like SKS, Wangnitayasuk, Herman Gebauer, and Alfonso Galea'i all testified against a hike in the minimum wage rate, and also like SKS, said they would not be able to compete in the global tuna industry.

Gebauer who is general manager called competitiveness in the tuna industry “fragile” and cited other canneries, unable to stay competitive, closing down in California, Puerto Rico and other areas. Galea'i said, “A wage increase will increase production costs” and consequently “curtail employment”.

Source: American Samoan Press