Doug O'Halloran of the United Food and Commercial Workers union received cheers from workers at a news conference Thursday when he said those who have been running the XL Foods Lakeside operation — the black hats as they are known for the colour of their headgear — need to be removed.
"Some of the management people have to go," O'Halloran said. "The yellow hats are the workers. The black hats are god or think they are. We all hope some of those black hats are getting their butts kicked down the road, because they're the problem."
O'Halloran said he is cautiously optimistic about JBS USA taking over management of the plant in Brooks. The company, which also has an option to buy XL, operates eight beef packers in the United States with 25,000 union employees and O'Halloran said the two sides are on good terms there.
"We believe this is a positive situation," he said. "We endorse it with caution because, like anything, the proof is in the pudding. JBS is going to have to come in here and prove they can run the plant. And in order to do that, they are going to have to reach out to the workers."
O'Halloran said the union's head office in Washington, D.C, has already been informed by JBS that it is going to live up to the current contract with XL workers. He said XL is going to set up a meeting with the union early next week to discuss how the transition is going to take place.
Many of the workers on hand shared their president's cautious optimism.
"Everybody is happy. We need new management. We need all new black hats at that plant. We need it new from the top right down," said Fred, who declined to give his last name.
XL Food's owners, the Nilsson brothers, have not responded to numerous interview requests since the beef recall began. In earlier news releases, co-CEO Brian Nilsson apologized to anyone who got sick from E. coli linked to the plant and said it is the company's goal to work with the CFIA to ensure there are no further recalls or outbreaks.
The Public Health Agency of Canada says so far 15 people have become ill in four different provinces.
The union has complained that the speed at which the line in the plant operates forces workers to cut corners when it comes to food safety. The Nilssons have said the plant's line speed is slower than the industry average for a facility its size.
O'Halloran said he hopes to see the plant begin limited production as early as next week because many workers will have missed a week's pay and possibly a couple of more before everything returns to normal.
JBS USA said it wants to work with the union to make the XL Foods plant a success.
Spokesman Cameron Bruett said JBS USA plans to have a team in Brooks as soon as possible that will reach out to the union and the community.
"Right now the deal consists of our managing the XL operation. How that will be structured, how that will work, all of those details need to be worked out," Bruett said from Colorado.
"We will do so as expeditiously as possible. I suspect in the coming week or so we will have a clearly defined path forward. Our goal is to make the transition as seamless as possible with our No. 1 goal being food safety."
The Canadian Food Inspection Agency is reviewing how the plant is managing its E. coli procedures to determine when it can reopen.
It was closed Sept. 27 due to tainted meat which caused an extensive meat recall. The plant has not been allowed to ship meat to the U.S. since Sept. 13.
The federal agency said the JBS USA deal will not affect its review of the plant.
"A recommendation on next steps will be based solely on these observations and test results," the CFIA said in a release. "Any change in management or ownership at XL will not affect our assessment."
O'Halloran said he thinks limited production at the plant could begin early next week. He suggested the company has food safety expertise that will help XL Foods regain access to the U.S. market.
"We have been calling since this began for new management or new ownership. We're thankful this is occurring, we think this is positive. God, it can't get much worse," said O'Halloran.
"Any of these steps will be good in the right direction and when I first heard about I just thought my prayers have been answered."
JBS USA has had its own E. coli problems.
The U.S. Centers for Disease Control says JBS recalled 172,000 kilograms of beef products in the U.S. in 2009 because of E. coli 0157:H7.
The CDC says 17 people became ill in 10 states. Twelve patients were hospitalized and two developed kidney failure.
The U.S. Department of Agriculture said the recall prompted JBS USA to re-examine its approach to food safety.
The XL Foods recall in the United States involves more than 1.1 million kilograms of beef. Canadian officials have not released the volume of meat recalled in this country, but more than 1,800 products have been included.
JBS USA is a subsidiary of Brazilian-based JBS S.A. It calls itself the world's largest animal protein processor.
The management deal announced Wednesday includes an option for JBS USA to buy XL Foods properties, including the Brooks plant, for US$50 million in cash and US$50 million in JBS S.A. shares. The company said any deal would not include JBS USA assuming any XL Foods debt or liabilities.
The Canadian Cattlemen's Association said producers are not concerned about the XL Foods plant being sold to a foreign buyer.
Spokesman John Masswohl said JBS USA has the skill and money to turn the XL plant around and get it back into the U.S. market.
"It doesn't really matter to us who owns the facility, as long as they can operate it properly," he said from Ottawa.
"If it is at all possible to make that facility run properly, then these are probably the guys that can make that happen."
The National Farmers Union, however, expressed concern that if the sale ends up taking place, two companies — JBS and Cargill — will control more than 80 per cent of Canada’s beef processing. The farmers group wants the federal government to review the takeover.
"The fear of collapsing prices for cattle, and of the 2,000 jobs that could be lost and the impact that would have on Brooks, pale in comparison to what it would mean for Canada to lose control of her cattle slaughter capacity," board member Neil Peacock said. "The JBS takeover is not a silver bullet that will solve the problems in the beef industry."
Industry Canada officials were not available to comment on the purchase aspect of the deal. But a federal official in Ottawa said it is unlikely any transaction would face a review because XL Foods Inc. is not a public company and the financial value of the deal would fall below the Industry Canada threshold of $330 million.
Alberta Agriculture Minister Verlyn Olson said he is encouraged by the JBS USA deal.
"I take this new development, with another major, highly respected player in the industry, to be a strong indication that all the parties involved are very serious about seeing the plant reopen,” Olson said in Medicine Hat, Alta.
“It's very good news for the employees there, the community of Brooks and the region, and certainly for the producers."
Brook's deputy mayor was on hand for the news conference hoping to get more information about the new operators.
"I don't know if there's many other options and so it seems like a good strategy and a good move probably," said Kimberley Sharkey.
— With files from John Cotter and the Medicine Hat News
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