LAKE FOREST, ILL. (July 23, 1:30 p.m. ET) — Last month, a group of former Pactiv Corp. employees and their supporters took to the streets in front of the company's Kearny, N.J., facility to protest what they called “sweatshop” conditions in the plant's packing department.
In a July 18 conference call, Pactiv executives responded to the complaints.
“I read these allegations and for the life of me … I scratch my head and say ‘are you kidding me?' Everyone has a right to free speech I guess,” said Kevin Quinn, vice president of operations.
The Lake Forest, Ill.-based company acquired the Kearny facility in 2005. By early 2010, the injection molding plant was inefficient — it had high labor costs, low productivity, and equipment that needed to be automated, Quinn said.
In March, the plant was approved for an upgrade, and Pactiv started plans to install robots and other automation.
Shortly after that, talks about unionization started, he said.
The protesting workers say the unionization push led Pactiv to lay off 60 percent of its most vocal workers.
According to the campaign's website, boycottreynolds.word press.com, workers started organizing in June 2010; they elected 10 representatives and petitioned Pactiv to improve conditions by lessening workloads and not requiring workers to carry heavy boxes, among other changes.
By August 2010, around 70 percent of the plant's employees had signed cards to join the United Steelworkers Union, the campaign said.
In response, Pactiv sent in officials to stifle the union effort, according to the campaign. The company “lied to the workers and promised to improve conditions within the year,” the campaign said.
But Pactiv CEO John McGrath said the company's response to the unionizing was to provide workers with as much information as possible.
“While we respect any decision that they make, we continue to strive to make sure our employees feel respected, therefore violating the need for a union,” he added.
Nine of Pactiv's 55 plants are unionized, he said, adding that as a large and respected company, Pactiv is frequently the target of union organizers.
In September, the union vote failed 93-40.
“It was a pretty overwhelming defeat, and an overwhelming ratification that we're doing right by our employees,” McGrath said.
After the union vote, Pactiv worked to improve morale and productivity at the plant, Quinn said.
“There's a reason employees become disgruntled,” he said.
The plant's manager was new and the facility suffered from a lack of communication. Following the union vote, Pactiv hired new production and human resources managers, he said.
The plant began procuring and installing new equipment in 2011. Then the plant lost one of its major customers, forcing Pactiv to shut down production on some machines. The company told employees it would need to downsize, Quinn said.
The plant started rolling layoffs — the company asked employees to work 30 hours per week instead of 40 — to “share the pain amongst everybody,” he said.
But employees did not respond well. “Quite frankly, you try to help everybody and that doesn't work either,” he said.
According to the campaign, in early 2011, production at the plant sped up. As the year went on, working conditions deteriorated — workers were given an increasingly heavy workload, and reprimanded for taking bathroom breaks or sick leave. The new rules targeted the most vocal and pro-union employees, the campaign said.
McGrath and Quinn said those claims are untrue.
“It's just amazing, these sweatshop allegations,” McGrath said.
Pactiv takes the safety of its employees very seriously, Quinn said, citing the plant's lack of accidents and success passing both corporate inspections and required Occupation Safety and Health Administration inspections.
“They've got a great safety record at Kearny, we take that seriously, we're very proud of that,” he said.
The plant also has low voluntary turnover rates — 1.1 percent in 2011 and 1.2 percent so far this year — and has increased worker salaries by more than 19 percent over the last five years, McGrath said.
“I just don't see how the term sweatshop can be applied,” he said.
According to the campaign, in May the company introduced new team leader positions. The positions require workers to take on supervisor roles, manage additional machines and speak English, among other criteria that deterred many employees from applying. The company also encouraged “obedient” employees to apply for the positions and helped them fill out the application, the campaign said.
Pactiv did introduce Elite Packer positions, but urged every employee to apply for them, Quinn said, adding that only 30-40 employees actually did so.
The company used the applications to evaluate employees. Pactiv would not discuss personnel decisions, but a spokeswoman said the company generally looks at factors like job knowledge, quality of work, the ability to be a team player, safe and good work habits, and adaptability.
Workers were not required to speak English and the applications stated that being bilingual would be a plus, the spokeswoman said.
The plant has a very diverse staff, Quinn said, adding that around 95 percent of the plant's staff, including managers, is foreign-born.
When layoffs became imminent, the employees who failed to complete the application or earned low scores were let go, Quinn said.
In July and August 2011, the plant laid off one salaried and 42 hourly employees, he said. The plant currently has 97 full-time employees.
According to the campaign, employees who agreed to waive their legal rights to challenge the layoffs received an additional eight to 10 weeks of salary.
A Pactiv spokeswoman said all employees received a severance packaged based on length of employment. They also received optional separation agreements that included general releases, a common business practice. Employees did receive additional benefits for signing the agreement, but signing was not a requirement for receiving a severance package.
After the layoffs, remaining employees were required to work mandatory overtime — with schedules totaling 60-70 hours per week — and the plant brought in temporary workers to make up for the lost labor, the campaign said.
Quinn said the plant did implement mandatory overtime for about three weeks total in 2011, after some of the new equipment malfunctioned, but it has not required mandatory overtime at all in 2012.
The plant also employs temporary workers at times to prevent laying off future employees, but only does so in “odd situations,” he said.
Workers filed charges against Pactiv with the National Labor Relations Board in October. NLRB investigated and dismissed the charges due to insufficient evidence, according to McGrath.
“I thought at this point I'd be done hearing about this,” he said.
Workers filed an appeal with the NLRB earlier this year. That case is still open.
The workers, who are mostly Chinese and Latina women, are supported by the “Ain't I a Woman!? Campaign,” an organizing arm of the nonprofit workers' rights group the Chinese Staff and Workers' Association, based in New York.