As New Owners Take Over Meat Plant, Battered Postville Waits and Worries

By Nathaniel Popper

Published September 09, 2009, issue of September 18, 2009.
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The new owners of the beleaguered kosher meat company Agriprocessors are quickly facing criticism over their early management of the company.

A team of three men took over control of Agriprocessors — now called Agri Star — at the beginning of August. The new team, led by Canadian businessman Hershey Friedman, and using the corporate name SHF, bought Agriprocessors out of bankruptcy in July. Their purchase of the kosher company came a little more than a year after it was the target of a massive immigration raid that led to criminal charges against the previous owners, the Rubashkin family.

The Rubashkins have been widely assailed for their management of the company’s slaughterhouse in the small Iowa town of Postville. Some town leaders in Postville say that since buying the company in July, Friedman and his new ownership team have given their own cause for concern.

“I’m quickly starting to become impatient with the company’s lax attitude toward civic responsibilities,” said Jeff Reinhardt, a member of Postville’s City Council.

Reinhardt and other local leaders expressed concern with the continuing involvement of Rubashkin family members in the company, and with the handling of new employees coming into the town. But the biggest concern has been the new owners’ refusal to meet with many community leaders and activists from both inside and outside Postville who have expressed an interest in being briefed on the company’s plans. “At this point in time, it would be very helpful for them to do something different than the old owners — to actually come in and have a meeting with members of the community,” said Steve Brackett, the pastor at St. Paul Lutheran Church in Postville. “I think they are very busy, but I also think it would go far to calming tensions if they would at least host a community meeting.”

Brackett is the head of a new Postville Community Benefits Alliance, which is hoping to negotiate some agreement with the new owners on how the town and company can relate to each other — a big issue given the kosher meat company’s outsized effect on the city of 2,000 residents. The immigration raid and subsequent bankruptcy of Agriprocessors led to a mass exodus of residents and devastated the local economy in Postville. Brackett said that his alliance made multiple requests for a meeting with the new owners and eventually heard back that “at this point, they don’t have time.”

Friedman did not respond to requests for comment. His lawyer, Shalom Jacob, said that the new management team was too busy running the company to meet with local civic leaders.

“I know they have a lot of positive ideas and intentions for the town and the civic areas and the people, and what they will do,” Jacob told the Forward. “But the first priority has to be turning this company around.”

Friedman owns a plastics company in Montreal, Polystar Packing, and another in Brooklyn, Favorite Plastics. Friedman bought Agriprocessors, in partnership with his son-in-law, Daniel Hirsch, a Brooklyn accountant. It is Hirsch who has been in Postville overseeing the daily operations of the plant. The plant is currently operating with a small staff and producing only chicken and turkey, with plans to slowly re-open the company’s beef production capacities.

Hirsch has met with Postville’s mayor and a few City Council members to lay out Agri Star’s plans. The mayor did not return calls seeking comment, but the city administrator, Darcy Radloff, said of Hirsch: “We welcomed him to the community and talked about him being a good corporate citizen.”

“They plan on operating a good business up there,” Radloff said.

Hirsch has also met with Aaron Goldsmith, a local businessman and a leader of the town’s Orthodox Jewish community. Goldsmith said that Hirsch had expressed an unwillingness to speak with members of the Community Benefits Alliance because the alliance had pushed for a binding legal agreement that would hinder the development of Agri Star.

“The company is not interested in the community benefits agreement,” Goldsmith said. “Nobody feels this is an equitable proposal.”

Postville’s City Council initially voted to support the idea of a community benefits agreement, but later voted to withdraw support for such an agreement — a development first reported on the blog Failed Messiah.

Brackett, who is leading the push for an agreement, said that his group has no specific agreement in mind, and at this point wants only to start a discussion with the company. One particular point of tension has been the involvement in Brackett’s alliance of Jewish organizations from outside Postville. In addition to Postville’s Lutheran and Catholic churches, the alliance includes Jewish activist groups from Minnesota and Illinois that participated in providing relief to Postville after the immigration raid. These liberal Jewish groups had an adversarial relationship with the old owners of the company.

The blog Failed Messiah reported that Hirsch wrote an e-mail to the alliance assailing its Jewish member groups. Jane Ramsey, executive director of one of the Jewish activist groups — the Chicago-based Jewish Council on Urban Affairs — said that Hirsch, in his e-mail, had mischaracterized her organization’s efforts as being aimed at bringing the new owners down.

“We have certainly picked up a wrongful assessment — and a tone on their part that just doesn’t represent who we are as organizations,” Ramsey said.

“Our purpose for being there is to do everything we can do to assist the community in Postville — we want nothing more than for this plant to be successful and for the company to be good corporate citizens,” she said.

The members of the Community Benefits Alliance are not the only groups reporting having had trouble getting information out of the new owners. Kosher food-certifying agencies have complained, as has the United Food and Commercial Workers, a union that tried to organize the workers under Agriprocessors’ previous ownership. Scott Frotman, a UFCW spokesman, said that the union had made requests for a meeting with the new owners in July, when the sale was finalized, and have not heard back.

“It’s unfortunate, given the company’s history,” Frotman said. “They have an obligation to Postville to come forward to talk about their vision for the company and the future.”

Within town, the company is already making its mark, having taken over full operation of the plant in early August. New workers have started to move to the town looking for work, and local religious leaders said that the company has not made provisions to help these workers establish themselves. Father Paul Ouderkirk, the priest at the local Catholic church, said that workers coming to town were turning to the churches for food and housing. Reinhardt said this reminded him of the situation under the Rubashkins.

“The company should take some responsibility for this,” Reinhardt said. “This is the same old story over again.”

Part of the reason for concern is that Heshey Rubashkin, the son of the old owner, Aaron Rubashkin, is still employed at the plant, as are other family members. Heshey Rubashkin’s brother, Sholom, is awaiting trial on charges of bank fraud, child labor violations and immigration law violations, and is not allowed to have any involvement with the company.

Jacob, the company’s lawyer, said that in employing members of the Rubashkin family, the company is merely continuing practices that were also used by the bankruptcy trustee.

“These are not people who are in management — these are employees, and this is something that was approved by the trustee,” Jacob said. “I don’t think anybody expects us to fire people just because of their name.”

Goldsmith said that within Postville’s Jewish community the concern has not been about how similar Friedman is to the Rubashkins, but rather how different.

“The Rubashkins ran their business like it was a communal foundation — and they supported the Jewish school and the synagogue here completely,” Goldsmith said. The new owners, Goldsmith said, “have made some minimal support of the school, but it was a very big challenge to get them to do even that. One of the concerns is that they are not stepping into the Rubashkins’ shoes — they are creating a different kind of business.”

Ramsey, at the Jewish Council on Urban Affairs, said that she wants to see the new owners go in a new direction, but is still waiting for evidence.

“They are the ones who get to set the tone,” Ramsey said. “The longer they don’t do that, the more nervousness will be felt by the community, and the more speculation will grow.”

Contact Nathaniel Popper at popper@forward.com






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