[PEN-L:1339] Re: McDonalds question

[Bill Rosenberg <w.rosenberg@xxxxxxxxxxxxxxxxxxxxxxx>]

Tom Kruse <tkruse@xxxxxxxxxxxxxxxx> wrote:

> The frist McDonalds in Cochabamba, Bolivia is to open on Friday.  We
> are preparing a protest of sorts.  I am writing for help in putting
> together info.  I have the piece by Liza Featherstonein LBO 86, a
> couple of list posts, but nothing else.
>
> I would greatly appreciate ANY critical infomration on McDs,
> especially profitability, business and labor practices.

Here's something I wrote in the last few weeks about one of McD's
main pattie suppliers (OSI) taking over a New Zealand company. It's
got a lot about McD's in it, and also has some useful Web references.
The Mcspotlight one is particularly useful - it has lots of stuff
about the UK "Mclibel" case, including the full judgment, plus up to
date information (http://www.enviroweb.org/mcspotlight-na).

Bill Rosenberg


 OSI subsidiary, Leges, of the U.S.A. taking remainder of Glovers Food

 An associate company of the giant OSI Group, Leges Corporation Inc
 of the U.S.A., which already owns 45% of Glovers Food Processors
 Ltd, has approval to acquire up to 100%. It will acquire the 45%
 shareholding of retiring Glovers' founder, Mr M. Glover, "over the
 course of the next three years". The price is stated to be "$659,699
 for 30%". The company manufactures, process and distributes beef,
 poultry and fish products. The major shareholders in Leges, with 45%
 each, are Gerald A Kolschowsky and Sheldon Lavin, with the remaining
 10% owned by OSI Industries Inc.

 According to the OIC, they "have been involved in similar businesses
 in the United States and elsewhere in the world for much of their
 working life. They are currently major shareholders in a large
 multi-national food company." Since their involvement in Glovers,
 "shareholders have reinvested the profits back into the Company".

 OSI is "one of the largest privately held meat-processing
 corporations in the world" according to its own Web site,
 http://www.osigroup.com. It was founded by the Kolschowsky
 family. More controversially, it is "McDonald's biggest burger
 supplier" in the world according to Meat Marketing & Technology,
 October 1997, "Bulletin From the Burger Battles"
 (http://www.mtgplace.com/magazines/M_c871.asp).

 OSI describes its own history as follows on its Web site:

 "Otto Kolschowsky immigrated from Germany in 1907 and opened a family
 meat market located in Oak Park, Illinois, in 1909. The business
 prospered and in 1917 had expanded to include the wholesale meat
 trade and moved to Maywood, Illinois. In 1928, the growing business
 took the name Otto & Sons. By 1955, the operation had established its
 reputation as a quality meat business and was chosen to supply fresh
 ground beef patties for a national food chain.

 Following years of extensive research and development on high volume
 patting-forming machines and liquid nitrogen freezing tunnels, Otto &
 Sons began supplying frozen ground beef patties. In 1973, a plant was
 opened in West Chicago, Illinois to handle the high volume
 operations. Otto & Sons became OSI Industries, Inc. in 1975 followed
 by another high volume operation opening in West Jordan, Utah in 1977
 to further supply the western United States. OSI moved into its
 corporate headquarters in 1982 based in Aurora, Illinois.

 Today we are one of the largest privately held meat-processing
 corporations in the world. In addition to the pure ground beef
 patties that are our primary product, we also produce circular sliced
 bacon, chicken nuggets, chicken patties, formed pork steaks,
 breakfast beefsteaks, julienne ham and turkey, pork sausage patties,
 and fillet of fish portions."
 (http://www.osigroup.com/osiind/osi.htm)

 Gerald Kolschowsky gave $200 to Republican Representative Jim Nussle
 in both 1995 and 1996 (http://www.com/hpi/fedind/0ia02040.html).

 Meat Marketing & Technology, quotes a "key industry consultant and
 fast-food insider" saying that

 "McDonald's biggest burger supplier, Aurora, Illinois-based OSI
 Industries, is rumoured to be up for sale. OSI supplies more than 60
 percent of Mickey D's hamburgers worldwide, with plants in more than
 30 countries. Keystone Foods and Golden State Foods, both key
 domestic McDonald's hamburger suppliers, may also be on the block.

 Why? These suppliers are so squeezed on costs that there's little
 room for growth and only minimal profit margin left.

 'The stakes are so high now that only companies with deep, deep
 pockets can afford to gamble with fast-food accounts,' the insider
 says.

 Of course, the ongoing E. coli problem doesn't make the odds any
 shorter, but the ultimate solution, this consultant contends, is
 precooked patties. He says the fast-food chains are badgering their
 suppliers to develop prototypes, but a rush to market precooked
 burgers seems to be about as imminent as a revival of McLean DeLuxe.

 'Because of the way they're getting hammered, [the suppliers] are
 adamant about not investing their own capital to make precooking
 feasible,' he says. There's another catch: You need to add
 ingredients to the patty formulation to bind extra water so the
 burgers stay juicy after re-heating. The problem? 'McDonald's is
 totally arrogant,' he says. 'They refuse to even consider formulating
 such a patty. They want it developed and funded totally by
 suppliers-which is never going to happen.'"

 OSI lists operations in Australia, Austria, Belgium, Brazil,
 Bulgaria, China, Costa Rica, Croatia, Czech Republic, Denmark,
 France, Germany, Guatemala, Hungary, India, Indonesia, Italy, Latvia,
 Mexico, Netherlands, New Zealand, Northern Ireland, Panama,
 Philippines, Poland, Portugal, Puerto Rico, Romania, Slovak Republic,
 Slovenia, South Africa, Spain, Sweden, Switzerland, Taiwan, Turkey,
 Ukraine, United Kingdom, United States, and Yugoslavia.

 One of its more grotesque jobs for McDonald's was in the Ukraine as a
 result of the Chernobyl disaster. The Seattle Times, on 24/6/97, in
 an article entitled "War and peace: Do Big Macs make the world
 safer?", by Tom Hundley of the Chicago Tribune (see
 http://www.seattletimes.com/extra/browse/html97/mcdo_062497.html
 ) reported from Kiev on the process McDonald's went through to start
 up in the Ukraine:

 "McDonald's normally attempts to buy all of its products locally. But
 to do this the company has had to build a supplier network from the
 ground up - literally.

 The Chernobyl factor

 Soil samples were taken and tested - radioactive fallout from
 Chernobyl is still a concern in the Ukraine - before the company
 settled on a salad supplier from the Crimea and a beef herd from the
 distant reaches of eastern Ukraine.

 "We started looking for beef in 1994. We investigated the ground, the
 feed, the quality of the herd. We looked at about 25 slaughterhouses
 before we finally found one that was up to EC standards," said Fritz.


 After reaching an agreement with the slaughterhouse, McDonald's
 brought in Chicago-based OSI Industries, a longtime McDonald's
 partner, to handle the meat patty production and logistics.

 At the moment, McDonald's in Kiev is serving imported beef, but the
 first all-Ukrainian Big Mac is scheduled to be put on the menu
 sometime in September."

 But perhaps OSI's most controversial moments were in association with
 McDonald's during the McLibel trial in the U.K. when McDonald's
 accused Greenpeace activists David Morris and Helen Steel of
 defamation. The seven year court case became a trial of McDonald's
 itself, including its industrial record and its effect on the
 environment. One of the key accusations made by Morris and Steel was
 that McDonald's were destroying rainforests and forcing tribal people
 off their lands. In the words of the final judgement in 1997, these
 statements "depended upon the contention that cattle ranching to
 provide McDonald's restaurants with beef patties has caused
 deforestation and displacement of small farmers in Costa Rica and
 Guatemala, and that both cattle ranching and soya farming to produce
 cattle feed to provide McDonald's restaurants with beef patties has
 caused deforestation and displacement of small farmers and indigenous
 peoples in Brazil." The judge found these claims unjustified (see
 http://www.enviroweb.org/mcspotlight-na/case/trial/verdict/verd
 ict_jud1d.html for this part of the judgement, from which the
 following information comes).

 The judge ruled that allegations against McDonald's on rainforest
 destruction, heart disease and cancer, food poisoning, starvation in
 the Third World and bad working conditions were unproven. On the
 other hand, he ruled that they had proved that McDonald's "exploit
 children" with their advertising, falsely advertise their food as
 nutritious, risk the health of their most regular, long-term
 customers, are "culpably responsible" for cruelty to animals, are
 "strongly antipathetic" to unions and pay their workers low wages
 (http://www.enviroweb.org/mcspotlight-na/case/trial/story.html).

 In reality it was companies like OSI who were being judged as much as
 McDonald's regarding rainforest destruction and the dispossession of
 tribal people and small farmers of their land.

 In Brazil, the centre of the claims about destruction of rainforests
 and brutal eviction of tribal people and small farmers, McDonald's
 beef supplier was "a company called Braslo Produtos de Carne Led
 which was a joint venture with a German company Lutz, and the U.S.
 company OSI Industries Inc., hence the name Bras(il)L(utz)O(SI). Both
 Lutz and OSI are major suppliers of patties to McDonald's elsewhere
 in the world. Since 1982 Braslo has been McDonald's sole supplier of
 beef patties in Brazil. "

 The judge did not dispute the fact that there had been massive
 destruction of rainforest in Brazil, and enormous human misery. For
 example, he quoted Mr George Monbiot, "writer, broadcaster and
 academic who spent two years in Brazil, between 1989 and 1992,
 investigating the causes of deforestation in the Brazilian Amazon",
 saying he was "patently a decent witness who knows Brazil well. I do
 not have any real reservations about his evidence of the general
 causes of destruction of rainforest and forest generally, including
 the large part, direct and indirect, played by cattle ranching
 generally. There was ample support for that. Nor do I have any real
 reservations about his evidence of the general causes of displacement
 of small farmers and indigenous peoples generally where they have
 been displaced, including the part played by some cattle ranches and
 soya farming."

 To quote the judgement:

 "Mr Monbiot said that cattle ranching outside the Amazon was the
 principal reason for the movement of peasants into the Amazon. This
 was because so much land had been taken over by cattle ranchers
 elsewhere in Brazil that the forests were the only place available
 for peasant agriculture. Land concentration in Brazil was extreme,
 and most of the largest properties took the form of cattle ranches.
 Cattle ranching in the Amazon and elsewhere in Brazil had significant
 social costs. In many cases the ranchers, both individual and
 corporate, had seized their lands from weaker and poorer citizens
 without due process. This was often done through the use of hired
 gunmen, and every year rural people in Brazil were shot dead as they
 tried to resist the annexation of their lands by ranchers. There were
 documented cases of torture, rape and unlawful imprisonment by
 ranchers and their gunmen trying to push people off their lands.
 Colonists pushed off their lands by ranchers outside the Amazon were
 in many cases forced to travel into the forest to start a new
 frontier, causing deforestation. Some of the land that ranchers had
 seized belonged to the indigenous inhabitants of the forest, the
 Indians, according to Brazilian law. In many Indian reserves,
 ranchers had taken over large tracts of land. Nearly all the land in
 Brazil previously belonged to the Indians or peasants who were
 displaced by force or economic change designed to favour large
 landowners."

 Where the evidence fell down was that no witnesses called were able
 to say definitively that Braslo's beef suppliers were using
 dispossessed or ex-rainforest cleared land, though it was clear that
 some of the beef came from areas in which considerable clearing and
 dispossession had occurred. Further, while Braslo certainly supplied
 beef to McDonald's Brazil, the judge found that no beef was imported
 by McDonald's suppliers for use in the U.S.A., because McDonald's
 specified home-grown meat, and very little was imported from outside
 Europe for McDonald's in the U.K.

 Similarly, OSI is a 55% owner of McKey Food Services Ltd, the sole
 supplier of beef hamburger patties and many pork products to
 McDonald's restaurants in the United Kingdom itself, the location of
 the anti-McDonald's campaign and the trial. In fact, McKey's was
 originally majority owned by McDonald's U.K. subsidiary. In Germany,
 McDonald's patties are supplied by L. & O. Fleischwaren, a joint
 venture between OSI and Lutz of Germany (a partner in Braslo).