In a double blow to Baltimore's Esskay heritage, Esskay Inc. said yesterday it was finally shutting its Baltimore plant, and would stop paying for its retirees' health benefits.
Company spokesman Harry Grauling Jr. said financial difficulties Esskay's parent company, Smithfield Foods Inc., forced it to ,, take the money-saving steps.
Although Mr. Grauling would only say that the actions would take place "soon," union officials said the company would cut off operations here by next month.
The Smithfield, Va.-based ham producer will save $1 million a year by ending contributions to the health insurance plan for the company's 380 Esskay retirees who worked at the Baltimore plant, he said.
The end of the local ham and sausage making operations had been expected, but workers and union representatives said they were stunned by the health insurance cutoff.
Thomas Russow, head of the United Food and Commercial Workers Local 27, which represents meatpackers at the East Baltimore plant, called the decision "very callous."
"We are seeing the demise of another great Baltimore company," Mr. Russow said.
He said the company told him last night that the contributions to the health insurance plan would cease next month. But, he said, the union intends to sue the company if it follows through on the plan because the union's contract with Smithfield calls for company contributions to the pensioners' health insurance through next February.
If that did not work, Mr. Russow said he would consider calling for a boycott of Esskay products.
Mr. Russow said there were about 50 people working at the Esskay plant, down from 500 in September, when the company unexpectedly announced that it would shut the 72-year-old plant. The company said engineers had discovered the building was not strong enough to safely support the plant's 10-ton ham-boiling machines.
After Smithfield announced the closing in September, city, state and federal officials began an effort to keep the plant in Baltimore.
But in February, Smithfield said continuing financial problems forced it to "suspend indefinitely" plans to build a new plant in Baltimore.
And yesterday, the company appeared to have closed the door for good, saying "the cost of building or acquiring a facility in the Baltimore area so as to continue meatpacking operations . . . were considered prohibitive by Smithfield management."
Industry analysts have long questioned the company's need for a plant in Baltimore, noting that Smithfield was suffering from overcapacity in its other plants, and could easily pick up the slack for Baltimore without building a new plant. The company has doubled its capacity at its Mash ham plant in Landover and has expanded its Gwaultney plant in Smithfield, Va.
Last month, the company reported it earned only $508,000, down 95 percent from the same period's earnings of $10.5 million a year ago.