Union assails Esskay on health benefits cutoff Local also to start talks over plan to close local plant

April 10, 1993|By Kim Clark | Kim Clark,Staff Writer

The union that represents workers at Esskay Inc. blasted the company yesterday for its plans to stop paying for its local retirees' health insurance.

At a morning press conference, Thomas Russow, president of the United Food and Commercial Workers (UFCW) Local 27, said he was starting negotiations over the company's plan to shut down its East Baltimore Street plant by next month.

But the union was preparing for a legal battle over the company's plan to cut off its $1 million-a-year contribution to a health insurance fund for 380 local retirees.

Thursday night, the company announced that financial difficulties of its parent, Smithfield Foods Inc., were forcing it to shut down the more than 100-year-old Esskay operation and stop subsidizing the local pensioners' health insurance.

A glut in the pork industry has driven down prices, and Smithfield has said troubles launching a new North Carolina slaughterhouse have sapped its profits. In the nine months that ended Jan. 31, the company said, earnings fell 88 percent, to $2.3 million, compared with a year earlier.

Arguing that the company has a "contractual and moral obligation" to keep paying for the health insurance, Mr. Russow said he would ask the company to take the dispute to an arbitrator.

If the company follows through on its announcement, local retirees who were paying about $30 a month for their health insurance will have to pay $157 a month starting June 1, he said. Increasing their costs five-fold "will have a terrible impact" on the retirees, Mr. Russow said.

Mr. Russow said the company should continue paying through at least next February, when the current UFCW contract with Esskay will end. That contract calls for payments to the pensioners' health plan.

If the company refuses arbitration, which appears likely, the union will take the company to court, Mr. Russow said

And Mr. Russow said he would consider calling for a boycott of Esskay products, including the hot dogs sold at Oriole Park at Camden Yards, to pressure the company to change its mind.

"Sometimes companies have to do bad things," Mr. Russow said of the impending plant closure. "But they can do them with style and grace. . . . We want them to go out of here on a white horse."

Yesterday, Leslie Stellman, Esskay's attorney, said that while the company would negotiate some terms of the closure, it couldn't afford to keep paying for the local pensioners' health insurance.

Esskay will not agree to arbitrate the retiree dispute, he said.

And, Mr. Stellman said, the company is not bound by either the union contract or morality to pay for the retirees' insurance.

"The competitive forces affecting the parent company are so severe that the morality is in saving the thousands of jobs left in this organization," he said.

And he said that because Esskay will close its plant next month and lay off everybody except about 10 nonunion salespeople, the union contract with the pension clause would essentially lapse.

Local retirees contacted yesterday, while sympathetic with the company's plight, backed the union's stance.

Fred J. Lengsfeld, a 48-year veteran of Esskay who retired in 1991, described the company's announcement as "shocking."

Mr. Lengsfeld said he receives $447 a month from his pension and would not be able to pay $157 each for health insurance for himself and his daughter.

Mr. Lengsfeld said the announcement had not turned him away from Esskay products, which he says are "very high quality." But, he said, he's wondering now "if I can afford them. . . . Maybe I'll have to eat a lot of soup."

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