Union Fight Adds to Egg City’s Troubles
There’s trouble at the world’s largest chicken ranch, and lots of feathers are flying.
On one side is Richard Carrott, a 37-year-old former television actor and owner of the Egg City ranch in Ventura County. Carrott, who a few years ago chased Space Age hoodlums while playing Cadet Captain Chris Gentry on the Saturday morning television show “Space Academy,” believes that he is being portrayed unfairly as the heavy in the labor dispute at the 300-acre ranch near Moorpark.
Egg City this month filed for protection from its creditors under Chapter 11 of the U.S. Bankruptcy Code, and Carrott insists that he must slash wages by as much as one-third to stay in business.
On the other side are about 240 workers, most of whom make $6.07 to $7.69 an hour taking care of the ranch’s 3 million hens and processing the more than 2 million eggs produced daily.
Productivity Demands, Work Conditions Challenged
The employees and their union, the United Farm Workers, claim that Egg City hasn’t negotiated fairly in the eight months since their last contract expired, and they charge that the ranch is trying to oust the union. They also accuse Egg City of imposing stiff productivity demands and unfair working conditions such as limiting employees to one trip to the restroom every two hours.
The conflict is attracting widespread attention among California farmers. Labor law experts say Egg City could become the first farm employer in California to use the bankruptcy courts to challenge its labor contract obligations. The ranch has said that if the UFW rejects its bid to reduce wages by $2 an hour, it will ask the bankruptcy court to approve wage cuts, although some legal experts say the move is unnecessary.
The Egg City dispute also represents a major challenge for Cesar Chavez’s already troubled union, which is suffering from a lack of new members and increasingly combative growers who have drawn support from the state Agricultural Labor Relations Board. ALRB officials said they believe that Egg City, California’s only unionized egg ranch, has the largest unit of UFW-represented workers employed year-round in California.
In the 1970s, Egg City was the site of one of the UFW’s biggest victories in its bitter struggle with the Teamsters Union over the right to represent California farm workers. The UFW prevailed in 1978 after three years of court fights and elections, including one marred by stolen ballots.
Founded in 1961 by Julius Goldman, who fled Germany during the Nazi holocaust, the ranch quickly grew into the nation’s premier producer. Arnold Kupetz, Egg City’s bankruptcy lawyer, said the ranch expects sales this year of about $45 million.
Quit Acting Career
Goldman sold the business over several years in the 1970s to Cincinnati-based Kroger, the big supermarket chain. Kroger, in turn, sold the ranch in May, 1985, for an undisclosed price to Carrott. The ranch’s formal name now is Careau Group, Kupetz said, and Carrott is its only shareholder.
A native of Indianapolis, Carrott decided several years ago to quit a struggling acting career that included bit parts on the television shows “Love Boat” and “Three’s Company” to go into the egg business. He said he made the decision after listening to a dinner conversation between his father-in-law, an egg industry executive, and a pet food company official who used flawed eggs that people wouldn’t buy.
Carrott said Kroger was losing about $500,000 a month operating Egg City when he bought it. Those losses have been cut but still amounted to $1.85 million during the six months ended last March, according to Kupetz. In its bankruptcy petition, the company listed liabilities of $24.1 million against assets of $21.5 million.
Egg City still owes Kroger, one of its three secured creditors, about $8 million. The other two secured creditors are CoastFed, a Los Angeles commercial finance company that also is owed about $8 million, and Okura, a Japanese trading firm whose $1-million debt is collateralized by nearly 400,000 chickens.
Carrott blames the ranch’s losses largely on its labor costs, which he claims are 30% to 50% higher than those of his competitors, all of which are non-union. He won’t disclose his labor expenses, but university studies show that California egg producers last year spent an average of 7.5 cents on labor to produce, package and ship a dozen eggs.
In addition to seeking a wage reduction, Carrott also wants concessions such as a temporary elimination of the practice of giving workers five dozen free eggs every two weeks.
Wants Financial Data
The UFW doesn’t deny that Egg City has financial problems, but it accuses the company of withholding key financial information from workers, making it difficult for union leaders to evaluate the proposed concessions.
“They’re giving us a sanitized version of the books. It’s not the real thing,” said Oscar Mondragon, head of the union’s horticulture division. Carrott insists that he has given comprehensive financial data to the union during past negotiating sessions.
Industry officials said the financial troubles at Egg City mirror the problems of California’s egg business, the largest in the nation, which has suffered from chronically soft prices due to overproduction.
California egg producers this month have received an average of about 47 cents for a dozen large, top-grade eggs. For all kinds of eggs, producers have received an average price per dozen of about 43 cents. According to industry officials, that is roughly 5 cents a dozen below the price that producers need to break even.
Industry experts say egg consumption has declined steadily in the United States for years because of concerns about cholesterol and because fewer people eat a full breakfast.
Squabble Over Breaks
In addition to arguing about pay, the two sides have squabbled over workers’ restroom breaks. Rob Roy, a labor lawyer representing the ranch, said the number of trips was limited because some workers were taking too many, possibly to pressure the company by slowing production.
Mondragon denied Roy’s assertion, and he said the restroom rules, which require workers to sign a sheet before leaving their stations, humiliate employees.
Seeking to pressure Egg City, the UFW has threatened to boycott stores that sell the firm’s eggs. To head off that threat, Egg City will ask the National Labor Relations Board this month to reclassify the company as a non-agricultural employer, which would make it subject to federal, rather than California, labor law. Such boycotts of retailers are prohibited by federal labor law.
Egg City plans to point out to the NLRB that as a result of increases in the amount of egg processing at the ranch, 75% of its employees now are commercial, rather than agricultural, workers.
An NLRB decision in Egg City’s favor would do more than prevent the union from launching a boycott. It also would eliminate the UFW’s certification under state law to represent the ranch’s workers. That would mean the UFW would have to seek recertification under federal law, a move that could be opposed by the ranch.
