One reader recently asked if we had any advance knowledge of the IFCO raids because we wrote about the immigration issue in numerous publications before the federal government announced its investigation into the hiring practices of the nation’s largest pallet recycling company. The simple answer is “No.” While we do try to keep on top of the issues affecting our industry, our columns are certainly not prophetic. Nobody could have ever imagined what happened on April 19, 2006 or the subsequent allegations that surfaced about IFCO Systems.
Unless you have been living under a rock for the last month, you have heard about the government raids of more than 40 IFCO facilities in 26 states. Law enforcement authorities arrested 1,187 people who were suspected of being illegal aliens. Criminal complaints were filed against seven IFCO managers or former managers in connection with the company’s employment practices. All these individuals are charged with conspiring to transport, harbor, and encourage and induce illegal aliens to reside in the United States for commercial advantage and private financial gain.
IFCO maintains that the allegations are limited to a few isolated locations. Mike Hachtman, IFCO’s vice president of business development, said, “Each of our operations runs fairly autonomously. We are proud of the entrepreneurial spirit that each of our managers has. And it does appear that those alleged incidents are isolated.”
The U.S. Immigration and Customs Enforcement (ICE) is continuing its investigation although it remains to be seen if any more criminal charges will be filed against IFCO managers. Let’s give IFCO the benefit of the doubt and believe that the allegations represent the actions of a few area managers trying to find any way possible to cut costs so that they will get a bigger bonus from the company. Or we could go one step further and think of them as innocent until proven guilty.
No matter what happens at the trials, the IFCO raids have gotten the attention of almost anyone in the pallet and lumber industries that employee immigrant/foreign workers.
What can the industry learn from the IFCO raids? Of course, there is the obvious conclusion that ICE has stepped up enforcement and is moving from a policy of fines and civil penalties to more aggressive enforcement and the leveling of criminal charges against businesses that knowingly skirt immigration laws. But let’s look deeper. Let’s look inside the soul of the industry and see what lies beneath the surface.
IFCO admitted that it gives local managers a lot of autonomy in decision making. This may be what led to any problems that are proven to have truly existed. Looking beyond IFCO at the general business climate today, it would be nice to think that honesty rules the day and that people will do the right thing. But the day-to-day reality seems to indicate that the opposite is true. Now I am not saying that any other pallet company has done what ICE alleges that some IFCO managers did. But I do believe that in the competitive nature of today’s business world, it can be real easy to justify cutting corners. And I’m not just talking about cheating on pallet specifications or sticking creditors.
I am also talking about your employees doing whatever they can to work less and earn more. Maybe your workers skimp on repairs and hope that the quality control guy does not catch it. I am talking about removing safety guards so that the line can have a bit more production. The list could be endless. Hopefully, you get the point.
What does this show us about our industries? The answer – “Nothing unique.” It appears that most industries struggle with professionalism and ethics. The pallet and lumber industries are no different because they are made up of people. Sometimes doing the wrong thing just seems to be hardwired into the human nature. No man is perfect. But some do try harder than others to do the right thing. And because it can be hard to always know who you can trust, it appears that the best way to keep honest people honest and detect troublemakers is to have systems in place that provide oversight and accountability. While no system will necessarily make bad apples become good fruit, oversight can provide upper managers the information they need to identify problem areas.
In the case of verifying the work authorization status of a new hire, ICE suggests that companies have more than one set of eyes involved in the process. Outside payroll firms can help monitor work authorization. A company could pick someone from accounting or a manager from a separate part of the company to periodically monitor the work status verification process and policies.
Hopefully, leading pallet companies will rise to the occasion and take steps to counteract any negative attention that the industry may receive because of the recent immigration raids. Putting systems and monitoring practices in place will provide just one more step of protection to shield companies and help develop a more professional image for the industry as a whole. While the industry will probably never be able to do anything about the small operations that pop up overnight and disappear just as fast, hopefully, the major players will set the tone by demanding a high degree of professionalism. Many do. But with the constant pressure to lower prices, this will be a battle that will continue to be fought.
In the case of IFCO, the allegations go way beyond basic I-9 compliance issues. If you want to know more about the IFCO case, read the article on page 18. This article also covers the basics of immigration law compliance. A special report on the issue can be ordered for $100 or it is available free for paying subscribers to the Pallet Profile and/or Recycle Record. See page 20 for more information.
