06-05-14 Immigration issue hits home (By Adam Geller ASSOCIATED PRESS)

Pallet manufacturer is a case study in economic realities
Preferred Pallets owner Monte Lowe, left, talks with his plant manager,
Harry Starnes, in the inventory yard in Cookeville, Tenn.

You could call it a forgotten industry, except most people never knew
this sawdust-covered corner of the economy existed in the first place.

At least not until late last month, when federal agents focused
uninvited scrutiny on the obscure business of wooden cargo pallets,
arresting nearly 1,200 employees of supplier IFCO Systems in the
singlelargest immigration bust ever. For a trade used to being
overlooked, it was hardly the ideal way to gain the spotlight.

But as the nation wrestles with illegal immigration, the raids on more
than 40 IFCO plants, from southern California to upstate New York have
made it clear to folks in this gritty business that they, too, have a
critical and surprisingly difficult-to-hedge stake in the outcome.

In much the same way that the broad immigration debate is defined by
conflicting interests and consequences, the IFCO crackdown is proving
an unexpectedly double-edged buzz saw for the thousands of momand-pops
that fill this gritty niche business. It’s immigration economics, just
on a small scale.

"It’s a real concern in this industry what’s going to happen to the
immigrants because they are so widely employed," said Ed Brindley, who
runs Pallet Enterprise, a trade magazine. "I know most of the pallet
people. And most of them consider labor to be their biggest problem."

In an industry of little guys, IFCO is one of the few big players.

So the government’s raids made many smaller business owners cringe. At
the same time, seeing a company reviled as an industry bully taken down
a notch also has turned some of them near giddy.

"It couldn’t happen to a nicer guy," said Monte Lowe, owner of
Preferred Pallets in Cookeville, Tenn., describing his initial reaction
to reports of the raids on IFCO. "Everyone I spoke with pretty much
said that."

But at some pallet shops, that elation is undermined by serious doubt.
That’s because the raids look to many like a reversal of several years
in which the federal government engaged in minimal worksite enforcement
of immigration laws.

In 1999, the federal government notified 417 employers of its intent to
impose fines for immigration-law violations. But such notices dropped
to three in 2004, according to a report on immigration enforcement last
year by the Government Accountability Office. Worksite arrests also
fell sharply, from 2,849 in fiscal year 1999 to 445 in fiscal year 2003.

More recently, worksite arrests climbed to 845 in fiscal year 2004 and
1,045 last year, according to U.S. Immigrations and Customs Enforcement.

It’s unclear to what extent the raids point to a sustained increase in
enforcement. But immigration officials have hardly put minds at ease,
saying they plan more such arrests.

Immigration lawyers and businesses, including the pallet companies, say
they hope any stepped-up enforcement will focus on the most egregious
violators. IFCO is accused not just of hiring illegal workers, but of
recruiting and harboring them.

But in an industry that leans heavily on immigrant labor, the folks who
sell pallets have begun to wonder: Does this mean they could be next
under the microscope?

"This business is my life and I’m not going to risk this for anything,"
said Steve Mazza, owner of S &B Pallet Co. in Plainfield, N.J. "It
raises my level of concern. It has made me go out and restate to my
employees here, ‘Hey, make sure you’ve got your I-9s. Make sure you’ve
got your Social Security cards and green cards and make sure we’re
following the letter of the law.’ "

An I-9 is the employment eligibility verification form that companies
must complete on all their workers.

Pallets are heavy, and the work is dirty and tiring. While the work
itself has not changed much over the years, the dynamics governing it
have shifted dramatically. It’s expensive to haul pallets around, so
this has long been a decidedly local business. But that way of doing
business has come under some intense pressure in the past few years.
Much of that pressure has come from IFCO.

IFCO, a major supplier of reusable plastic containers common in Europe
for moving produce, has been buying small pallet shops in the U.S. for
the past few years, setting up a nationwide recycling network. That
helped it land customers like Home Depot.

IFCO has challenged smaller companies in scale and price. The company
routinely pays more for used pallets and sells recycled pallets for
less, leaving rivals to wonder how.

Now they think they know the answer.

"IFCO came in and their pricing was extraordinary, predatory, and they
picked up a lot of business," Mazza said. "I think now we’re seeing
some of the reasons they were able to do that."

Other pallet-company owners say they would never do the things that
IFCO has been accused of. But there is wide agreement that Mexican and
Central American workers have become a mainstay of the pallet business,
and it’s clear that many of those workers are not here legally.

The raids, however, have driven home the uncertainty surrounding their
work force in a way the debate in Congress failed to do.

"Some of the people in this industry aren’t exactly sure that they’re
doing the right thing," said Steve Geiges of Treen Box & Pallet Corp.
in Bensalem, Pa. For many pallet providers, the appeal of immigrant
workers is not so much about pay. Many say they pay them the same wages
as their American-born workers — often a base of $6 an hour
supplemented by perpiece pay. Immigrant workers are valued, though,
because they routinely show up on time and are willing to work long
hours. The rap on Americanborn workers in this trade is that it’s
difficult to count on them.