A significant and long-time trend is the continuing elimination of small units and the concentration of business in fewer, larger units. The trend is obviously toward larger companies and larger packs in a given plant. The Journal of Commerce of March 4, 1964, carried a page 1 story headlined "More Mergers Loom in Canning Industry-Product Diversity Target."

The number of establishments in fruit and vegetable canning and processing fell from 2,265 in 1947 to 1,607 in 1958, according to the census of manufactures, and the average size of plant increased, while the proportion of small establishments declined over this same period.

The U.S. Department of Agriculture analyzed the concentration ratio (percentage of value of shipments of an industry accounted for by the 20 largest companies) between 1947 and 1958, in 25 food manufacturing industries. In 13 of the 25 industries, including canned fruits and vegetables, the concentration ratio increased. The concentration ratio in canned fruits and vegetables was 46 percent in 1947 and 55 percent in 1958-an increase of almost 20 percent.

(See attachment 16: Canning, Preserving, and Freezing.-Number of Companies and Establishments, 1958, 1954, and 1947.)

(See attachment 17: Number of Establishments in Canned and Frozen Fruits and Vegetable Industries, by Size of Work Force, 1958, 1954, and 1947.)

(See attachment 18: Food Processing Plants are Fewer and Larger.) Not only does food processing have all the characteristics of any manufacturing industry-production lines, mechanized equipment, etc.-but agriculture itself "has taken on more and more of the character of industrialization in the United States." "

Indeed, mechanization in farming is utilized so extensively, that "since 1937, farm productivity has increased about 180 percent as compared to about 100 percent for industrial productivity.""

The mechanization of field production and harvesting of processing crops, the snychronization of harvesting and picking, and the availability of fast, flexible truck transportation, have minimized perishability and permitted processors to draw on supplies from greater distances, thus extending their processing season. Farm processing of food products for sale in 1947 accounted for only a little more than 1 percent of the total value of food products produced by farmers according to the U.S. Department of Agriculture. This figure is undoubtedly less today. Thus, to equate agriculture with food processing is to describe a situation that no longer prevails in our economy.

7. TECHNOLOGICAL DEVELOPMENTS IN CANNING AND PROCESSING PERMIT HIGH-VOLUME, SPEEDY PROCESSING: MINIMIZE PROBLEMS OF PERISHABILITY; REDUCE NEEDS FOR LABOR

The food processing industry is perhaps the most automated of all industries today. These automated processes have allowed tremendously increased tonnages to move through a plant through simplified and greatly accelerated production and at the lowest possible cost, while actually using less labor. Machine technology in food processing has permitted the industry to achieve overwhelming efficiency in the use of manpower.

Modern technology largely prevents the danger of spoilage of perishable commodities. Technological improvements have also come to the farm. The use of mechanical equipment in the growing and harvesting of agricultural products for processing has resulted in the steady flow of raw products:

"Technological improvements in the canning industry seem able to meet the pressure of the increasing raw product supply while introducing increased cannery case-yield per ton for some products."

Great improvements have marked the handling and storing of fresh products since the FLSA was originally drawn. Controlled refrigeration programs have been instituted in the processing of horticultural products so that they may be held from 4 to 6 weeks after they have been picked.

Halle & Stieglitz. New York, N.Y., "The Convenience Food Manufacturing IndustryAn Institutional Research Study," January 1963, p. 33.

7 W. B. Murphy, president, Campbell Soup Co., at Texas A. & M., College Station, Tex., Jan. 18, 1962. In Congressional Record, Jan. 22, 1962, p. 531.

The food marketing industries-recent changes and prospects; in U.S. Department of Agriculture. "Marketing and Transportation Situation," February 1962, p. 18.

Sidney Hoos and Beatrice M. Bain, "Fruit and Vegetable Canning Industry Market Structure Changing in California Agriculture" (University of California Division of Agricultural Services), March 1960, p. 15.

34-421-64-pt. 1--20

Precooling, truck refrigeration, and improved highways have resulted in a more satisfactory movement of the raw product from orchard or field to the processing plant.

Perishability has been drastically reduced by modern refrigeration and automated machinery.

Present-day machines permit fruits and vegetables to pass virtually untouched from the field into the can. The Libby, McNeil & Libby peach cannery at Gridley, in California's "peach bowl," has mechanized its receiving, preparation, and processing departments to handle peaches at a rate better than a ton a minute. This means that when operations are at capacity, more than 100 peaches go into cans every second of the working day.

(See attachment 19: Technological Developments in Canning, Freezing, and Processing.)

(See attachment 20: Perishability, Seasonality, and Extending the Processing Season.)

8. MAJOR SEGMENTS OF THE CANNING AND PROCESSING INDUSTRY, UNDER UNION CONTRACT, DO NOT USE, OR USE LESS THAN, THE TOTAL EXEMPTION WITHOUT IMPAIRING TOTAL OUTPUT OR COMPETITIVE EFFICIENCY

Many of our canning and processing collective bargaining contracts provide for overtime after 8 hours per day or 40 hours per week-with no exemptions. Others provide for overtime after 8 hours per day (instead of 12) and 48 hours per week (instead of 56) during the processing season, and after 8 and 40 hours, respectively, during the nonprocessing season. Still others allow only one 14 week exemption from overtime requirements, instead of the two 14-week periods presently permitted, or limit the exemption period to less than 14 weeks.

In many contracts, even during an "exempt" week, time and one-half is paid after 8 hours' work and doubletime after 12 hours' work.

(See attachment 21: Hours and Overtime Provisions in Teamster Agreements in the Canning and Preserving Industry.)

Even in the canned fresh fruit and vegetables industry, one-fourth of the establishments paid overtime after 40 hours during the processing season."

10

And in the wholesale fresh fruit and vegetables industry, 798 out of 826 establishments paid overtime after 40 hours per week during the processing season.” Here is concrete evidence that the Fair Labor Standards Act exemptions have become well-nigh obsolete. These contracts, and those negotiated by other unions in this industry, give the lie to the argument that overtime exemption is an economic necessity; that the industry cannot practically or profitable operate under the wage and hour standards applicable to the rest of American industry.

The survey indicates that employers in these industries can operate on shorter workweeks, or pay overtime, and still compete with those working unlimited hours or paying no overtime.

Elimination of the exemptions will have minimal impact on those industries handling and processing farm commodities. Removal of the overtime pay exemptions and the requirement of overtime pay will serve to reduce the length of workweeks, as it nas in unionized establishments.

These union conditions are jeopardized by the existing exemptions in the act. since unorganized firms take the full exemption under sections 7 (b) (3), 7(e), and 13(a) (10), and thus place fair employers under a competitive handicap.

The enlightened firms which bargain colletively with their employees feel the pinch in competition with the companies that take full advantage of the low wages and long hours of work made possible by the exemptions.

Such discrimination has broad repercussions throughout the industry and represents a constant threat to union standards. We are vitally interested in protecting our contractual relations as well as the present cooperative terms that exist with our employers.

Many Teamster employers in these industries have recognized the basic inequity of the overtime exemptions by eliminating them or limiting their application. Campbell Soup Co. is one such firm, as shown in the following excerpt from a letter dated March 4, 1964, from the company to Mr. Peter Andrade, director of the Western Council of Cannery & Food Process Workers Unions:

"This letter is in response to Mr. A. Weiss' recent request concerning overtime exemptions at our major processing plants. We do not exercise any of the overtime exemption provisions at our heat process plants in which perishable products

10 U.S. Department of Labor, Wage and Hour and Public Contracts Division: "Handling and Processing of Agricultural Products," February 1962, table 2.

are handled at Camden, N.J.; Chicago, Ill.; Napoleon, Ohio, and Sacramento, Calif."

Many of the unionized firms in the industry have demonstrated that they can meet the hours and overtime standards which apply to the vast bulk of American workers, and still continue to operate profitably in a highly competitive nationwide industry. These firms prove that it is economically feasible to comply with accepted industry standards of a 40-hour week, with time and one-half for overtime.

The Wage and Hour Division of the U.S. Department of Labor, in a recent study of premium pay practices in industries engaged in handling and processing agricultural products, examined 893 union contracts, covering over 3,000 establishments of all sizes, in 19 different industries, located in all sections of the country.

The study shows that 9 out of 10 establishments, by agreement, pay overtime after 40 hours per week during peak or processing seasons.

The findings on daily and weekly premium pay for overtime work are as follows:

"Premium pay at one and one-half times the regular rate is common for work after 8 hours a day and 40 hours a week. The contracts applicable to 72 percent of all establishments provided for premium pay after 8 hours per day, and those applicable to 89 percent of the establishments required overtime rates after 40 hours per week.

"Under the agreements, the 40-hour work standard was generally applicable in cotton compressing, meat packing, condensed and evaporated milk, special dairy products, fluid milk, Hawaiian raw sugar, farm products warehousing and storage, wholesale dairy products, and wholesale fruits and vegetables. Premium pay for weekly hours after 40 was also quite pronounced in several other industries, such as poultry dressing and packing, creamery butter, natural cheese, and beet sugar processing. For two industries-canning and freezing of fresh fruits and vegetables-premium pay after 48 hours a week in the processing season was applicable to the larger number of the establishments." "

The International Brotherhood of Teamsters feels it owes the progressive employers help in combating unfair competition. We do not believe that union employers should be penalized for their fairness. The best means of ending such disadvantage is to eliminate the wage and overtime exemptions under the act as they apply to agricultural processing.

The maintenance of "fair labor standards" requires that the exemptions under the Fair Labor Standards Act be removed and a basic floor of protection assured both the workers and their employers. In this way, employees under collective bargaining agreements will be protected against the competition of firms whose employees are not protected by minimum wage laws or collective bargaining. Removal of these exemptions will restore competitive equity within the industry. The potential impact of removing the overtime exemptions for these industries can be determined from the following table, compiled from statistical tables prepared by the Statistical Reporting Service of the U.S. Department of Agriculture, based on a survey in 1960 on overtime pay practices:

Number and percent of establishments engaged in handling and processing specified agricultural products for 41 or more hours per shift in 15 or more weeks and not paying overtime rates for hours in excess of 40

11 U.S. Department of Labor, Wage and Hour and Public Contracts Division: "Handling and Processing of Agricultural Products," February 1962, app. IV, p. II.

Mention should also be made of the fact that canners supplying canned and processed fruits and vegetables to agencies of the U.S. Government must pay for overtime work at the rate of time and one-half for work in excess of 8 hours per day or 40 hours per week, with no seasonal exemption or overtime tolerance, under the Public Contracts Act.

In view of these demonstrated facts, it is difficult to consider seriously the contention that other firms in these same industries are unable to absorb the slight additional costs for overtime and still remain in business. The evidence obliges us to reject out of hand the argument that the requirement of overtime pay will result in bankruptcies and unemployment.

A study of the economics of the industry reveals that it is no more entitled to exemption from the act than the many industries now covered.

The wages and hours of workers have changed substantially since the act was passed in 1938. At that time, many exempt industries worked exceptionally long workweeks without the payment of overtime.

However, hours of work have been substantially reduced in all industries not covered by the act in the last 25 years. The exempt workweek for employees in the canning industry established in 1938 was related to the workweek generally in effect at that time in the United States. This relationship no longer exists because of the sharp reduction in the workweek of virtually every industry other than canning and processing. These exemptions, therefore, are not applicable under our present economic conditions.

9. AVAILABILITY OF LABOR

Use of technology, even by small firms, drastically cuts processing time and requires less manpower.

Changes in the labor demand and supply have been significant within recent years. One of the most important of these is the reduction in labor requirements that results from mechanization and technological advances. The output per man-hour is remarkably greater; hence, fewer workers are needed, even though the output is greater. The Department of Agriculture estimates that production in factories processing farm foods rose by 1963 to 47 percent over the 1947-49 base period, while man-hours of all employees fell 5 percent."

With fewer employees to recruit and with more stabilized employment for the majority of workers, the procurement of a work force is simplified. Moreover, the skills required are not as specific as in prior years as the machines and their control systems more nearly resemble those of other types of manufacturing plants. Hence operative experience in general can more readily be substituted for specific experience on blanchers, fillers, closing machines, or cookers.

As population has grown and communities have developed in the suburban and rural areas in which canneries are located, the canners have an easier access to labor supply. Beyond these factors, the widespread ownership and use of automobiles enhances the mobility of workers. In consequence of these altered relations of labor demand to supply, the alleged impossibility of scheduled- or multiple-shift operation as made by the canners in 1933 and 1937 has little or no validity for the majority of the Nation's fresh fruit and vegetable processors. The availability of labor, even for peak seasonal operations, is apparently a minor problem among the Nation's processors. Moreover, the added attraction of better wages and overtime pay would undoubtedly attract sufficient competent labor to localized labor shortage areas-if any such exist in the midst of present unemployment levels.

(See attachment 22, "Employment Trends and Labor Supply.")

10. SEASONALITY AND PERISHABILITY HAVE BECOME LESS SIGNIFICANT AS FACTORS WARRANTING EXEMPTION

Perishability has become much less of a problem than in the past. Modern technology and controlled-temperature warehousing largely prevent the danger of spoilage.

The Wage and Hour Administrator has stated that:

"*** perishability is no longer a factor in the handling of many fresh fruits and vegetables by reason of the development of new methods of processing such as freezing and controlled storage."

"13

12 Marketing and Transportation Situation, April 1961, p. 28. Preliminary data for 1963 supplied by author.

13 Address before 19th Annual Cannery Convention, Seattle, Wash., May 28, 1962.

At Seabrook Farms, one of the Nation's largest growers and processors: "Corps are harvested on specified days-sometimes even at a certain hour-to prevent production jam-ups.'

97 14

Canning has become less and less seasonal.

Processors have been extending the processing season by controlling the perishability of raw products. This has been accomplished by cold storage control of ripening (postharvest ripening).

Some processors have lengthen the season considerably by processing a larger number of commodities (commodity diversification).

Processors are also processing raw products into bulk containers for off-season remanufacture.

The contractual relations between the farmer and the processor give the canner substantial control over the rate of flow and the condition of the raw product he is to process. The specifications of these contractual relations make it possible for the processor to specify planting dates, varieties, cultural methods, the acreage to be delivered, and if necessary, daily delivery quotas.

Additionally, many processing plants are situated within hauling distance of production areas which have differing maturity dates and thus, by contracting for their requirements in these different areas, they may extend and stabilize the raw product inflow. The introduction of fast, flexible and efficient truck transportation makes this possible.

These contractual controls also contribute to a higher quality, less perishable, raw product. Good highways and fast trucks alone assure the delivery of a fresher product than could be delivered by the rail lines and over the bumpy country roads of former years. With contractual controls over deliveries, it is no longer necessary for the produce to stand in long waiting lines to be unloaded. Beyond these features, the new knowledge of postharvest physiology makes it possible for the canner to bring all fruits and vegetables under some degree of control over perishability. And in some instances, such as pears, the control may be virtually complete. The first stage of the control (after specification of variety, planting date, and cultural methods) begins with the harvest. It is now known that most fruits and some vegetables may be separated from the plant before they are fully ripened; then, after being brought under temeprature control immediately following the harvest, they may be ripened under controlled conditions following extended periods of storage. This means that the processing period can be divorced from the harvesting cycle, and hence be brought under the control of man rather than of nature.

More and more farm commodities-corn, carrots, beets, bush beans, peas, lima beans, etc.-are now picked by machine instead of by hand, providing for fresher, more uniform product. These items are loaded in large "tote" boxes which allows for airflow through and around the product and adds to its "holding" ability (time it can be held before processing without loss of quality). Cooling or holding rooms are maintained to hold the peak time pickings and to provide fairly uniform product flow instead of the "peak and valley" procedure of the 1930's. Better seed, staggered planting times, irrigation and pest control have added their contributions to stability of handling. Today, green beans can easily be held 7 days between picking and processing. With the possible exception of peas and corn, all other major processing vegetables can be held in like manner. Fruits such as apples, pears, etc., can be held for weeks between picking and processing.

Prior to the advent of truck transportation, canning plants were most advantageously located either on rail lines or within the area of raw product production. With more versatile transportation facilities, canning plants may now serve the production areas of several commodities. This versatility of plant is also promoted by greater flexibility and adaptability of machinery and equipment within the plant. With increasingly larger investments, it is important to plant managements to spread their overhead costs over as large an output as possible. Consequently, multiple-product plants are becoming the general rule, and greater continuity of employment is one of the favorable results. Fewer canning plants are producing a greatly increased output.

In brief, methods of extending the processing season for fruits and vegetables include:

1. Staggered planting schedules.
2. Early and late maturing varities.

3. Delivery quotas.

14 Wall Street Journal, May 17, 1956.