By Jim Schutze
By Rachel Watts
By Lauren Drewes Daniels
By Anna Merlan
By Lee Escobedo
By 1989, Pilgrim's Pride had pushed its way into the bottom of the Fortune 500, debuting at number 496 by selling more than $500 million in chickens the year before.
By 1992, falling prices and rapid expansion caused the company to lose almost $30 million in one year, and Pilgrim's Pride defaulted on some of its loans. The company was forced to ask creditors for more time to pay its debts.
Heavy investments in Mexico--where Pilgrim's Pride is now the second-largest chicken processor---helped pull the company out of its financial trough, but those same operations are now dragging the company's bottom line. Last January, the company reported a 93-percent drop in quarterly profits caused primarily by the devaluation of the peso.
Pilgrim's Pride racked up record sales in 1995, topping $930 million, but the company lost $8 million during the 1995 fiscal year, mainly because of continuing problems with its Mexico operations. Bo Pilgrim, at the time, said the company's U.S. operations were going strong, but that peso devaluations and problems with the Mexican economy had hammered the company. He said $30 million in losses in Mexico canceled the company's other profits and put it in the hole.
Even so, Pilgrim's Pride remains the nation's fifth-largest producer of processed chicken, with more than 11,000 employees working at its processing plants, hatcheries, and feed mills in Texas, Arkansas, Arizona, Oklahoma, and Mexico. Some of its chickens are sold in grocery stores under the Pilgrim's Pride brand. Many more are sold directly to food companies and fast-food restaurants.
Over the years, Bo Pilgrim has earned a reputation for something more than just making money. His company has periodically been accused of violating state and federal environmental and labor laws.
In 1985, Pilgrim was a member of the Texas Water Development Board--ironically, the same body he is now approaching for help with his problems in East Texas. During the six years Pilgrim was on the board, the Houston Chronicle reported in 1985, Pilgrim's company repeatedly was allowed to violate state pollution limits on effluent flowing from its East Texas plant.
Residents of Mount Pleasant, home of Pilgrim's largest processing facility, complained that Pilgrim's Pride was allowing chicken blood and guts to flow into streams, roads, and pastures. The problems were so bad that the U.S. Environmental Protection Agency ordered the company to stop polluting immediately.
That same year, 1985, the responsibility of enforcing state water-pollution laws passed from the Water Development Board to the newly created Texas Water Commission. With just hours left before the Water Development Board gave up its enforcement powers, the agency's staff signed an agreement with board member Pilgrim giving the company more time to clean up its operations without facing fines for violations.
Pilgrim, at the time, belittled the critics who were complaining about pollution from his Mount Pleasant plant. "Lots of cities in the state of Texas from time to time violate their [water] permits," Pilgrim was quoted as saying. "The people who criticize industry and cities on environmental problems don't know what they are saying. The problem is that people who talk on telephones and work with filing cabinets are not aware of the problems of supplying food for the nation."
Since the 1980s, state environmental regulators have hit Pilgrim's Pride with more than a half-million dollars in fines for various violations of pollution laws. In July 1995, the company agreed to pay another $325,000--the largest fine in state history for violations not involving hazardous waste--for repulsive odors and water pollution from its plants in Mount Pleasant and Lufkin.
Residents of Mount Pleasant have complained about the stench from Pilgrim's plant for years, and have been dissatisfied with the company's repeated promises to solve the problem. Last April, for instance, the Mount Pleasant Daily Tribune ran an editorial column saying the plant's odors "can only be called abuse."
"Surely, they [Pilgrim's Pride] can see that it was the stink in Mount Pleasant that cost them the plant deal in Sulphur Springs," columnist Bob Palmer wrote. "Having a stink that would gag a maggot for six or eight days in February, when the temperature is not really hot enough yet to get the guts really smelling, is totally unacceptable."
Pilgrim's Pride has had trouble on other fronts as well. A woman living near one of the company's facilities is now suing Pilgrim's Pride, claiming that runoff from company property is laced with arsenic--used in chicken feed to speed up growth--that has killed her cattle.
Employees have complained to the Texas Workers' Compensation Commission that Pilgrim's Pride intimidates injured workers to prevent them from filing workers-compensation claims. Dr. Louis Arrondo of Mount Vernon, one of the area's few Spanish-speaking physicians, has also sued the company, claiming that Pilgrim's Pride has tried to cut him out of business because he attempted to provide medical care--and submit insurance claims--for workers injured at Pilgrim's plants.
Pilgrim himself will never live down the notoriety he gained in 1989 when he appeared on the floor of the Texas Senate--shortly before it was due to vote on changing state workers-compensation laws--and passed out $10,000 checks to lawmakers as campaign contributions.
Few question that chicken plants are a dirty and potentially dangerous business. Residents in East Texas liken them to the slaughterhouses of Upton Sinclair's landmark exposé The Jungle, set in Chicago in the early 20th century--places where low-wage immigrant workers toil for hours amid blood and carnage killing, plucking, cleaning, and slicing chickens on high-speed assembly lines.