Green Giant takes root in Mexico

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MINNEAPOLIS (AP) -- Accusations from labor that the valley of the Jolly Green Giant is moving to Mexico have coincided with Green Giant's jubilant triumph over Birdseye as the No. 1 frozen vegetable brand.

For its first 28 years in frozen vegetables, Green Giant was No. 2 behind the industry pioneer. But for the past seven months the subsidiary of Pillsbury Foods has controlled about 16 percent of the $2 billion frozen vegetable market to 14 percent for Birdseye, according to ratings by Nielsen Co.

``They've made it to No. 1,'' said Birdseye spokeswoman Linda Eatherton. ``I don't know if it's been a meteoric rise. But they are there.''

``We're clearly in front of them now,'' Green Giant President Gary Klingl said. ``It's something we feel pretty good about it.''

But while management is echoing the leaf-clad giant's anthem of ``Ho, ho, ho,'' plant workers in Watsonville, Calif., are crying ``Boo, hoo, hoo'' over the permanent loss in January of 380 jobs from the 490-member work force.


The plant's broccoli and cauliflower growing and cutting work was moved to labor-cheap Irapuato, Mexico, a town of about 300,000 people which dumps raw sewage into its waterways. Labor leaders say the expansion south of the border will undermine product quality and sully the wholesome image of the Giant and his elves.

``We are trying to educate the consumer as to what the new Green Giant is,'' said Joe Fahey, president of Teamsters Union Local 912 at the Green Giant plant in Watsonville. ``He's turned into a vicious mean ogre.''

Green Giant curtailed its Watsonville operations at a time when the community was reeling from a 13 percent unemployment rate brought on by earthquake damage. The move increased the Mexican work force to about 800. There are about 7,000 Green Giant workers in the United States, including sales, operations, management and plant workers.

Labor groups angered by the exodus of production jobs have protested in Tokyo, a key market in Green Giant's overseas sales expansion; Minneapolis, where Pillsbury is based; and England, home of Pillsbury parent Grand Metropolitan PLC.

Their complaints are included in a video called ``Dirty Business,'' which claims that Irapuato's polluted water is dumped on crops. The video also depicts laborers who toil at ``Gigante Verde'' for about $4 a day at ages as young as 11. Fahey said starting wages for the same jobs in Watsonville were $7.56 an hour, or $60.48 a day.

Klingl said production standards in Irapuato, with the help of chlorinated well water, are no different than they are at any other Green Giant plant. And no one as young as 11 is working at the plant, he said.

Green Giant pays above the approximately $3.50-a-day minimum wage in Irapuato and has plans to build a sewage treatment plant if the city does not build its own, Klingl said. Also, Mexican farmers work under the same guidelines the company imposes on U.S. growers even though there are fewer farm chemical restrictions in Mexico, he said.

Klingl admitted that the cheap labor incentive of moving to Mexico is ``obvious to everybody.'' But he said increased hand work and a better growing season will improve quality.


``If we were trying to squeeze the last nickel and dime out of this thing, we wouldn't be doing the things we've been doing,'' said Klingl, a Green Giant executive for the past 10 years.

But there is no denying a tightening of purse strings at Green Giant since Grand Metropolitan acquired Pillsbury Jan. 4, 1989, in a hostile $5.8 billion takeover. Under the unofficial Grand Met restructuring motto of ``a light grip on the throat,'' cost-cutting has been fervent throughout Pillsbury.

Grand Met officials have asked Klingl to increase Green Giant profits this year ``far in excess'' of 15 percent even though per capita frozen vegetable consumption is flat and canned vegetable consumption is declining. And under Grand Met's brand-building emphasis, Green Giant's advertising budget has ballooned from $3 million in 1986 to $20 million projected for 1991.

``Quite frankly we are having difficulty achieving it (the profit goal),'' Klingl said. ``We will do the 15 percent.''

Mark Ritchie, executive director for the Institute for Agriculture and Trade Policy, a labor-oriented research group in Minneapolis, said the economic pressure will lead to further expansion in Mexico. With a depleted presence in California, the Green Giant's U.S. valley is now centered in the Midwest.

Southern Minnesota, for instance, has three Green Giant canning plants and Le Sueur -- home of the annual Giant Days celebration -- is marked with three mammoth cutouts of the icon.

``We will see Green Giant leave Minnesota eventually,'' Ritchie said. ``Minnesota producers now selling to Green Giant can anticipate that Green Giant will move everything to Mexico.''

Not true, Klingl said.


Yes, Irapuato will be the site of a new Green Giant mushroom growing and processing facility within 18 months. And Green Giant corn will come from Mexico when there are seasonal gaps in U.S. production, he said. But the 7-year-old facility will be ``maxed out'' with those additions and the broccoli and cauliflower work from Watsonville, he said.

The growing conditions in the Midwest are unbeatable for peas, corn and other vegetables, Klingl said. In addition, Pillsbury proved its commitment to U.S. manufacturing by launching a $140 million plan last year to expand and modernize some plants and distribution centers while closing others.

``My personal opinion is there are a lot of people who have lost their job and they are hurt and they are striking out,'' Klingl said about the dissent.

Green Giant is taking the protests seriously but hasn't noticed any impact on sales, he said.

The company said it slashed the California operation because it was costing too much to ship fully processed products to points east of the Mississippi River, where 85 percent of the products are sold. It emphasized that it was adding jobs at plants in Wellston, Ohio, and Belvidere, Ill.

Klingl said shipping from Mexico is less expensive because the vegetables are in bulk form. They receive further processing and packaging in Ohio and Illinois.

``They were trying to minimize their expansion south of the border,'' Fahey said. ``If you were Green Giant, you'd do the same thing.''

Green Giant's share of revenue in the frozen market has grown from 9 percent in the early 1980s to 16 percent compared with Birdseye's slide from 15 percent to 14 percent in the same period, Klingl said. Green Giant also holds an edge over Birdseye in vegetable poundage, but by a smaller margin.

Klingl said Green Giant made its greatest strides against Birdseye by selling frozen vegetables in plastic bags. The bags now account for more than 50 percent of the frozen vegetable market and Green Giant sells about 7 million cases a year compared with 1 million cases a decade ago.

Green Giant is No. 2 in the $2.4 billion canned vegetable market behind DelMonte.

The highly fragmented fresh vegetable segment is $18 billion and growing faster than the population. Seventy-five percent of all vegetables consumed in the United States, measured by dollars, are fresh.

Green Giant and other companies have been unsuccessful in branding those products on a large scale. But Klingl thinks his brand can someday work its magic on fresh vegetables the way other brands penetrated the fresh poultry industry.

Efforts also are under way to expand frozen and canned products in overseas markets, where Green Giant is beginning to be recognized in Taipei, Korea, Mexico, Japan and Europe, Klingl said.

Klingl said the Tarzan-like giant -- an advertising constant for 30 years -- ``touches the child in people. It touches those warm fuzzy things down inside.

``You know that there is no such thing as a giant and all these funny little helpers running around, but it gives you a permission to believe Green Giant vegetables are better than the competition.''

And, according to Fahey, it obscures the reality of where the goods are produced.

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