The Mafia and Pallet Manufacture

Don told me that wooden pallet manufacture in the U.S is a $500 million a year business. His efforts to help engineer a superior pallet no doubt caught their attention. The Mafia's effort, according to Don, relies on illegal immigrants. I did a check on this and sure enough it seems to be true.

In case the link breaks before I publish this, here's the story copied from the Miami Herald: 

LABOR May 16, 2006

Wooden pallet industry highlights immigration issues

Associated Press

You could call it a forgotten industry -- except few people ever knew about this sawdust-covered corner of the economy.

At least not until late last month, when federal agents arrested nearly 1,200 employees nationwide of a company that makes wooden cargo pallets, in the single largest immigration bust ever.

The bust at IFCO Systems shoved the wooden pallet industry -- where workers pound together waffles used to forklift everything from mangoes to machines -- into the limelight, as the nation wrestles with the quandary of illegal immigration.

''It's a real concern in this industry what's going to happen to the immigrants because they are so widely employed,'' says 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 only big players, and much smaller businesses are fearful. At the same time, some of them are near giddy to see a company widely reviled as an industry bully and brutal competitor taken down a notch.

''It couldn't happen to a nicer guy,'' says Monte Lowe, owner of Preferred Pallets in Cookeville, Tenn. ``Everyone I spoke with pretty much said that.''

But some pallet shops see the raids as a reversal of several years in which the federal government engaged in minimal work site 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 just three in 2004, according to a report on immigration enforcement last year by the Government Accountability Office. Work site arrests also fell sharply, from 2,849 in fiscal year 1999 to 445 in fiscal year 2003.

More recently, work site 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.

''It certainly does kind of upset the apple cart. It spooks people. It spooks employers,'' said Marshall Fitz of the American Immigration Lawyers Association. ``Everyone is kind of stretching their necks out to see what's around the corner.''

A spokesman for U.S. Immigration and Customs Enforcement acknowledged past figures showed declining enforcement. But he said they also point to a change in the agency's strategy, moving away from fines and instead filing criminal charges against employers.

''We are rebuilding the program and they [enforcement actions] are beginning to go back up,'' said Dean Boyd, the spokesman for the agency, widely known as ICE. ``Certainly we've got a lot of work to do, but we're taking a different approach.''

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 companies must complete on all their workers.

To understand the challenge facing pallet shop owners like Mazza, it helps to know a little bit about the industry.

Pallets -- most commonly measuring 48 inches by 40 inches and weighing about 40 pounds -- were invented around World War II. The essence of a good pallet is that it's cheap, strong and, well, cheap.

IFCO has challenged smaller companies both 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 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.

Like other small businesses, pallet suppliers say they are trying to operate within the law. They check the documents the government tells them to check. They also know many of those documents may be fraudulent, but say the law does not allow them to reject workers who have papers.

The raids, however, have driven home the uncertainty surrounding their workforce 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.