NBC News provided exclusive coverage of The Private Equity Stakeholder Project’s new report, Profit Over Safety: Private Equity’s Leveraged Bet on Packers Sanitation. The report details how The Blackstone Group’s Packers Sanitation Services Inc (PSSI), which specializes in cleaning food processing plants, has stood out as a dangerous workplace – even as Blackstone and Packers’ previous private equity owners have collected hundreds of millions of dollars in dividends from the company.
Packers Sanitation Services was first sold to a private equity fund called Blue Point Capital Partners and has since been owned by a series of different private equity funds: Harvest Partners in 2007, Leonard Green & Partners (sold for $1 billion), and in 2018 for an undisclosed sum to Blackstone, the largest private equity firm in the world.
“A 2017 analysis by the National Employment Law Project, an advocacy group, found that PSSI has some of the worst rates of workplace injuries in the country.” According to the DOL, “OSHA opened inspections into PSSI 56 times in a span of five years, from 2015 through 2020, and issued 38 citations against the company.”
The Private Equity Stakeholder Project focused on PSSI for its latest report because “its track record goes back years,” PESP executive director Jim Baker told NBC. “It’s been controlled by a string of different private equity firms that have used it, literally, to pay themselves hundreds of millions of dollars, while workers are getting injured and dying.”
NBC reported, “Under its private equity owners, PSSI has merged with competitors and nearly doubled its selling price: It was sold for $540 million to Harvest Partners before it sold again just three years later for $1 billion. But even as PSSI has found success in finance, its worker safety record remains troubling. Three PSSI workers have died on the job since Blackstone took over in 2018, including one who was decapitated cleaning a chicken chiller, and four others had accidents that resulted in amputations, according to Occupational Health and Safety Administration records highlighted in a new report by a watchdog group….OSHA cited PSSI for two of the deaths, the decapitation and another fatality in a chicken chiller.”
According to NBC, OSHA cited PSSI for 17 violations last year for failing to train workers about the dangers of liquid nitrogen after a nitrogen leak killed six people who worked for the Foundation Food Group at a poultry plant in Gainesville, Georgia. While those killed were not employees of PSSI, OSHA asserted that PSSI was responsible for cleaning the plant and for making sure its own workers were safe there.
One of three companies cited in connection with last year’s fatal nitrogen leak at a Georgia poultry plant, PSSI serves as an example of how “private equity isn’t making workplaces safer.”
Even when compared to other types of manufacturing work, NBC reported that the meatpacking industry has proven to be especially dangerous, and that industry investors should prioritize worker safety.
Instead, private equity firms have added debt to PSSI’s books and used the money to pay themselves through debt-funded dividends, or dividend recapitalizations. PESP’s report noted Packers Sanitation paid Leonard Green and Alpinvest a $340 million debt-funded dividend in December 2017. Packers Sanitation paid a $135 million dividend in June 2019 and another $297 million dividend in November 2020 to the Blackstone Group.
Using this “low road approach,” private equity firms cut costs through reducing wages, benefits and staffing, “with devastating consequences to millions of workers, their families, and their entire communities.”
Matt Stoller, the research director at the American Economic Liberties Project, a nonprofit organization that advocates for breaking up large corporations and whose executive director is a former Treasury Department official, told NBC, “Private equity doesn’t care that much if their private subsidiary companies go bankrupt, whereas for a public company it is embarrassing.”
Head of OSHA during the Obama administration, David Michaels said that private equity firms are known to maximize profits, often by cost cutting: “Safety is among the first to go in cost cutting efforts. When I see a company taken over by private equity, I certainly worry about the safety of workers.”