SCDigest editorial staff

The News: Houston-based IFCO North America, a leading manufacturer and manager of wooden pallets and other logistics container products, was caught in a broad sweep focused on employment of illegal aliens. The numbers are almost unbelievable, with the government saying 1200 workers as well as seven managers have been arrested.

The Impact: Public attention is increasing – if you are employing large numbers of illegals, you might want to quickly make other arrangements and consult your attorney.

The Story: The U.S Justice Department concluded a broad investigation by arresting more than 1000 employees and seven managers in the North American unit of Netherlands-based IFCO corporation, which produces and manages pallets and other logistics containers in the U.S. and across the globe.

The government said that more than half the company’s 5800 U.S. employees were thought to have false or incorrect social security numbers.

The government carried out raids this week at 26 of the company’s U.S. plants and warehouses, most of which are involved in the manufacturer and distribution of wooded pallets. Seven current or former managers of IFCO Systems North America were charged with federal crimes of conspiracy to transport, harbor and encourage illegal immigrants to reside in the United States for commercial advantage and financial gain. These managers face up to 10 years in prison and a $250,000 fine for each illegal immigrant worker.

The North American unit’s parent company is based in Amsterdam, and publicly traded in that country as well as Germany. It is one of the largest pallet and container manufacturers and managers (using pallet and container pool systems) in the world.

The company has said in a statement that it is cooperating fully with the investigation and that it hopes "to have this matter resolved as soon as possible."

Officials said the arrests were part of a criminal investigation of IFCO's Pallet Management Services division that began more than a year ago.

It is too early to know the impact on pallet supplies in the U.S., but given IFCO’s leading role in pallet distribution and the scope of the arrests and turmoil, shortages and service issues seem likely in the short term.