Profits heading south

By Dan Hilborn
Published Aug. 28, 2004


The Hospital Employees' Union is calling for stricter public scrutiny of the Fraser Health Authority's tendering process after a Burnaby laundry firm was sold to a large American corporation just two days after it received a contract to provide laundry services for local hospitals.

"It's more and more apparent that these contracts, when they are being appraised, have to come under public scrutiny," said Margi Blamey, HEU spokesperson.

At issue is the Aug. 10 awarding of a $50-million, 10-year contract to provide laundry services at five area hospitals to two local firms - Keefer Laundry of Burnaby and Ecotex Laundry Services of Abbotsford.

Just two days after the contract was announced by the FHA, Keefer Laundry was sold to Minnesota-based G&K Services Inc., one of the largest uniform and apparel service companies in the United States.

A man who identified himself as the "owner-manager" of Keefer Laundry did not reveal the impending sale during a brief telephone interview with the Burnaby Now on Aug. 12.

"I'd rather not say anything at this time," said the man who refused to divulge his name. However, he said the local company has been in business for 98 years and has "lots of experience" providing services to the hospitality industry, hospitals, and other public institutions.

However, Blamey said her union is concerned that free trade agreements could effectively prevent the local health authority from ever reclaiming the jobs as part of the public service.

"What impact will the U.S./Canada and NAFTA trade agreements have on what we contract out?" Blamey asked. "If we want to pull this back into the public sector we will be impacted by these trade agreements. We know from what happened with the softwood lumber that these are not things that we can easily reconcile."

A press release issued by the HEU on Monday morning offered an even stronger condemnation of the deal. "It's bad enough that health care dollars are being diverted to private profits, but once again, those public dollars will be padding the bottom line of a foreign corporation," HEU spokesperson Zorica Bosancic said in the statement. "It's taking decent jobs away from working people and their families, as well as the public right to scrutinize how their dollars are being spent."

Attempts to contact G&K Services Canada in Ontario were unsuccessful, however, Helen Carkner, spokesperson for the FHA, said the company has indicated that it has no intention of moving the jobs south.

"What they've indicated to us is that they have no intention of moving or changing," Carkner said Monday morning. "If anything, they'd expand their business into other areas."

Carkner also said that the FHA did not have prior knowledge that Keefer Laundry was being sold to an American firm. "We learned about it once the contract was finalized."

And when asked if the health authority had any concerns about the sale, she answered: "No, for a couple of reasons. We've been assured that it will be business as usual, and our point of entering the contract is making sure the work is done and standards are met, and we have clauses to ensure that.

"I think the public will be concerned that the linen supplies around them are clean, that's what they'll care about and that's what we care about," Carkner said.

Meanwhile, the HEU is also concerned about the loss of about 50 union jobs at the Tilbury Regional Hospital Laundry (TRHL) facility in Delta, which used to do the work for the five FHA hospitals that had their services contracted out.

In announcing the contract, Bob J. Smith, chief of shared services for the FHA, said the deal will save the health region about $5 million over its 10-year term.

And Carkner said the change will not result in any loss of work for FHA employees.

Blamey said the employees of the Vancouver Coastal Health Authority who work at Tilbury will lose their jobs.

"I think the impact on employees in the FHA has yet to be seen, but there's certainly an extensive impact at Tilbury," she said. "Another twist is that this was a publicly owned facility that was widely acclaimed for its cost effectiveness and high standards of service delivery, yet it's now being contracted out to two new facilities."

Blamey noted the FHA now has three separate facilities to handle its hospital laundry.

In 2002, the health authority signed a contract with K-Bro Linen of Alberta to provide services for Mission Memorial, MSA, Chilliwack and Fraser Canyon hospitals.

The latest contract will see laundry from Delta, Langley Memorial, Peace Arch and Ridge Meadows hospitals handled by Ecotex, while laundry from Burnaby Hospital will go to Keefer.

In March, Keefer Laundry was listed as being in "minor noncompliance" of its liquid waste water discharge permit, which means the company experienced one to three permit violations in the previous 12-month period, based on a monthly sampling.

The HEU is also reviewing a July 2001 decision by the U.S. Occupational Safety and Health Review Commission which fined G&K Services a total of $12,600 after a new employee at a San Antonio, Texas, laundry facility lost his arm while trying to operate an industrial drying machine.