Changes in the policy of immigration law enforcement have had and will continue to have a negative impact on the ability of some companies to manufacture and distribute goods to customers due to loss of labor. Recently, a large U.S. food producer (hereafter referred to as “LFP”) was surprised one morning when 25% of their workforce was required to leave immediately, as a result of these policy changes. Like many U.S. companies, LFP has been using a third-party agency for more than five years to e-verify workers to ensure that only workers with the appropriate legal documents were hired. Recently, the newly elected administration has been changing the approach to the enforcement of immigration laws, including the increased supervision of e-verify third-party agencies. This led to the surprising scene one morning when LFP’s e-verify agency walked into their manufacturing site. The agency admitted to LFP that they had lied about some worker’s legal documentation and e-verify results. In fact, 25% of LFP’s workers, including both the plant manager and shift manager, were undocumented (illegal) workers. The agency would be required to notify the government if LFP did not escort the workers out immediately, now that they had been notified. The agency itself, however, would face no penalty. As a result of the disruption, LFP lost thousands of dollars in overtime pay and still could not deliver goods to customers on time. This forced customers to delay bringing on new SKUs that were planned and, in some cases, shift their business to LFP’s competitors. These consequences say nothing of the goodwill that was lost with customers.
LFP quickly jumped into crisis mode to manage the situation. They rallied their workers together around doing all everything possible to best serve the customer. Workers committed to large amounts of overtime to keep as much customer business as possible. Next, LFP had to become creative to replace the lost workers. Their manufacturing plant is located in an area of the country where it is difficult to find skilled labor, and they estimated that it would take a minimum of 18 months to find and train replacement labor. It would take much longer to replace the plant managers and shift manager who had each been at the company for over 5 years. Thus, to attract labor, LFP started by increasing starting salaries. They also invested in building robust training and development programs so that they could hire and train less skilled workers. Finally, LFP found a new e-verify third party agency. In the long run, the company is looking at finding production assets in areas with a larger workforce. However, the process to find a good location could prove difficult as the location must also meet many other requirements such as being within a maximum distance from certain suppliers and customers.
In addition to the steps that they have taken, I believe that they could also start recruiting in high schools for manufacturing workers, increasing the size of their labor pool. They are already investing in new development programs to train unskilled labor, and those programs could be expanded to train high schoolers. Also, hiring teens from local schools could have a positive impact on the community due to the training they would receive and the additional income they could bring home to their family. I would also recommend to LFP that they do what they can to impact policy. Changes in the policy of the immigration law enforcement is only one of the many policy changes that are being proposed that will impact labor and supply chain. LFP and other companies should be a part of this political conversation, influencing some decisions in their best interests.
Looking at the political landscape today, it is hard to predict what policies will affect the supply chain in the future. Will there be enough labor to support LFP’s growth or will there be a labor shortage? In what ways could they further prepare for a labor shortage? Also, in light of the problems with the first e-verify third-party agency, should they perform the e-verify process themselves to prevent surprises in the future?
 Note: As the information provided is not public, the company requests to remain anonymous.
 Company Source: Director of Supply Chain and Logistics.