OSI lays off food workers at scandal-hit supplier

OSI China announced widescale layoffs on Monday after it was accused of supplying expired meat to fast-food giants including McDonald's and Yum! Brands in July.

A total of 340 workers will lose their jobs, including 226 employed by Shanghai Husi Company and 114 contractors to Shanghai Husi, OSI China said on its website. Shanghai Husi is owned by OSI China, the Chinese arm of US food giant OSI Group.

OSI China said most workers at Shanghai Husi have been on paid leave since July 21, the day after the scandal was exposed, and are now in the process of being laid off.

"It was our expectation that they could resume their work as soon as possible. Unfortunately, due to circumstances beyond our control, this will not be the case," OSI China said.

Shanghai Husi has experienced significant financial and customer losses in the past two months, it said.

In July, a television station accused Shanghai Husi of using expired meat and forging production dates.

Local authorities detained six managers of Shanghai Husi.

Investigations are still ongoing. "It is very unlikely that production will be resumed soon," OSI China said, adding that a small number of workers were retained to "assist with the ongoing authorities' investigation".

The Shanghai Food and Drug Administration said that officials met officers of OSI China on Monday morning, and emphasized that OSI China is responsible for Shanghai Husi's case.

OSI China said the layoffs only apply to Shanghai Husi and have been reviewed by the local government and the trade union. Workers were notified and advised of their options, it said.

"We are working closely with government agencies to ensure that severance payments will be made to these workers in accordance with all applicable laws, as well as company policies," OSI China said.

"Besides the compensation packages, we are also working closely with local government agencies to provide support to affected workers, including career development coaching, job search and skills training," it said.

No Husi workers were available to comment.

Ben Cavender, principal at the China Market Research Group, said OSI's decision shows the consequence of the problems they are having.

"They are losing businesses to customers who have been moving to other suppliers," Cavender said. "As they are under investigation, they don't need so many workers and they are feeling the effects of what happened."

"It will take a long time for them to do any business here," Cavender said. "They have to spend a lot of time working with the government and show they understand what the problems are and they are able to fix them."