Greyhound Corp. announced yesterday that it is planning to close and sell the unionized meatpacking plants of its Armour Food Co. subsidiary, saying it no longer can compete with lower-cost nonunion rivals despite the union's acceptance of a five-year wage freeze in 1981.
The Armour brand name is also for sale, the company said, fueling Wall Street speculation that Greyhound is going to abandon the meat business altogether.
Greyhound's move to free itself from the nationwide master labor agreement with the United Food and Commercial Workers is the second major corporate assault against the union agreement in the past six weeks.
On April 22, Wilson Foods Corp., a leading pork producer, filed bankruptcy papers, terminated the labor agreement and slashed its workers' wages as much as 50 percent.
The union, one of the largest in the AFL-CIO, is challenging that move, claiming it is a misuse of the bankruptcy laws, but the tide of events in the industry clearly is running against the skilled meat-cutters, who were the basis of the union's strength in the industry.
New automated plants, owned by such corporate giants as the Iowa Beef division of Occidental Petroleum Corp. and requiring fewer skilled workers, rapdily are becoming dominant.
The number of production employes in the nation's packing houses dropped from 149,100 in 1965 to 132,700 in 1980, according to the Labor Department, while new methods of cutting and shipping beef have greatly curtailed the demand for highly trained workers.
Armour Food, one of the oldest names in meatpacking in this country, has about 4,000 workers, half in union plants, half in nonunion plants.
Greyhound's decision to close the unionized operations caught the union by surprise, union officials said. Lewie Anderson, head of its packinghouse division, was in Oklahoma trying to salvage the union's position at Wilson when the announcement came.
Armour was losing money when the union accepted a landmark contract that froze wages and cost-of-living increases for five years.
Since then, Armour has returned to profitability, earning $13.2 million in 1982, but a company official said that "the return on equity just wasn't worth it."
Armour, which Greyhound acquired in 1970, operates 13 unionized plants, including one in Norfolk. By closing the plants, Armour effectively cancels the labor contract covering the workers, union officials said, leaving any new owner free to operate on a nonunion basis.
Under the master agreement, union meatpackers and slaughterhouse workers receive about $18 an hour in wages and fringe benefits, while nonunion workers receive approximately half as much.
Greyhound Chairman John W. Teets said that, although many Armour plants are modern and efficient, "We cannot operate a profitable business without relief from the master agreement's noncompetitive wage scale."
The agreement to which he referred is the same one he called a "historic first" and "an instance of statesmanship on the part of the union" when the Food and Commercial Workers reluctantly accepted it to save their jobs just 18 months ago.
Teets said that "there are some 300 to 400 regional and nonunion packers in the industry who are undercutting the market share and profitability of companies like Armour who must operate under the competitive disadvantage of the master agreement."
Teets' statement, on which he instructed Greyhound and Armour officials not to elaborate, said that Armour has done all it can to achieve efficiency but "there's a limit to what management can accomplish internally. We have reached that limit."
He said Greyhound's board of directors authorized the plant-closing and sale plan at a special meeting on Thursday.
Greyhound has retained the investment house of Lehman Brothers Kuhn Loeb to find a buyer for the plants.
Greyhound officials would not say when the plants would be closed, or whether they expected to sell them piecemeal or as a package.
According to Teets, the directors also gave Armour the "option" to close and sell its nonunion plants as well, which would mean getting out of a business that accounted for nearly half of Greyhound's revenues last year.
"I am presuming that all of Armour is for sale," said James Dowling, an analyst at Shearson/American Express.
"They have indicated they wanted to reduce their exposure in slaughtering," he said.
Greyhound, best known for its intercity bus lines, reported 1982 net income of $137.5 million on revenue of $4.7 billion.
The Armour division accounted for $2.2 billion of the revenue and $13.1 million of the net income.
In 1980, the year before the master labor agreement was negotiated, Armour reported losses of $4.4 million.
Greyhound's stock closed yesterday at $23 3/4 in New York Stock Exchange trading, up 1 3/4.