The meat of the matter: the labor movement's future might hang on what happens at this giant packing plant near the tiny town of Tar Heel.

Once butchered to the right size, meat is wrapped and shipped to stores, wholesalers and distributors or to other Smithfield plants for processing. It's no work for the queasy. Razor-sharp blades and repetitive-motion injuries are constant worries. Union brochures carry stories of workers hurt on the job and rushed back to the line. The company counters that the plant's safety record is better than most and that the number of job-related injuries and illnesses has fallen in recent years. In 1998,19 out of every 100 workers reported injuries on the job. Three years later, the number dropped below 10%. It has crept into double digits only one year since. Industry averages ranged from 12% to 29%.

Smithfield officials tout the plant's economic benefit to the region--a payroll of $150 million a year. "The wages we pay in that facility are close to $2 an hour higher than poultry jobs in that same part of North Carolina," Luter says. But the plant doesn't fare so well in other comparisons. It draws more than 80% of its work force from Bladen, Cumberland and Robeson counties. Its average wage of $12.10 to $12.20 an hour for production workers is below Robeson's average of $12.62, according to the most recent state Department of Commerce estimate, and average wages in Cumberland and Bladen are even higher.

Smithfield Foods has a history of dealing with unions stretching back 30 years. Its oldest union shop is in its hometown. Roughly 40% of its 53,000 employees are covered by collective-bargaining agreements with five unions. According to Pittman, the Tar Heel plant's wages are about the same as those in the other plants, which explains why some workers don't want the UFCW: Why pay dues if you're already making as much as union members? But for the company, it raises another question: Why spend millions to keep the union out?

The Tar Heel plant plays a strategic role in the company's business. It processes up to 32,000 hogs a day, 64% of Smithfield Packing's total capacity. "If we had an extended strike in that plant," Luter says, "we would have hogs backing up throughout North Carolina or we would have to put hogs on trucks and ship them to the Midwest." One reason Smithfield built such a mammoth plant in Bladen County was its location. It's close to Interstate 95, pig farmers in Eastern North Carolina and pork consumers on the East Coast.

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The company had been a small player until the 1980s. In 1981, it bought Gwaltney, its main rival in Virginia, and doubled in size. Three years later, it acquired Patrick Cudahy, a Wisconsin-based maker of bacon, ham and sausage. At the same time, unions were losing their grip on the industry, as high labor costs made producers such as Armour and Swift vulnerable to new competition with leaner payrolls and heavier investment in machinery. Half the workers in meatpacking were union members in the early '80s, according to a U.S. Department of Agriculture report in 2000 on consolidation in the industry. "By 1987, union membership in meatpacking had fallen to a fifth of the work force, where it has remained."

Without having to deal with union work rules, the upstart companies could automate more of the process, speed up lines and keep down wages. Between 1977 and 2007, U.S. Bureau of Labor Statistics figures show, the average pay for production workers in animal slaughtering and processing plummeted from 4% below the national average for manufacturing production workers to more than 30%. It became "a job of last resort," Horowitz says. "The work force changes, and you have this huge influx of immigrant workers."

While this was happening, Smithfield was vertically integrating operations by raising as well as slaughtering hogs. In 1987, it launched a joint venture with Carroll's Foods of Virginia in Warsaw. In 1992, it purchased a majority stake in Brown's of Carolina in Kenansville. Hog production across North Carolina grew from 4.5 million head in 1992, the year the plant opened, to 9.3 million just four years later. Owning hogs from "squeal to meal" helps a processor control quality and build its brand, Horowitz says.

"They have more control over the input that they're getting than Oscar Mayer and Hormel. That allows them certain efficiencies in production and manufacturing because they don't have to worry about variations in supply." But unlike pure meat processors, which can withstand a strike by ceasing to buy hogs, the company is at a disadvantage, he says. "Smithfield, by creating this integrated structure, is much more vulnerable. If they can't keep operating, they have this huge inventory, which just tears their cash up."

So far, Smithfield has kept organized labor at bay in Tar Heel. When the union filed charges with the NLRB after losing the 1994 election, the company agreed to another vote. Losing in '97, the UFCW again turned to the NLRB, which ruled in 2004 that Smithfield had violated labor law in both contests. In '94, the company had threatened to fire workers, confiscated union literature and intimidated employees while it was distributed. The '97 campaign, the board found, had been worse--violations included assaulting a worker and threatening to freeze wages and to close the plant. It ordered a new election and made the company display a sign saying it had been found guilty of labor-law violations and listing more than 30 things it has promised not to do.

When the Court of Appeals for the District of Columbia upheld the decision in 2006, the company gave up the legal fight. Luter won't talk much about the '97 election. "Let's just say that some of the advice we got from outside people 10 years ago was probably not some of the best advice we got." When pressed about the advice, he says, "I'd rather not go there. It's a new day." Luter, 43, has been president of Smithfield Packing since 2004. His great-grandfather and grandfather founded the company in 1936. His father, Joseph Luter III, is chairman of Smithfield Foods and was the holding company's CEO since it was founded in 1975 to 2006, when he turned the job over to Larry Pope.

That it took the NLRB seven years to act is no surprise, Horowitz says. Weakened during the Reagan Administration, the labor board has never regained its strength. "Routinely, what has gone on in the last 25 years is companies violate the law in union organizing drives and trust that, if they lose, enough time passes between the violations and the ruling that the union is unable to recover." As evidence that Smithfield isn't anti-union, Luter points to an election last year at a distribution center in Clayton that the Steel Workers union won by two votes. "It was very close, but they won, so we're in discussions with them right now."

Keith Ludlum, a UFCW organizer who has been fired by Smithfield twice--he was reinstated by the NLRB once and is contesting the second--says there's a world of difference between accepting union representation for 119 employees in a warehouse operation and doing it for more than 4,500 hourly workers in the main slaughterhouse. In March, Smithfield Packing announced it was closing a smoked-ham factory in Kinston--the only union shop among its six wholly owned processing plants in North Carolina. Pittman says the move is to improve efficiency and is not an anti-union maneuver. The plant is 60 years old; some of the jobs are heading for another union shop.

Winning a third election might keep out the union, but company executives shouldn't expect such a victory to end the war. Reflecting on the previous votes, Pittman makes an observation that mirrors Horowitz's from the opposite view. "If you're familiar with campaigns and labor law, every time a union loses a campaign, they file unfair labor practices. It's just part of their job. They're supposed to file charges if they don't win." There's just too much on the line, it seems, for either side to give up.

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SMITHFIELD FOODS INC.

Headquarters: Smithfield, Va.

Founded: 1936

Employees: 53,100

Represented by union: 22,000

Sales: $11.9 billion

Net income: $166.8 million

Source: Company, fiscal 2007

OPERATING PROFIT

(millions) Pork $228.0 Hog production 211.4 International 38.3 Beef 5.7 Other 40.9

Source: Smithfield Food, fiscal 2007

LACKING ORGANIZATION

Last year, workers in North Carolina had the lowest rate of union membership in the country.

Union membership 1 North Carolina 3.0% 2 Virginia 3.7 3 South Carolina 4.1 4 Georgia 4.4 5 Texas 4.7 6 Idaho 5.3

Tennessee 5.3 8 Arkansas 5.4 9 Louisiana 5.6 10 Utah 5.8

Source: U.S. Bureau of Labor Statistics, 2007