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Making Honeywell Feel the Heat

Thursday, March 31st, 2011

How would you describe the situation of a corporation involved in union-busting, mishandling of radioactive waste, production of nuclear weapons and the effort to lower corporate tax rates while cutting Social Security and Medicare? If you are Barron’s, you’d say the firm is “in its sweetest spot in more than a decade.”

That’s the way the investment weekly describes Honeywell International in a recent article that gushes over the company’s financial results and predicts that its stock is “poised for liftoff.” Honeywell, a $33 billion transnational, is viewed differently in Metropolis, Illinois, where some 230 members of the United Steelworkers union have been locked out of their jobs for more than nine months.

Apologists for the attacks on public employees often try to disavow anti-union motivations by saying they have no problem with collective bargaining in the private sector. Honeywell is a glaring reminder that challenges to worker rights can be found among employers of all types these days.

The dispute in Metropolis—which calls itself the hometown of the fictional character Superman—brings together a variety of current hot-button issues, including unions, nuclear power, environmental protection, healthcare coverage and pensions. Honeywell’s plant is the sole facility in the country that converts uranium ore into the uranium hexafluoride gas used in the production of both nuclear power and nuclear weapons. This is a risky process that involves highly toxic materials.

These dangers were highlighted in December 2003, when an accidental release of toxic gas forced the evacuation of nearby residents and the shutdown of the plant for four months. The U.S. Nuclear Regulatory Commission (NRC) issued two violations relating to the way the company handled the incident.

Given such hazards, the members of Steelworkers Local 7-669 have long focused on safety issues, both for themselves and for the surrounding community. The union has been particularly concerned about the high rate of cancer among the workforce and thus has sought to negotiate good health coverage for active workers and retirees. During contract renegotiations last year, Honeywell sought to eliminate retiree health benefits, reduce pensions for new hires, cap severance pay and contract out maintenance. When the union balked but declined to strike, the company abruptly locked out the workers in June. And in a move made all the more reckless by the dangerous nature of the work, the company brought in poorly trained replacements to keep the plant operating.

In September, a loud explosion was heard at the plant but there were no reports of toxic releases. A Steelworkers report notes that the company was cited by the NRC for improperly coaching replacement working during on-site job evaluations by federal inspectors. Honeywell’s safety image was further tarnished just a few weeks ago, when the U.S. Justice Department and the EPA announced that the company had paid a criminal fine of $11.8 million to resolve a charge of illegally storing hazardous and radioactive materials in Metropolis.

The $11 million is the latest addition to the more than $650 million in fines and damages Honeywell has paid since 1995 in connection with 32 instances of misconduct collected by the Project On Government Oversight in its Federal Contractor Misconduct Database (the company ranks 17th in amount paid out).

Honeywell’s record of corporate irresponsibility goes back even farther. From the late 1960s through the late 1980s, the old Honeywell (prior to its 1999 takeover by AlliedSignal, which adopted the name) was targeted by antiwar activists because of its production of cluster bombs and land mines that were widely used in Vietnam and later because it was unwilling to take responsibility for clearing munitions that remained after the war was over.

Despite this checkered history, Honeywell has remained a large federal contractor. It is involved, for example, in both the clean-up of the Cold War-era Savannah River nuclear weapons complex in South Carolina and the construction of a new nuclear arms production facility in Kansas City.

And if all the above is not enough controversy, Honeywell CEO David Cote was named by President Obama (before the lockout) to the National Commission on Fiscal Responsibility and Reform, which issued a report in December that, among other things, proposed cuts in corporate tax rates. Cote issued a personal statement complaining that the report did not take a harder line on Medicare and Medicaid, and he recently called for cuts in Social Security. He also just told Bloomberg Television that he would love to see corporate income taxes entirely eliminated.

For many people, the Honeywell name is still associated with thermostats. But today, it is a poster child for much that is wrong with corporate America—mistreatment of workers, environmental recklessness, military profiteering, and unwillingness to pay a fair share of taxes. It should be made to feel more of the heat itself.

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Posted in Contractor Misconduct, Employee Rights, Environment, Government contracting, Military contracting, Nuclear Power, Unions | 1 Comment »

A Good Merger for a Change

Thursday, March 24th, 2011

AT&T’s proposed $39 billion acquisition of its smaller cell-phone rival T-Mobile has been widely criticized as anti-competitive and bad for consumers. Normally, I would be joining in such a chorus, but this is a special case.

Giant mergers are usually bad news not only for consumers but also for workers, especially if they happen to be unionized. Acquisitions are typically followed by layoffs and sometimes by efforts to bust unions at the firm being purchased. This was seen, for instance, after the acquisition of Northwest Airlines by Delta, which has been accused of intimidating flight attendants and other Northwest workers into decertifying their unions last year.

A very different dynamic is at work in the T-Mobile/AT&T deal. This is a rare instance in which the acquiring company has a vastly better labor relations record than the target.

Let’s start with T-Mobile. The cell phone provider, owned by Deutsche Telekom, has aggressively opposed an organizing drive launched by the Communications Workers of America (CWA) after the German company entered the U.S. market a decade ago. The company’s anti-union crusade, not widely reported in the mainstream media, has employed the usual techniques of targeting workers with propaganda, misinformation, captive meetings and warnings that unionization would lead to job losses.

What makes T-Mobile’s practices all the more egregious is that Deutsche Telekom has good relations with unions in Germany. It is one of numerous European companies that operate under a global double standard: cooperating with unions at home while fighting them tooth and nail in the United States. It was one of those firms singled out in a report issued last year by Human Rights Watch with the title A Strange Case: Violations of Workers’ Freedom of Association in the United States by European Multinational Corporations.

The report charges that “T-Mobile USA’s harsh opposition to workers’ freedom of association in the  United States betrays Deutsche Telekom’s purported commitment to social responsibility, impedes constructive dialogue with employee representatives, and in several cases, has violated ILO and OECD labor and human rights standards.”

These findings reinforced the conclusions of an earlier report written by John Logan for the American Rights at Work Education Fund.

Consider, by contrast, the case of AT&T, which in its current incarnation is the result of the 2006 recombination of various parts of the old Bell system that had been broken up in 1984. Its mobile phone business is what was previously known as Cingular Wireless.

Before the creation of the new AT&T, Cingular had adopted a policy of strict neutrality with regard to union organizing drive—the stance that the law requires but which is rarely adhered to by U.S. employers. That policy carried over into AT&T, which in 2007 was honored by American Rights at Work for its enlightened labor practices. A report issued by the group at the time quoted an AT&T executive as saying that the company “has long taken pride in our cooperative and respectful relationship with the unions that represent our employees.”

In keeping with this position, AT&T recently told a reporter from BNA’s Labor Relations Week (subscribers only) that it would maintain strict neutrality regarding union organizing after acquiring T-Mobile. This means that an estimated 23,000 T-Mobile employees would have an excellent chance of finally gaining union representation.

It is thus no surprise that CWA and the AFL-CIO have voiced support for the merger. This should not be viewed as a matter of narrow self-interest. The remarkable response to Wisconsin’s attack on union rights has revived the old labor solidarity principle that an injury to one is an injury to all. A corollary to that is that a boon to the rights of one group of workers is a boon to all.

The achievement of collective bargaining rights by 20,000-plus T-Mobile employees would be one of the largest labor gains in the U.S. private sector in many years and could serve as an important lesson about the willingness of workers to embrace unions when management thuggery is taken out of the picture.

Also keep in mind that if AT&T does not acquire T-Mobile, it might end up in the hands of the other industry giant, Verizon Wireless, which also has a dismal record on labor relations.

All this is not to discount the concerns of consumer groups. The fact that AT&T is union-friendly does not give it a pass in other areas. It wouldn’t hurt if the CWA works with consumer groups to be sure that AT&T does not abuse its bigger position in the market.

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Posted in Antitrust, Employee Rights, Telecommunications industry, Unions | No Comments »

Public Employees and the Public Interest

Thursday, February 24th, 2011

Chicago Tribune, January 29, 1900

Well before Wisconsin Gov. Scott Walker began his unholy crusade, the Right was heavily promoting its claim that public employee unions are a threat to the public. The title of a 2009 book by conservative ideologue Steven Greenhut said it all: Plunder! How Public Employee Unions are Raiding Treasuries, Controlling Our Lives and Bankrupting the Nation.

What the union bashers are trying to obscure is that public employees have a long history of supporting policies that promote the broad public interest. This goes back to the very roots of the public employee union movement.

In the 1890s teachers in Chicago created a federation that became the first real teachers union and one of the pioneers of public employee unionism in general. When the federation, led by Margaret Haley and Catherine Goggin (illustration), was confronted with a move by the board of education to cut teacher salaries because of a purported fiscal crisis, the teachers responded to the claim of a revenue shortfall in a creative way. They launched an intensive investigation of tax dodging by some of the largest corporations in the city, finding that property tax underpayments amounted to some $4 million a year (serious money back then).

Tax officials were reluctant to crack down on powerful business interests, so the teachers sued, eventually winning a favorable ruling in the Illinois Supreme Court (though the U.S. Supreme Court later went the other way).

A cynic might say that the teachers were simply acting in their self-interest by finding a new revenue source that would help restore their lost wages. Yet their goal was also to find funds that could improve conditions in the schools—and those conditions were truly abysmal. In his 1975 history of the American Federation of Teachers, William Edward Eaton writes that in the 1890s:

The teachers of Chicago daily faced the horrors of overcrowded, unsanitary buildings stuffed with too many children and controlled by an impersonal bureaucratic structure. This they did with poor pay, no job security, and no pension system.

The efforts of teacher organizations to address these problems, through collective bargaining as well as tax justice campaigns, also redounded to the benefit of the students and their families.

The Chicago teachers were also an important force in the passage of the Illinois Child Labor Law of 1903. That cynic might say this was aimed at boosting school enrollment and increasing the demand for teachers. Maybe so, but can anyone deny that banning child labor was also a boon for society as a whole, aside from sweatshop proprietors?

In the decades that followed, unions of teachers and other government employees have been among the strongest advocates of a vibrant public sector. They have continued to be leading critics of corporate tax dodging and opponents of efforts to gut public services. Unions such as AFSCME have been at the forefront of campaigns to stop the contracting out of government functions and the privatization of public assets such as highways—practices that usually work to the detriment of taxpayers as well as public employees.

The state and local public employee unions accomplished this against all odds. Denied the protection of the National Labor Relations Act, they had to get states one-by-one to recognize their right to organize—the right that is at risk in Wisconsin and elsewhere. It took a period of remarkable militancy in the 1960s and 1970s—including defiance of laws banning strikes by public employees—before they made significant progress. Among those strikes was the 1968 walkout by sanitation workers in Memphis, where Martin Luther King Jr. was visiting to show his support when he was assassinated.

And even then there were often severe fiscal limits on the ability of public employees to bargain for substantial wage gains. To compensate, many public unions put more emphasis on securing better retirement benefits for their members. These pension rights—in effect, deferred wages—are now under attack as if they were some giant giveaway.

The real giveaways are the lavish business tax cuts and corporate subsidies that the likes of Gov. Walker promote at the same time that they are demanding severe concessions from government workers. The great confrontation of 2011 comes down a question of whose interests are more closely aligned with those of the public at large: those who teach our children, drive our buses and put out fires in our homes—or superwealthy individuals and large corporations that are reluctant to create new jobs.

With each passing day, the momentum is moving in favor of the descendants of the 1890s Chicago teachers who are fighting for their rights and for the public interest in Madison, Columbus and other capitals across the nation.

Note:  A new movement called US Uncut is organizing actions around the country calling for a crackdown on corporate tax dodging as an alternative to harmful cuts in government programs such as education.

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Posted in Employee Rights, Subsidies, Tax avoidance/evasion, Unions | 1 Comment »

The Selective Sanctity of Contracts

Friday, February 18th, 2011

Along with the rule of law and private property rights, the sanctity of contracts is considered fundamental to “economic freedom.”  Yet certain kinds of contracts, namely the collective bargaining agreements of U.S. public sector workers, are now starting to be regarded as dispensable.

In Wisconsin, newly elected Gov. Scott Walker – whose official website is emblazoned with the slogan “Wisconsin is Open for Business” – is trying to strip state employees of their right to bargain collectively on the full range of workplace issues and force them to pay a much larger portion of the cost of their pension and healthcare benefits, sparking unprecedented protests (photo).  Similar attacks on public bargaining rights are under way in states such as Ohio, and a wide array of public officials are talking about the possibility of reneging on state and local government pension benefits negotiated over many years.

These assaults on the contract rights of public workers are said to be necessitated by the dire fiscal condition of many states. Yet it is telling that those assaulting public unions are not also questioning the viability of other expensive government obligations, for which the beneficiary is business rather than labor.

State and local governments spend an estimated $70 billion a year on economic development subsidies – corporate income tax credits, property tax abatements, direct cash grants, etc. – to lure large companies to invest in their jurisdiction or to retain those already there. They do so despite extensive evidence that such subsidies are often immaterial in corporate site selection decisions and that their costs—which for some tax deals can last for decades—often far outweigh the economic benefits of the investment.

The current fiscal crisis is a perfect opportunity for states to abandon these self-defeating subsidy practices. Yet aside from a small number of places such as California, where Gov. Jerry Brown is seeking to eliminate the highly ineffective enterprise zone program, and a few other states where film production tax credits have been reduced or suspended, surprisingly little is being done to end the corporate giveaways.

Shutting down or cutting back the boondoggle programs would limit new obligations, but if states are truly facing a fiscal emergency perhaps they should also look for ways to escape from expensive financial commitments that are already in place. Why are state and local governments not looking for ways to abrogate existing subsidy agreements?

Some might say that companies would lay off workers if they had to return subsidies. That’s debatable, but the problem could be addressed by limiting the revocations to large and profitable companies. For example, why shouldn’t Google (2010 profits: $8.5 billion) be required to give back the big subsidy packages it has extracted for its data centers, including $200 million for a facility in Lenoir, North Carolina and about $50 million for one in Council Bluffs, Iowa?

The same goes for the big Wall Street firms. Should Goldman Sachs (2010 profits: $8.4 billion) be allowed to keep the $175 million in subsidies (and $1.7 billion in tax-exempt financing) it received for its new headquarters in lower Manhattan—or the $164 million it got for an operation across the river in New Jersey?

What about Boeing ($2.1 billion in profits for the first three quarters of 2010): Should it retain the estimated $900 million subsidy package it received for its new Dreamliner production line in Charleston, South Carolina?  Must Procter & Gamble ($12.7 billion in profits for the fiscal year ending June 2010) retain the $85 million tax break it got for a plant in Utah?

And, of course, there is Wal-Mart (which will soon announce annual profits expected to exceed $14 billion). Over the years it has received what my colleagues and I at Good Jobs First estimate at more than $1.2 billion in subsidies at hundreds of stores and around 90 percent of its 100 or so distribution centers—including at least five facilities in Wisconsin. Couldn’t it afford to give some of that back in a time of need for many of the communities in which it operates?

Business advocates would no doubt scream bloody murder if subsidy abrogation were ever seriously considered by state or city governments. They would accuse officials of breaking solemn promises and poisoning the business climate. They would mobilize small business owners to defend the rights of their larger brethren. And they would waste no time bringing suit against public officials for breach of contract.

On what basis can subsidy agreements be considered sacrosanct while public sector collective bargaining agreements and pension obligations are torn to shreds? The failure of those seeking to undermine commitments to public workers to also call for sacrifices by business suggests that their real objective may have more to do with ideology than fiscal relief.

Note: For more details on the subsidy deals cited above and many more, see the Accountable USA state pages of the Good Jobs First website (index by company name here). And see our Subsidy Tracker database as well.

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Posted in Corporate Subsidies, Employee Rights, Unions | 1 Comment »

Putting Off Corporate Absolution

Thursday, February 10th, 2011

I was just beginning to recover from President Obama’s dismaying speech at the U.S. Chamber of Commerce when I found myself in the middle of another effort to gloss over the misdeeds of big business. This occurred at the annual conference of the BlueGreen Alliance, which brought together some 1,600 labor and environmental activists to discuss the prospects for a sustainable economy but also invited representatives of some supposedly enlightened corporations.

When we gathered for lunch on the first day we first had to listen to a presentation by David Kiser, a vice president at International Paper, which is listed in the conference program as one of the “Platinum Sponsors” of the event. Kiser went on about IP’s commitment to “environmental stewardship” and “caring for employees.”

I had to restrain myself from laughing out loud. IP has one of the worst track records of any major corporation when it comes to both labor and environmental practices. Some of the earliest anti-corporate research I ever did was to assist a campaign launched by the Paperworkers union (now part of the Steelworkers, which co-founded the BlueGreen Alliance) to resist company demands for contract concessions in the 1980s.

After workers at an IP mill in Mobile, Alabama voted against the concessions, they were locked out by the company. The Mobile workers then made a coordinated bargaining pact with their counterparts at three other IP mills—in Jay, Maine, Lock Haven, Pennsylvania, and De Pere, Wisconsin—where contracts were expiring and the rank and file had decided to strike rather than concede.

IP responded by bringing in replacement workers from around the country, many of them recruited by BE&K, an Alabama-based construction company that had diversified into strikebreaking. The campaign by the striking and locked-out locals was eventually crushed by the company.

Yet during that campaign, workers at the mill in Jay, Maine (photo, from 1973) drew national attention to the environmental hazards of IP’s operations, which were a major contributor to the dioxin problem due to chlorine used in the paper bleaching process. The labor and environmental issues intersected in February 1988, when unskilled strikebreakers hired by the company accidentally broke the valve on a tank containing chlorine dioxide gas in pressurized liquid form. About 112,000 gallons of the liquid poured out and vaporized into a huge green cloud that floated out from the mill, forcing the evacuation of some 3,000 people from homes, schools and businesses. If the weather had been warmer and the winds weaker, many could have died.

Paperworker union members helped enact local ordinances in Jay that cracked down on IP’s emissions and pressured Maine state officials to file suit against the company for environmental violations. IP paid $885,000 to settle the charges. Later, the U.S. EPA also brought action against the company, which in 1991 pleaded guilty to five felony charges and paid a fine of $2.2 million. Over the following decade, IP was implicated in state and federal environmental violations in states such as New York, Massachusetts, Wisconsin, Mississippi, Florida, California, Georgia and Virginia.

Since the early 2000s the company has been trying to rehabilitate its environmental image by actions such as donating land to conservation groups and appointing the head of one such group to its board of directors.  Yet the company remains a heavy polluter. In the EPA’s most recent Toxics Release Inventory, IP mills rank first and second among all paper facilities in the total volume of releases and account for 15 of the industry’s top 50 polluters, with total toxic releases of more than 43 million pounds.

IP’s labor relations are a lot less tumultuous these days, but in the last decade the company has slashed its U.S. hourly workforce from 45,000 down to 24,000.

The International Paper of 2011 is not the same as the IP of 1988, but I still find it difficult to regard the company as an ally in the effort to shape the green economy of the future. It takes a long time for the impact of past transgressions to dissipate.

This was brought home to me at another session at the BlueGreen Alliance conference. An official of the EPA was talking about how Recovery Act money is being used to help clean up a Superfund hazardous waste site in New Jersey where a long-defunct company had dumped large quantities of radioactive thorium once used in the production of gas lamps. Thorium, the EPA guy noted, has a half life of 14 billion years.

When the impact of business misbehavior can endure for eons, it will take more than a few social responsibility gestures to redeem corporate sinners.

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Posted in Corporate "Social Responsibility", Environment, Green Jobs, Unions | 1 Comment »

U.S. Workers Face Chinese Employers

Thursday, January 20th, 2011

Much of the discussion of Hu Jintao’s visit to the United States is focused on China’s treatment of its dissidents and its workers, but another issue is becoming increasingly important: the treatment of U.S. workers by the Chinese companies that are rapidly expanding their presence in the United States.

Hu’s decision to include a stop in Chicago is not meant primarily as an homage to President Obama’s hometown. He wants to spotlight a Chinese-owned company called Wanxiang America, which from its suburban Chicago headquarters has built an auto parts and renewable energy conglomerate that has become the largest example of direct foreign investment in the U.S. from the People’s Republic.

Until recently, China accounted for a negligible portion of overseas money flowing into the American economy. But in the past two years there has been an enormous influx. The Washington Post cites a consulting company estimate that the Chinese stake has jumped to $12 billion since the beginning of 2009.

There’s every indication that number will continue to rise rapidly. The Chinese government is encouraging the trend to help protect its access to American markets, and the job-hungry U.S. seems to no longer have any of the objections that thwarted the efforts of Chinese companies to buy the oil company Unocal and the appliance firm Maytag a half dozen years ago.

Many U.S. observers are celebrating the arrival of Chinese capital, but this is actually a very dismaying state of affairs. The fact that companies from a country in which many workers are paid near-starvation wages find it economical to produce here says a lot about the dismal state of labor in the United States. The anti-union hostility of American employers has forced down pay rates in this country to the point that the U.S. is now considered a low-wage haven, at least among the countries of the developed world.

There’s no indication that investors coming from a dictatorship of the proletariat will do anything to reverse the decline of U.S. workers’ power. If anything, they will follow the pattern of companies from heavily unionized countries in Europe and Asia that eagerly embrace the culture of union-busting once they arrive on these shores.

Chinese investment in U.S. industry has already shown signs of anti-union animus. Not long after China International Trust and Investment Corp. (CITC) took over bankrupt Phoenix Steel in Delaware back in 1988 with the support of the United Steelworkers, the new operation, named CitiSteel, refused to recognize and bargain with the union, which had represented the Phoenix workforce for decades.

And when appliance-maker Haier Group became the first large Chinese company to build a factory from scratch in the United States, it chose South Carolina, one of the states most hostile to labor unions. In subsequent years, Chinese firms have continued to concentrate on right-to-work states. For example, Tianjin Pipe is planning to build a $1 billion production facility in Texas.

Today’s U.S. affiliates of Chinese companies are not entirely non-union. Wanxiang America has taken over unionized auto parts operations being shed by major U.S. companies, but many United Autoworkers members depart during the buyouts and other workforce reductions that accompany the change in ownership. The UAW has also survived GM’s sale of Nexteer Automotive to China’s Pacific Century Motors—a deal that went through after union members approved a contract that cut wage rates.

The ability of these companies to maintain good relations with their unions will depend in part on whether they engage in the kind of restructuring ploys favored by U.S. employers. It was not an encouraging sign when Neapco Components, an affiliate of Wanxiang America, announced last year that it was shutting down its manufacturing plant in Pottstown, Pennsylvania and transferring the operation to Nebraska, where state officials arranged for the company to get $1 million in federal stimulus funds to underwrite the move.

The larger labor relations challenge is the inevitable clash between Chinese and U.S. workplace cultures. Even in non-union companies, U.S. workers are used to a certain level of respect for individual rights. Many Chinese firms retain the remnants of a repressive collectivism. The Haier plant in South Carolina, for instance, is festooned with motivational banners exhorting workers to “make the impossible possible without an excuse.” The original Chinese managers there caused resentment by chastising individual workers for slip-ups in front of the entire workforce.

It remains to be seen how U.S. workers take to the pseudo-Maoism of contemporary Chinese business, but there’s no question that the rise of Chinese investment is another strong argument for the revival of an aggressive U.S. labor movement.

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IKEA Knocks Down Labor Rights

Friday, December 17th, 2010

When my colleagues and I at Good Jobs First introduced the Subsidy Tracker database recently, our hope was that the information would be helpful to a wide range of campaigns for economic and social justice. I can now offer one particular use.

By plugging the name Swedwood into the search engine, one finds that the company received a $1 million cash grant under the Virginia Investment Partnership program in connection with its vow to invest $281 million and create 740 jobs. Actually, this grant was just part of a series of subsidies worth a total of $12 million that Swedwood received from the state (the data in Subsidy Tracker are not yet comprehensive).

Swedwood is significant because the company, a unit of the retail giant IKEA, is at the center of a controversy over its labor practices at a furniture plant in Danville, Virginia for which it received the $1 million subsidy. Employees of the facility, fed up with dangerous working conditions and discriminatory employment practices, have been trying to organize with the help of the Machinists union, which produced a report concluding that the Danville operation may be the most hazardous furniture plant in the country. Swedwood and its parent have responded to the organizing drive by harassing union organizers and firing union supporters.

The Machinists and the Building and Wood Workers International labor federation have launched a campaign to pressure IKEA and Swedwood to respect the rights of the Danville workers. Among other things, the campaign is asking supporters to send a holiday card to IKEA Chief Executive Mikael Ohlsson with instructions on how to build a fair collective bargaining relationship with the workers (allen wrench not included).

The unions might also want to make an issue of the fact that a company that was generously subsidized with taxpayer funds is now flouting labor laws.

The financial assistance IKEA got in Virginia is not the only time it has played the subsidy game. In places such as Tempe, Arizona and Frisco and Round Rock in Texas, the retailer has received millions of dollars in sales tax rebates and infrastructure assistance to help finance new stores. It is expected to receive up to $18 million in subsidies for the store it is building in Centennial, Colorado.

In fact, tax avoidance is at the center of IKEA’s entire corporate structure, a complex arrangement that puts nominal control in the hands of a Dutch private foundation but allows founder Ingvar Kamprad and his family to dominate the company and grow wealthier from it (according to Forbes, Kamprad is the 11th richest person in the world, with a net worth of $23 billion).

IKEA is a prime example of how companies that have reputations for being socially responsible somehow get away with exploiting the system of economic development subsidies and with being hostile to unions in the United States – while cooperating with them in countries (such as IKEA’s native Sweden) where they are well established and protected. In the past, IKEA has relied on paternalism – including better than average employee benefits – to discourage unionization at its U.S. operations. The events in Danville suggest a troubling turn toward heavy-handed union busting.

Perhaps this will begin to change the view of corporate social responsibility arbiters such as Ethisphere magazine, which lists IKEA as “one of the world’s most ethical companies.” While the idea of corporate ethics is an oxymoron, companies should not be singled out for praise of any kind if they deny the rights of their workers to organize.

Note: The Dirt Diggers Digest index of information sources featured or utilized in the blog has finally been brought up to date.

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Posted in Corporate "Social Responsibility", Corporate Subsidies, Disclosure, Unions | 1 Comment »

Tracking Corporate Traitors

Friday, October 8th, 2010

Not too many years ago, America was up in arms about offshore outsourcing. The news media were filled with reports of the wholesale migration of both white collar and industrial jobs to low-wage havens in Asia. The mood of panic was reflected in articles such as the March 2004 Time magazine cover story Is Your Job Going Abroad?

For most people these days, the outsourcing controversy has largely been forgotten or recalled only in the context of the new NBC sitcom situated in an Indian call center.  But for the folks at the AFL-CIO, offshoring is neither a laughing matter nor a thing of the past. The labor federation and its community affiliate Working America have just released both a report and a database showing that the corporate practice of shifting jobs from the United States to cheaper foreign locales is still a burning issue for American workers and the American economy.

The report cites evidence that the use of offshoring is expanding in corporate America, though many companies have learned to be more discreet about it. The true extent of the job migration is difficult to determine, the report notes, because federal statistical agencies such as the Bureau of Labor Statistics and the Bureau of Economic Analysis are not set up to measure this kind of phenomenon accurately.

For those less inclined toward policy briefs and more concerned about conditions in their community, the AFL and Working America also released a new version of their Job Tracker database. It allows one to plug in a Zip code and see a Google map with pushpins indicating workplaces that have experienced job flight, as indicated by WARN Act filings, Trade Adjustment Assistance certification and other data sources. Job Tracker also shows which workplaces have been hit with health and safety violations (from the OSHA database), labor law violations (from the NLRB database) and employment discrimination violations (from the database of the Office of Federal Contract Compliance Programs).

This is a great resource for researching bad employers, whether or not they are moving jobs offshore. The site also has a feature allowing a user to recommend a company that should be featured on Job Tracker. It would be great to see it expanded even more to cover other forms of regulatory violations as well as key data such as government contracts and subsidies.

The Job Tracker is handy for finding out how employers in specific locations export jobs, but it is also helpful to see aggregate figures for corporate behemoths. The AFL/Working America report mentions the case of IBM, whose U.S. workforce dropped from more than 40 percent of the company’s worldwide total in 2005 to just over a quarter in 2009.

IBM is far from unique. Based on figures from its 10-K SEC filings, the U.S. share of General Electric’s workforce dropped from 51 percent at the end of 2005 to 44 percent at the end of 2009. During the same period, the U.S. share at Caterpillar fell from 52 percent to 46 percent. Even at Wal-Mart, celebrated for creating American jobs (such as they are), the U.S. share declined from 72 percent to 67 percent. For many corporations it is not possible to measure the trend, given that they choose not to give a geographic breakdown of employment in their 10-K or annual report.

The tendency of large U.S.-based corporations to invest and create low-wage jobs abroad is not a new story. But the decision by such companies to expand employment overseas at the expense of U.S. jobs during a period of severe recession at home amounts to a form of economic treason. In this way, the Job Tracker is not just a database but also a corporate crime detector.

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Posted in Employment, Foreign Investment, Globalization, Unions | No Comments »

Tiananmen Square Inc.

Friday, October 1st, 2010

Large corporations don’t depend on China only for cheap labor; they also seem to be adopting the practices of that country’s repressive government in the treatment of dissidents. It has just come to light that oil giant Chevron is working with Houston authorities in the prosecution of shareholder activist Antonia Juhasz, who berated executives and directors at the company’s annual meeting last May over environmental and human rights issues.

Juhasz, author of the book Tyranny of Oil and editor of an alternative annual report on Chevron, was removed from the May meeting and arrested. Rather than dropping the charges after the disruption was over, Chevron has pursued the matter. At a recent court hearing, the company pushed for Juhasz to get jail time for criminal trespass and other charges.

What happened to Juhasz was not the first time an activist was ejected from an annual meeting for speaking out. In 2004 veteran labor activist Ray Rogers was wrestled to the ground by security guards and forcibly removed from Coca-Cola’s meeting after he forcefully criticized the company for its ties to paramilitary groups involved in the murder of trade union leaders in Colombia. He was threatened with arrest but not taken into custody.

The criminal prosecution of Juhasz is a troubling turn of events. Annual meetings are the one occasion when corporations are supposed to give the semblance of being democratic institutions. CEOs and board members should endure the protests and not try to take revenge on their critics.

Some might say that the likes of Juhasz and Rogers are out to disrupt annual meetings and that they should instead work through proper channels to get their point of view across. But corporations are trying to close that avenue as well.

Corporate interests are up in arms about the Securities and Exchange Commission’s decision in August giving shareholders new powers to nominate directors to corporate boards. The move marks the beginning of the end of non-competitive board elections that have much in common with the selection of leaders in China and the old Soviet Union.

Corporations tried mightily to prevent this intrusion of democracy into their affairs. As I noted a year ago, the corporate comments submitted to the SEC about the proposal raised some ridiculous objections. The Business Roundtable claimed that the rules would violate a corporation’s First Amendment rights by forcing it to include comments by outside candidates in its proxy statement.

McDonald’s Corporation fretted that shareholders might nominate someone “who may not have even met the existing members of the Board.” Sara Lee Corporation claimed that the change would result in directors who represented a special interest rather than the interests of all shareholders – conveniently forgetting that many directors have been chosen because of their affiliation with a financial institution or other entity that has a significant relationship with the company—a suspicious practice known as corporate interlocks or interlocking directorates.

Having lost in the rulemaking process, business groups are now taking the matter to court. The U.S. Chamber of Commerce and the Business Roundtable have challenged the SEC decision in the federal court of appeals in Washington. The two groups – whose legal team is led by Eugene Scalia, son the Supreme Court Justice – depict activist shareholders as a special interest whose ability to nominate board candidates would violate the First and Fifth Amendment rights of corporations. Their brief implies that the whole idea of proxy access is a plot by unions.

Echoing the current Republican talking point, they claim that the new rules would create “uncertainty.” They even play the recession card, saying: “We respectfully submit that stewardship of the national economy during these difficult economic times counsels strongly in favor of a stay.” They conclude by saying that a failure of the appeals court to put a stop to the proxy reforms would cause “irreparable injury” to public traded corporations.

At one time, such arguments would be laughed out of court. But in the current climate, with business rights being treated as sacrosanct, the challenge has a reasonable chance of success. Democracy may not be coming to Corporate America after all.

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Posted in Corporate Governance, Corporate Power, Shareholder Activism, Unions | 1 Comment »

European Companies Behaving Badly

Thursday, September 9th, 2010

Many American workers are irate these days about the jobs that are supposedly being taken away from them by undocumented foreign laborers. A new report from Human Rights Watch shows that the real threat to our living standards may come not from Mexican farmworkers, chambermaids or carwashers but from another group of “illegal” immigrants: European transnational corporations investing in the United States.

These companies – which include the likes of T-Mobile parent Deutsche Telekom, DHL Express parent Deutsche Post, French construction materials giant Saint-Gobain and Britain’s Wal-Mart rival Tesco – are illegal in the sense that they fail to comply with international labor norms when it comes to their U.S. operations.

Human Rights Watch, usually preoccupied with the mistreatment of dissidents and others in countries such as the Democratic Republic of Congo, Senegal and Kyrgyzstan, has not hesitated to point out that when it comes to the workplace, the United States is far from a paradigm of respect for individual rights. In 2000 it published a report called Unfair Advantage, which showed how workers’ freedom of association is routinely violated by employers.

Its new report, titled A Strange Case, shows how this pattern of abuse is practiced not only by domestic companies used to a climate of lax labor enforcement, but also by European companies that have much friendlier relations with unions in their home countries and that claim to abide by the principles regarding labor rights included in the declarations and conventions of the International Labor Organization, the Organization for Economic Cooperation and Development, and other global bodies.

Noting that these companies “exploit the loopholes and shortcomings in U.S. labor law” to engage in union avoidance and unionbusting practices, the report states: “The European Dr. Jekyll becomes an American Mr. Hyde.” Another way of putting it is that these companies behave like proper Westerners who indulge in sex with children when traveling to Southeast Asia: they are willing to do things abroad that they would never consider at home.

The Human Rights Watch report documents intimidation tactics used, for example, by T-Mobile in response to an organizing drive led by the Communications Workers of America and by DHL Express in response to a drive launched by the American Postal Workers Union. It also shows how European companies have tried to remove unions already organized, such as the decertification effort by Saint-Gobain against the United Auto Workers at a plant in Massachusetts.  Other case studies show how companies such as Norway’s Kongsberg Automotive use tactics such as the lockout of union workers during contract negotiations that, as the report puts it, are “unheard of in Europe.”

The report points out that these European companies exploiting the lax U.S. labor rights environment are invariably ones that profess to be practitioners of corporate social responsibility (CSR) and that claim to have policies of cooperating with worker organizations throughout their operations. This, along with the fact that environmental criminals such as BP can claim to be CSR advocates, shows that the organizations that rate firms on corporate responsibility have to do a lot more than take company statements at face value.

Although the Human Rights Watch report doesn’t address it, another factor in the ability of European companies to behave badly in the United States is the unwillingness of the unions in their home countries to take aggressive action on this issue. Some of those unions have spoken out forcefully in support of their beleaguered American cousins, but that has not been enough to stop the abuses.

Yet the central problem is not CSR hypocrisy or inadequate labor solidarity, but rather the dismal condition of labor law in the United States. It would be nice if European companies decided on their own accord to treat American workers as they do employees at home, but even better would be if the federal government compelled both foreign and domestic companies to respect the collective bargaining rights of all U.S. workers.

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Posted in Corporate "Social Responsibility", Corporations & Human Rights, Foreign Investment, Globalization, Unions | 1 Comment »

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