December 2010 Archives

IKEA Knocks Down Labor Rights

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 11^th 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.

Introducing Subsidy Tracker

Over the past decade, the National Institute on Money in State Politics has built its Follow the Money database into an impressive resource for showing the influence of large corporations on state electoral campaigns. I have long wanted to create a comparable tool to track the flow of money in roughly the opposite direction: economic development subsidy awards from states to big business.

I am happy to announce that my colleagues and I at Good Jobs First have just introduced such a resource. Subsidy Tracker is the first national search engine for determining where a company has gotten economic development subsidies around the country. The database stitches together information from scores of different disclosure sources, many of them obscure reports and webpages. The subsidy programs covered include corporate income tax credits, property tax abatements, enterprise zone tax breaks, cash grants, reimbursement of worker training costs, and others.

In its initial form, the database contains information on more than 43,000 subsidy awards from 124 subsidy programs in 27 states; the number will soon jump to more than 64,000 in 34 states and will continue growing.

Here are some ways Subsidy Tracker can be used:

To find companies that have received subsidies in many places. Currently, for instance, Wal-Mart shows up 69 times, trailed by Target at 45.
To find companies that have gotten some very large individual subsidies. General Electric received a tax credit worth up to $115 million in Ohio in 2009.
To find bad actors that have received subsidies. Super-polluter and climate denier Exxon shows up 23 times in Louisiana alone. The anti-union T-Mobile shows up eight times so far. Wall Street villain Goldman Sachs has received more than $124 million in tax credits and grants in Utah and New Jersey.
To find good actors that have received subsidies. Flambeau River Papers, included on the American Rights at Work 2010 list of employers that “practice labor-management cooperation while creating pioneering solutions to the environmental challenges of the 21st century” shows up in Subsidy Tracker as having received a grant of $249,000 from Wisconsin in 2008.
To find companies that have received subsidies in states where they have made substantial campaign contributions. Agribusiness giant Archer Daniels Midland, which according to Follow the Money made more than $546,000 in campaign contributions in Illinois since 2003 (including those of its executives and employees), has received more than $87 million in enterprise zone tax credits in the state during the same period.
To find companies that profess extreme laissez-faire views and then take subsidies. Koch Industries, whose owners bankroll the Tea Party movement, received two tax credits worth a total of more than $10 million from Oklahoma in the past year.

I’m sure researchers, journalists and others will think of many more ways to use the database. Each entry in Subsidy Tracker contains a link back to the original online source (except a limited number of cases in which the data we obtained is not posted on the web). Search results can be downloaded to a spreadsheet. For more on the data and how the site works, see the User Guide.

Good Jobs First introduced Subsidy Tracker along with two other resources: a report called Show Us the Subsidies, which evaluates the subsidy disclosure practices of the 50 states and the District of Columbia; and Accountable USA, a set of pages that review each state’s subsidy policies, describe large and controversial subsidy deals and provide other provocative information.

We hope all these tools help shine a light on the many excessive and ineffective subsidies that are going to large companies at a time when states and localities can ill afford the loss of what is estimated at $60 billion a year in public revenue.

Subsidy Tracker is a work in progress. In this first phase, we have focused on data sources that we discovered in preparing Show Us the Subsidies and Accountable USA. In the months ahead, we plan to go deeper by using freedom of information requests to obtain data not currently disclosed in any form.

I hope that Dirt Diggers Digest readers will find Subsidy Tracker to be a useful tool in your research. I look forward to your comments and suggestions.

Resources

Subsidy Tracker main page

Subsidy Tracker User Guide

Inventory of data sources currently in Subsidy Tracker

Table of online disclosure links for major subsidy programs (not all data yet in Subsidy Tracker)

Accountable USA main page

Index of companies whose subsidy deals are profiled in Accountable USA

Show Us the Subsidies report and state appendices

Good Jobs First case studies of companies and industries that are major subsidy recipients

It’s Not Paranoia if Dow Chemical Really is Breaking Into Your Office

Wall Street has been in a state of high alert over reports that the next big document dump by the transparency extremists at WikiLeaks will concern a major U.S. bank. The stock price of Bank of America recently plunged for a while on speculation that it was the target.

Yet the bigger espionage story of recent days is one in which a major U.S. corporation is alleged to be the culprit rather than the victim. Greenpeace has just filed a racketeering complaint in DC federal court alleging that Dow Chemical and a smaller chemical company – a North American subsidiary of South Africa’s Sasol Ltd. – conspired with a leading public relations firm, Ketchum Inc., and a smaller pr outfit called Dezenhall Resources Ltd., to spy on Greenpeace.

This is said to have occurred from 1998 to 2000, a period when Greenpeace was campaigning against the dioxin risks created by manufacturing facilities such as those run by Dow and Sasol North America, which at the time was known as CONDEA Vista and was owned by the German energy giant RWE.

What’s the big deal, you might ask. Don’t environmental groups monitor big corporations all the time? In fact, the web page on which Greenpeace presents its materials about the lawsuit contains a prominent link to its archive of its corporate investigations. Shouldn’t companies be able to keep tabs on their opponents?

The difference between what Greenpeace does and what Dow et al. allegedly did is the small matter of adherence to the law. The defendants are accused not of using legitimate information-gathering techniques but rather of engaging in illegal activities such as trespass, invasion of privacy, conversion (a form of theft) of confidential documents – even misappropriation of Greenpeace’s “trade secrets.”

The complaint alleges these firms hired private security consultant Beckett Brown International (BBI; later known as S2I Corporation) to do their dirty work. The now defunct BBI, at the time run and staffed by former employees of the Secret Service and federal intelligence agencies, is said to have hired subcontractors who broke all kinds of laws to get at internal information about the operations, strategic plans and finances of Greenpeace and apparently a number of other groups such as Friends of the Earth and the Center for Food Safety. Prominent environmental activists allied with Greenpeace, such as the legendary Lois Gibbs, are also said to have been spied on.

One of the most troubling allegations in the complaint is that BBI employed off-duty DC police officers to gain access to private premises (including locked areas in which Greenpeace kept its trash and recycling materials before they were collected) by showing their badges as if they were on official business. Greenpeace says it has recovered more than 1,000 pages of its internal documents – a fraction, it says, of what was taken. Greenpeace alleges that most of the papers came not from BBI incursions against its dumpsters but rather from direct break-ins at the group’s DC offices. Electronic surveillance is also charged.

BBI apparently did not have much of a reputation to protect, but the case is presumably a significant setback for Dezenhall Resources, which calls itself “the nation’s leading high-stakes communications consultancy.” Its principal Eric Dezenhall, a White House staffer during the Reagan Administration, has written several books (fiction and non-fiction) and frequently publishes commentaries in the Huffington Post and the Daily Beast. He helped Forbes compile its list of the year’s biggest corporate blunders.

Having worked for clients such as Michael Jackson and Enron executive Jeffrey Skilling, Dezenhall fancies himself a pr gunslinger; others have called him the “pit bull” of public relations. Now that he is on the hot seat himself, Dezenhall seems less inclined to take the offensive. When the Washington Post contacted him about the Greenpeace suit, his response was “no comment.”

That was also the response of spokespeople for Dow Chemical, Sasol and Ketchum. Dow, of course, has been no stranger to controversy from its role as a producer of napalm and Agent Orange during the Vietnam War to its refusal to adequately compensate the victims of the Bhopal tragedy after taking over Union Carbide. Just think of all the juicy secrets that would come out if WikiLeaks ever got hold of its archives. But for now the Greenpeace suit is shedding light on an egregious case of corporate misconduct.