Backing Measure Puts Businesses in Tough Spot

Only yesterday, it seems, those who confronted California businesses with sidewalk pickets and angry words were society’s underdogs. They were the farm workers, community activists, labor organizers and Rainbow Coalitionists holding the knife to businesses’ soft spot: fear of controversy.

Proposition 209 has turned things upside-down. Now, blink twice and it seems the overdogs are doing the confronting.

University of California Regent Ward Connerly threw a picket line around the state’s largest utility company this summer, and Republican Gov. Pete Wilson weighed in with a barrage of fighting words.

Their message to California business: Don’t enlist in the fight to save government’s affirmative action preferences, or you’ll feel controversy aplenty.

Proposition 209 is the Wilson-backed, Connerly-chaired Nov. 5 ballot initiative to outlaw preferential programs based on race and gender in government employment, contracting and education.

Like Proposition 187 on immigration two years ago and the trial of O.J. Simpson last year, Proposition 209 again reminds Californians of their unsettling differences, and has been worrisome to business from the beginning.

Many leading industrial, retail and service businesses long ago followed the lead of government in instituting affirmative action programs. Some have been lackluster, others aggressive. But in whatever form, affirmative action has become integral to many corporate personnel offices across the state.

More recently, some businesses have gone further. Rather than just accepting affirmative action as an obligation or an investment, or as a defense against discrimination complaints, business began to sell diversity as an asset.

So, when the petition drive for Proposition 209 began, executives questioned its implications for the state and for themselves and for this new civic chant that nobody in the world can beat California for multicultural enlightenment.

A year ago, the powerful California Business Roundtable, a group of 75 CEOs from the state’s major corporations, saw the initiative coming. Although not taking a position pro or con on the proposition, the Roundtable, headed by Southern California Edison Co.’s John Bryson, issued a statement in defense of affirmative action generally, saying: “It is not about employing unqualified people; it is about opening the system to all and providing a climate where everyone has a chance to succeed according to their efforts and abilities.

“And opening the system to all may require recruitment and training efforts, especially for those historically denied opportunity.”

The San Francisco Chamber of Commerce studied the issue for two months and decided there was no choice except to speak out against Proposition 209: Government begat affirmative action, and now government should stick with it. In June, by unanimous vote of 45 executives present, the chamber said so.

“Diversity is one of California’s strengths in the global marketplace. [Proposition 209] would send a very negative message to business at the international level,” said chamber Vice President Carol Piasente.

Over the months, at least 16 smaller business groups also announced opposition to the ballot measure, including the National Assn. of Women Business Owners of Los Angeles, the California Hispanics Professional Assn. and the Black Business Council.

Then, with business opposition mounting, the gloves came off.

On Aug. 1, Pacific Gas & Electric Co. Chairman and Chief Executive Officer Stanley T. Skinner announced his company’s opposition to the proposition. In a statement from company headquarters in San Francisco, he put it this way:

“California has one of the most ethnically and racially diverse economies in the world. As a major California business and employer, we . . . believe that this diversity is a source of strength, and that it makes sound business sense to encourage diversity in our customers, our suppliers and our employees. . . .

“Consistent with this view, for many years PG & E has sponsored affirmative action programs. These programs have enriched and strengthened our employee work force, and have given many a chance for advancement they otherwise would not have had. These programs have broadened and diversified our base of suppliers and, at the same time, provided opportunities for many new and small businesses to grow, create jobs, and generate profits for owners who are women, minorities or disabled veterans.

“We believe that passage of Proposition 209, the California Civil Rights Initiative, would represent a serious setback to these programs . . . many excellent programs.”

The next day, the governor went, you might say, into orbit.

In a public letter to the PG & E chairman, Wilson said this:

“No, Stan, it would not, unless those ‘excellent’ programs grant preferences--that is, discriminate--on the basis of race, ethnicity or gender in public contracting and public higher education admissions. Proposition 209, by its plain, clear language prohibits such discrimination directly and prohibits the reverse discrimination of preferences based on race, ethnicity, or gender.

“It does not prohibit nonexclusive outreach or recruitment.

“It does not address or even mention that amorphous, undefined phrase, ‘affirmative action,’ which means different things to different people.

“It does not prohibit government assistance to those who have suffered socioeconomic disadvantage, and who--whatever their race, ethnicity or gender--have not had the same opportunities as the rest of us. . . . Regrettably, your position has put PG & E on record as defending the morally indefensible.”

A few days later, Connerly, a private housing management consultant as well as a Wilson appointee to the UC regents, gathered about 35 supporters and picketed one of the utility company facilities in Sacramento. Connerly carried a placard saying “PG & E discriminates.”

He told reporters the aim of such a demonstration: “Any other company that’s thinking of this, then they’re running the risk of having large numbers of people throughout this state who will picket and boycott and do whatever is necessary to call attention to their implicit endorsement of quotas and preferences and reverse discrimination.”

Such a war of words between a business executive and a pro-business Wilson administration is not an everyday occurrence.

But Wilson and the pro-209 forces may have accomplished what they intended by raising the stakes for any other large business contemplating an alliance with the opposition. Campaign finance reports show that businesses so far have made very few contributions--on either side.

In September, the state Chamber of Commerce convened and decided to take no position on the issue.

And only a few major corporations are said to be still pondering their position.

One is Los Angeles-based oil giant Arco. Spokesman Al Greenstein said the company would not discuss publicly its deliberations pro or con, but added that Arco remained committed to its own affirmative action programs: “We believe very strongly in the need for a diverse work force. We do a lot of business on the West Coast and internationally.”

Another major employer still weighing what to do, Hewlett-Packard Co. in Palo Alto, expressed concern about the possibility of unintended consequences of the initiative. Gary Fazzino, manager of state government relations for the sprawling electronics concern, said the company had not yet decided whether to endorse or oppose the initiative but was “very troubled by the potential impacts on outreach programs.”

Well-established efforts to encourage school-age girls and minorities to pursue technical educations “have been tremendously successful” in diversifying the labor pool of engineers for California companies, Fazzino said. And there is concern that this kind of public-private outreach may fall under the provisions of Proposition 209, forbidding any gender or racial preferences in public education.

“We view California’s diversity as a tremendous asset,” Fazzino said. “That’s a significant reason why our corporate headquarters and many HP facilities are here.”

But as the campaign intensifies, lots of companies are laying low.

“The governor feared that others might be tempted to follow PG & E, so he set out to neutralize them. . . . Whatever concerns business may have about affirmative action, the bigger concern is the story of our times--large corporations are easy targets,” said one Southern California development executive. “But don’t use my name, I don’t want to be a target myself.”

So far, Southern California businesses have not been as outspoken as those in the San Francisco Bay Area. The Los Angeles Chamber of Commerce is scheduled to discuss Proposition 209 along with other ballot measures in early October.

Preliminary opinion is “very mixed” among Los Angeles executives, said chamber President Ray Remy. “If anything, there is probably more sentiment to stay out of this campaign.”

In response to an inquiry, Southern California Edison spokesman Steve Hansen said only: “We are not taking any public position. We do have an affirmative action pledge that we made in 1989 and that we are currently holding to. And we support the earlier position paper issued by the Business Roundtable.”

Spokesman Doug Hendrix of Vons Co. grocers in Arcadia similarly said his company was not taking sides, but added: “We operate in the most diverse marketplace imaginable. We feel diversity is our strength.”

So far, the Proposition 209 headquarters said that no major business had sided with its cause. In an interview, Connerly said he believed that many business executives and many more workers privately supported the goals of the initiative.

But, he added, “When the chips are down, big business is a coward.”

On the other hand, some of Proposition 209’s opponents believe the ringing support that California businesses have voiced for affirmative action in their own factories, stores and offices is anything but cowardice, it’s just good commerce these days.