Class Warfare’s Collateral Damage
Since 1898, Fulton, N.Y., had been home to one of the Nestle Co.'s most important chocolate factories.
The more than 450 workers at the Swiss company’s plant were proud that Fulton was where Nestle’s Quik got its start. They took even more pride that the paychecks they earned enabled them to own homes, send their kids to college and plan for their retirement.
But last fall the lives of those workers, their families and everyone else in town were thrown into turmoil when Nestle USA announced it would close the Fulton factory forever.
Did the workers in Fulton lose their jobs because they weren’t productive enough to cut it in the global economy? Hardly. The Fulton workers had the lowest absentee rate, the best safety record and the highest efficiency rate within their division. The plant was a money-maker for the company.
But the workers had something else too: an average age of 52.
Many of them were getting close to retirement and the pensions that the Retail, Wholesale and Department Store Union had won for them years before. The sooner the company could close the Fulton plant, the less it would be required to pay into the workers’ pension plan. By avoiding these costs, Nestle could save millions of dollars.
“Corporate greed” may sound like one of those nasty “class warfare” expressions, but it’s the only explanation for why the workers in Fulton lost their jobs.
Nestle today is the world’s largest food company. Just one year before it announced it was shutting down its Fulton plant, it posted $47 billion in annual sales. In 2000 alone, Nestle stock climbed by 30% and, even with the uncertainties of the stock market, it was still considered a solid investment.
Nestle’s problem wasn’t that it was struggling to survive or that the Fulton plant was costing the company money. Instead it was that, to its management, being successful and making a good profit simply weren’t enough: Management wanted more and wanted it fast.
It’s a familiar story. Instead of generating new sales by offering innovative products, Nestle opted to take the low road. The company replaced skilled workers with machinery at some plants, closed others and abandoned some of its areas of core competency. In 2000 alone, Nestle closed 38 factories worldwide. But while the company was divesting from some industries, it was also moving at breakneck pace into others.
On the heels of its plant-closing binge in 2000, Nestle spent $11 billion to buy the pet-food maker Ralston Purina in January 2001.
Nestle’s decision to claim a bigger stake of the pet-food trade was motivated strictly by mathematics: The sales rate for the food that people eat grows only as fast as the economy, while pet-food sales are expanding twice as fast.
There is one thing Nestle didn’t include in its equation: the effect of its decisions on its workers, their families and the communities where they live.
The most common measurements of the price of any factory closing are the wages and valuable benefits that workers lose. But that’s only where the tally begins. Local hospitals are forced to care for more uninsured patients, schools and local government suffer the cost of an eroding tax base, and overextended human services are strained even further.
There are other costs too -- homes that are lost, increases in domestic violence and the breakup of families, to name a few.
When companies close factories, corporate public relations flacks usually say it was an unavoidable response to the demands of the marketplace. In some instances that may be true. But the only demand Nestle was responding to when it shut down the Fulton plant was its own insatiable hunger for more profit, regardless of its human cost.
Rep. Cal Dooley of Visalia, a leading “New Democrat” in Congress, recently remarked that Al Gore’s language of “class warfare” made voters “uncomfortable.” Dooley’s angst notwithstanding, discussing the effect of corporate greed on the nation isn’t promoting class warfare. To the contrary, it is essential we speak out against it to prevent more communities from becoming its casualties.
Would a presidential candidate who discusses that issue risk making some voters “uncomfortable”? Probably. But the crisis facing working families is one no real leader can be comfortable ignoring.