Conventional public attitude towards the business community is "either you love 'em or you hate 'em." This is a by-product of the old social contract that reserved stewardship of the economy to capitalists and their managers. Mainstream leaders accepted this relationship and were comfortable allowing business this powerful role. Of course, in exceptional moments, public officials would attack business in general or a particular company or an executive, usually because they had done something really egregious or the officials were negotiating for a bigger chunk of the pie.
On the left, a very strong "anti-corporate" sentiment lumps all companies, and sometimes all employers--big and small, for profit and not-for-profit--into the same camp. Some sections of this left pursue popular campaigns on behalf of labor, community, the environment, or democratic rights. They engage in militant action and sharply expose the oppressive role of corporate America, but their demands usually boil down to "more" or "less" within the traditional paradigm. They cede to hated corporate America the right to make the key decisions regarding the economy. These conventional approaches are paralyzing and ineffective in today's climate, and cannot capture the imagination or intelligence of the American people. From our strategic perspective, the business community falls into three categories:
We need to distinguish among them and develop appropriate strategies for each sector.
We know who they are and see their work with increasing frequency. It is not enough to acknowledge their presence. We need to frame the discussion of their practices in terms of broader community interests and development of productive capacity. To do so is a requirement of representing the public's interest in community development.
We need to isolate these Low Road companies from other sections of the business and broader community, who now tend to allow them to defend their narrow interests. Whether this is because of class solidarity, apathy, or conviction, it is a tremendous impediment to progress. Sharp material differences exist between the corporate-raider and "cash-cow milker" that will drain a local company of its value and close its doors, and the local machine shop down the street that depends on the business of that same "cash cow" for its survival. Yet local government, the community development activists and prominent community banks remain frightfully silent on the destructive practices of a small but very influential segment of the private sector. Their silence only reinforces the destructive myth that all corporations are the same and that they somehow have the God-given right to remain "private."
We need to win in our conflicts with businesses on the Low Road to give others confidence that opposing them is a step toward influence and momentum. We need to frame the conflict so it is accurately seen as opposing bad business in support of good business. We don't want it misperceived as "anti-business" or "anti-corporate." But exposing this destructive segment of the private sector is not enough. Low Road behavior must be blocked and stopped, and punished when appropriate, in the same way we punish destructive practices in the underground market, or in society as a whole. Some laws against illegitimate corporate practices are only enforced periodically. These need to be updated and applied consistently in light of real conditions.
The company I worked for--Taylor Forge--was being destroyed because of a strategy promoting shareholder return without considering the destruction it caused in families and the community. It dawned on me that if, in a rage, I grabbed a baseball bat and broke car windows on Cicero Avenue, I would go to jail. On the other hand, if I had $50 or $60 million, bought a company on Cicero Avenue and wrecked it in the course of making my stockholders more money, I would be written up in Crain's Chicago Business as a "tough but smart" business leader.
In our marketplace, companies expertly wrap themselves in positive descriptions. Effective public relations puts the best possible spin on their contribution to society or on the compelling reasons why they do what they do. Despite the fluff, their practices de-develop our communities and corrode and destroy our productive capacity.
The quest for short-term shareholder value is not only destructive to communities and workers, but also can be destructive to long-term shareholder value. Successful speculation is not the same as successful business. Underlying this misunderstanding is greed, of course, but also a deliberate blindness and a culture of selfishness. Equally corrosive are the policies of executive compensation that reward practices incredibly destructive to a community, a company, or industry's health.
This does not mean that all companies that pay a minimum wage, or that are involved in a dispute with labor or with the public, or who have a process that is not sound should be labeled the enemy. We should be careful with our labeling, acknowledging that, in some cases, a company's practices are contrary to public interest but the solution is complicated. On the other hand, when we have a company that is clearly and intentionally on the Low Road, it is essential that we act when we can to expose, block, and oppose.
Our tactical allies are companies that have a short-term material intersection with our objectives, but do not necessarily agree with our whole development program. These include the majority of companies that have a local market and depend on a thriving local economy. A large number of companies are still locally owned. Their success depends on a strong social and economic infrastructure. Their managers and owners have often worked themselves up from production positions, and come from working class communities. They are familiar and sympathetic with the conditions, worries, and concerns of the majority of people.
These allies include investors, entrepreneurs, executives, and others who are fair and recognize our common interest. Some companies, because of the nature of their production, require the kind of society our strategic objectives seek. Many high-technology companies want a community with a highly developed infrastructure that will provide a steady flow of highly educated and motivated workers. Their productivity depends on decentralized authority and initiative rather than the rigid, assembly-type production process known as Taylorism. But the fact that they have a material interest in our program does not mean they recognize that or step forward. It is our job to highlight this common interest, provide them with appropriate material benefit when possible, and effectively break our own habit of lumping all parts of the private sector together.
In the business community there are businesses, large and small, and business leaders who accept the main features of our strategic vision. They are absolutely essential for the success of our new development strategy. They have essential skills and resources to complement those of labor and community.
These are individuals who can be found working in most Low Road companies, who are often required to act in a certain way because of their job or immediate situation, but who have a high level of consciousness and commitment to the High Road. Finding individuals like these is like finding diamonds, and our social movement should never close its eyes to this possibility.
Mid and lower-level managers in some Low Road companies may also share a commitment to further develop the productive capacity of the company and can find themselves in fundamental conflict with strategies that threaten it. In short, whole classes of company owners and managers can be our strategic allies. These include employee owners of companies, micro entrepreneurs, and "minority" and women entrepreneurs who bring strong values and commitment into their business practices.
Our specific program for tactical and strategic business allies outlines the unique features we bring to business development. These include: linking successful companies with sustainable objectives; giving priority to work with social, female, and minority entrepreneurs; developing the full capacity of labor within the business, and building a mutually beneficial relationship with community and local government.
Brach Candy Company
In 1989, at the request of a local community coalition called the Garfield/Austin Interfaith Action Network (GAIN), CLCR became involved in a protracted effort to save jobs at Chicago's Brach Candy Company.36 This campaign provided a great opportunity to define the interests, actions, and roles of the various parts of the private sector connected to the company and to develop strategies appropriate to these varied interests.
In 1987, this West Side company had employed some 3,700 people and generated $80 million in payroll revenues that circulated through the local economy, yearly. The company was purchased by Klaus Jacobs, a Swiss entrepreneur. By 1989, he had laid off 1,000 people, replaced four CEOs and management teams, lost about $100 million in sales, and threatened to close the company if the City of Chicago didn't set up a Free Trade Zone that would permitted Brach to buy sugar at reduced international prices.
CLCR established a partnership between GAIN, the Teamster local that represented the production workers, some of the management of the company including Peter Rogers, a prominent Brach ex-CEO and a coalition of 80 organizations. The Campaign sought a High Road future for Brach:
CLCR conducted a Social/Cost Benefit Study38 to quantify the impact of the projected loss of 2,048 jobs at Brach Candy Company in 1990. We found that over two years there would be:
These victims would be the companies that had a material interest in supporting our labor/community coalition--packaging companies, producers of the raw materials Brach used in production, transportation companies, and others that were part of the production chain associated with Brach's candies. The health of these companies depended on the success of our labor/community coalition. Accountants, lawyers, bankers, and consultants also had an interest in our success. Within Brach, the labor/community coalition had the active support of some top-level managers who knew they could lose their own jobs if the Low Road strategy prevailed.
Part of the success of the "Save Brach's" Coalition Campaign came from recognizing these common interests, winning over some representatives of the private sector to our efforts, and advancing objectives that clearly encouraged and supported good business just as we opposed bad business practices. We successfully challenged the labor and community activist's habit of treating the business community as a monolith.
Mayor Daley of Chicago sided with Brach managers in the conflict with the Teamsters and the Coalition. And then, in the midst of the conflict, Brach's low-wage competitor that was solidly on the Low Road--paying minimum wage, a history of abuse of immigrants, and rabidly anti-union--requested and received a city subsidy of $3 million. This city policy was a by-product of a habit that treats the private sector monolithically and tries to respond to every request without a careful evaluation of its impact on the city and other companies. This type of policy encourages the Low Road.
A local not-for-profit development corporation had been seeking Brach as a member for 16 years with no success. Shortly after our Coalition held a press conference attacking the Low Road strategy of the new owner, the development corporation received a check for dues from the Brach's CEO and gladly accepted the money and the company into its ranks. This passive deference to the private sector by a CDC receiving tax breaks to serve the local community is not uncommon. It breeds public cynicism about the field of community development.
Through our work at Brach, we became familiar with the candy industry in Chicago. To our surprise, we learned that the Chicago area produces more candy than any other city in the world, with about 50 manufacturers plus many smaller candy makers employing 10,000 people and generating $2.4 billion in shipments.39 It is a sector that can afford good wages because of the skills and talents of Chicago's labor and management pool.
Along with our strategic and tactical allies in the private sector, the unions that represent candy workers, and others from community, education, and government, we have created the Candy Institute, committed to building this industry on the High Road. The Candy Institute is developing and implementing programs on technology, training and education, production, marketing, export, and innovation. As this industry faces increasing global competition, an effective public/private partnership will rise to the challenge.
Entrepreneurs are leaders in the market of any economy. They start up and buy companies. They are investors and financiers. They make things happen. They have the leadership characteristics and skills to succeed. They act according to their values. We need to cultivate entrepreneurs who will lead in developing the economy in line with our strategic vision, retaining and improving assets that are now deteriorating, and envisioning and creating new assets.
Part of our new model of community development involves transforming the field of development itself. It is now a passive service provider to the private sector, but it can play an entrepreneurial and, therefore, competitive role in determining the future use and value of the assets of our community. Key to our success is identifying, recruiting, developing, and rewarding a breed of entrepreneur who will lead in the marketplace, but do it with a full commitment to our social and community values as well as to the bottom line. Success will give us the capacity to create enormous financial and social opportunity, either through transforming a reactive retention project into an engine for development, or identifying an undervalued community resource or asset and developing it.
These entrepreneurs are our strategic allies in the business community and represent a relationship that is worth a lot of investment and patience. What are their characteristics?
Entrepreneurs with these qualities should be our preferred vendors and participants in our networks and our projects. They bring far more value to us than traditional entrepreneurs with equivalent or even superior skill.