The Company Town (37 page)

Green-energy promoters like to say that renewable-energy plants generate lots of jobs: The American Wind Industry Association, for example, announced that its companies had more workers than in all of coal mining during 2008, about 85,000. Even if one accepts these figures—and many dispute them or challenge their significance—these are largely construction and manufacturing jobs, not long-term maintenance positions. In Arizona, a 280-megawatt solar project was announced in 2008 by Arizona Public Service and Spanish company Abengoa Solar. The job pay-off for what Abengoa claims will be “the largest solar power plant in the world”: 1,500 in construction and only 88 permanent jobs at the Gila Bend site, sixty miles southwest of Phoenix. That same year, Aspen Environmental Group, a Sacramento-based consultancy, estimated that if geothermal and wind installations were substituted for a coal-fired plant that Sierra Pacific Power proposed to build in Nevada, five times more jobs would be created. Translation: 500 to 750 green jobs, at most.
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Whether new installations are operated by Google, Microsoft, or one of the renewable-energy companies, none seems likely to compare to the company towns built in past decades, either in size or importance. From textiles in New England and the Piedmont region to steel and a variety of industries in the Midwest, extractive operations across the country, and shipbuilding on the coasts, over the decades American companies erected industrial powerhouses supported by their own towns, large and small. These burgs were the scenes of high drama: empire-building, urban landscaping, labor strife, abject misery, upward mobility, and often urban decay. By comparison, such new-economy operations seem the settings for a more modest version of human theater. They might best be thought of as something like lighthouses—out-of-the-way but necessary installations, attended by minders who have no aversion to solitude.

Of the country's growing industries—which also include medicine and energy—tourism seems the most likely to become the mainstay of established and burgeoning company towns. It is an industry notoriously prone to starts and fits, as tourism-dependent lands from the Caribbean to Africa can attest. But then nothing in the American experience has been particularly predictable. Just consider the sturdy brick edifices in Lowell—built to last many lifetimes and now abandoned, like the great pyramids, to the fickle vicissitudes of history.

—Letter of Merrimack Manufacturing Co. Treasurer F. B. Crowninshield and others to Lowell, Massachusetts, cofounder Nathan Appleton, 1858
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n a land of plenty, every corporate would-be town-builder confronted questions of scarcity: Where could one best locate the appropriate raw materials along with the power and talent to fuel, conceptualize, and extract or manufacture a product? Often, raw materials proved to be the primary concern. The Boston Associates chose East Chelmsford, Massachusetts, for its water power—and then over the next hundred-plus years, managers at Lowell struggled with the question of manpower. Milton Hershey selected a home base in rural Pennsylvania for its dairy farms and upright labor force; his product, chocolate, seemed to practically sell itself as the country grew up, and with few exceptions, employees seemed to find contentment in the well-appointed town of Hershey. Coal and copper barons, oil magnates, and timber kings had little choice over location—they had to locate where the limited resources existed and hope either via carrot or stick to induce working people to follow. The
creators of the Manhattan Project, too, were restricted in their choice of location: Electricity and isolation were their key considerations.

So, with some regularity, managers of company-town-domiciled businesses faced a conundrum: What human-relations formula would serve them best? What combination of policies toward their workers and the surrounding community would lead to the most productive outcome? No matter their outlook—utopian paternalist or exploitative despot—managers and their companies were constrained in how they could treat their employees not only by their own outlooks but by the market. Remember, too, that very few companies lived at either end of the spectrum. Rather, all companies are some mix of utopia and exploitationville—and their direction is often set by both economic and strategic considerations.

Managers have inclined toward utopian, or at least more benevolent, policies when they faced some of the following:

On the other hand, executives have cared less about progressive relations with communities and employees when the following conditions applied:

That said, a measure of managerial discretion always exists.

Pacific Lumber, for example, adopted self-described “paternalistic” policies despite that company's low-skilled workforce. It doesn't take a rocket scientist to make a Hershey bar or a Maytag washer. And almost all of Henry J. Kaiser's shipyard workers were low-skilled.

It is hard to deny that, for example, the mistreatment of coal miners by Colorado Fuel and Iron or the high-handedness exhibited by U.S. Steel toward its steelworkers had a lot to do with management's elitist, even hostile, attitude toward them. “I can hire half of the working class to shoot the other half,” steel man Henry Clay Frick famously boasted before the bloody 1892 strike and shootout in Homestead, Pennsylvania. U.S. Steel's competitive situation steadily worsened over the course of the twentieth century—but long before this became clear, the corporation insisted that it meant to do little to develop Gary, Indiana. U.S. Steel could have done more for the town, but it very openly and publicly opted for a hands-off policy.

The changed competitive situation facing Lowell's Boston Associates and Hormel led these companies to dramatically revise their human-relations policies. But Corning Inc., too, has seen its bottom line hammered—and through thick and thin, that company has largely maintained a consistent, progressive posture toward the town of Corning and its employees.

The bottom line: American conservatives and many businessmen have long maintained that all problems can be solved via the free market and private enterprise. But only one of the strains of business thinking that we've discussed here recognizes that many social problems are also problems that business has a proper role in addressing. Only if business recognizes the existence of this “utopian” tradition of business practice and continues to develop it can the free-market-solves-all-woes argument be supported.

This is more than a suggestion that everyone “be nice.” It is an argument that companies need to recognize, where employees are concerned,
one of the fundamentals of markets—the necessity of fair dealing, good behavior, and trust. Economists often speak of these elements as a prerequisite for the development of relationships between buyers and sellers, and between enterprise and investors. Who would buy anything from a company, or invest in it, if people thought it produced shoddy or dangerous merchandise? The same mutual respect should characterize relations between companies and their employees and hometowns, without whose input and support little gets done.

Nor must one be a closet socialist to agree with such sentiments. In his well-known essay “The Social Responsibility of Business Is to Increase Its Profits,” conservative economist Milton Friedman railed against the notion that an executive should use corporate resources for social purposes, which he said necessarily implied “that he is to act in some way that is not in the interest of his employers.” The very idea: squandering the stockholders' money! But even Friedman admitted that “it may well be in the long run interest of a corporation that is a major employer in a small community to devote resources to providing amenities to that community or to improving its government.” Such “hypocritical window dressing,” he admitted, could have “worthwhile effects.” I don't regard such doings as necessarily hypocritical—and neither did the benevolent paternalists at Hershey, Corning, Kaiser's shipyards, or Pacific Lumber.
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