Belching Out the Devil
Page 28
And thus he has faced down his critics, mended the ways of the company, embraced social change, shouldered the burden of world leadership and wrapped it all into a corporate philosophy: you make money if you are seen to do good.
The board in front of Isdell lead the appreciation of their captain of industry. Behind me the woman has put down her knitting to join the applause. But the dad is holding his hands to his chest clapping wildly. He is a fan. Had he spare underwear to throw it would be in the air by now and Isdell would be whispering to his roadie ‘That one to my dressing room.’
As the applause starts to dip B Wardlaw turns to me and says, ‘Wow, that’s the impact you folks have had, you wouldn’t have heard that speech three years ago.’ And I believe B, it has been the activists, union members, villagers, shopkeepers and students that have forced the Company to look at the issues. We would not have heard that three years ago, the speech was totally about Corporate Social Responsibility.
But it is also evident that the Company’s old ways are resolutely at the helm. They remain wedded to their mantra that ‘we only make and sell concentrate and are not responsible for the bottlers or suppliers’ when it is clear that the ‘Coca-Cola system’ is controlled by The Coca-Cola Company, both in terms of the franchise and The Coca-Cola Company’s share ownership. It is also evident that the company has not addressed the specific issues.
The story told here is the story of a company going through the growing pains of Corporate Social Responsibility and emerging a changed and mature business leader working for a better world. But any storyteller knows that what you leave out of a story is as important as what is kept in. And Coca-Cola’s omissions are the uncomfortable specifics.
• Isdell talks of ‘communities lack of public access to clean water,’ but doesn’t mention Kaladera, the farmers or the women from the basti fighting at the pumps.
• Isdell talks of ‘creating economic empowerment everywhere we do business,’ but blanks out the fleteros in Colombia working with no job protection, with long hours and low pay.
• Isdell talks of how creating jobs ‘helps alleviate poverty in the communities we serve,’ but skipped the children working the fields for Coke’s sugar who are not alleviated but condemned to poverty.
• Isdell talks of a workplace ‘free from violence, harassment, intimidation and other unsafe or disruptive conditions due to internal or external threats’ but dropped the page that mentioned the Indian workers passing out in unsafe conditions and the Turkish deliverymen sacked for wanting to join a union and then gassed in a Coke plant with their children.
• Isdell says, ‘If the communities we serve are in and of themselves not sustainable then we do not have a sustainable business’ but didn’t have time to mention the unpaid taxes to Nejapa and the slums where local people pay for water since Coke came.
• Isdell talks of the company being a ‘functioning part of the local community,’ but the name of Raquel Chavez has slipped his mind.
Campaigners have forced the company to respond and the company has responded with PR. It seems to be their pathological response. Ron Oswald, the leader of the International Union of Foodworkers, a man who regularly meets with the company, said ‘When you build that whole thing around a product that nobody needs, that product is pure image…so the communications people inside Coca-Cola accumulate huge amounts of power over many years…they see issues of substance and they interpret them as issues of communication and then they try to communicate the solution, instead of dealing with the issue.’9
The shareholders’ resolutions are next on the agenda and the outcome is predictably in favour of the company. Isdell’s responses to questions are by now so prepared, prepacked and ready to go that you can practically hear the microwave bell ping before he opens his mouth. Polite and orderly, he controls the meeting like a teacher in a slightly rowdy class. Ray Rogers shouts ‘Point of order’ and jumps out of his chair at every possible opportunity. Amit tells Isdell he is insulting. B says ‘I have worked out that with about 1,500,000 shares in the company and an hour to question the board that gives each share about 0.00024 seconds’ worth of time, so I will be as quick as I can’ before putting his idea of a board committee for human rights.
Isdell bats away the questions with his trusty PR shield and gets a few shareholders making supportive statements too, one shareholder compares Isdell to a ‘gifted athlete’, making leadership look so easy. Someone else congratulates the company on advertising on family-friendly TV like American Idol…But the meeting closes with a gentleman being called from the front executive enclave, he has thick glasses and is reasonably elderly.
‘My name is Herbert Pinkus,’ he says, looking as if he had been well named. ‘I control around 10,000 shares, I personally own around 6,000 shares. I want to congratulate the board and thank them for the fine job.’ Then he turns to face the rest of the room, ‘And I also want to say a word or two to the naysayers here. The Coca-Cola Company is not the conscience of the world, The Coca-Cola Company is not the policeman of the world. The mission of The Coca-Cola Company is to enhance shareowner value and I think they do a terrific job in that.’ He starts to get a round of applause but carries on over it raising his voice, ‘ and I have another personal message for the naysayers.’ He pauses for good effect, ‘Sell your shares and get out of the way. Thank you.’
The executive enclosure erupts and claps heartily and so do I. For all the talk of sustainable communities it is refreshing to hear an honest opinion, red in tooth and claw. B nudges me, ‘I am glad you had an opportunity to see that attitude in action. America love it or leave it!’ And he smiles, despite having had his proposal to set up a human rights committee within Coke defeated by 91 per cent of the shareholders.
The meeting closes and the lights are raised. The executives start to stand in their remarkably uniform bespoke suits, stretching their legs and slapping each other on the shoulder. A small group of big men assemble around Neville, and when the prerequisite number are fore and aft they set off down the side of the room, with Isdell in the middle, through the shareholders and the crowd. I remain seated, surrounded by the noise of scraping chairs and the litter of discarded order papers, thinking through what I’ve just heard.
This is the problem. You can call it sparkling beverages as many times as you want and you can talk of magic moments of refreshments but Coca-Cola is fizzy pop. You can talk of consumers inviting you into their lives and you can treasure secret formulas but all you are selling is essentially sugar and water: fizzy pop. No one actually needs Coca-Cola and no one would die if it disappeared off the planet tomorrow.
And that is my realisation. The brand is the most important thing the Company has because put aside the concentrate and that is all they have left to sell. The brand is what transforms fizzy pop into Coca-Cola, that intangible bundle of images and feelings held within people’s minds and kept alive on a $2.4 billion advertising budget.10 Coca-Cola is more image than product and as such exists as a mental construct within each and every one of us. Except my image of Coca-Cola is no longer linked to polar bears, Santa ads, iconic script and bottles. When I think of Coca-Cola now I think of Luis Eduardo in jail throwing notes wrapped in sweets out of the windows to his daughter on the street. On other days I think of a child disappearing into forest of sugar cane and sometimes I think of Raquel Chavez winning against the company or the protestors who shut down the plants in India.
There have been some significant successes in the struggles against the Company and there are campaigns and solidarity groups that anyone can take part in. Yet despite this there is an aching question of ‘what can I do, they are one of the world’s biggest companies?’ But the one thing the Company has taught me is that stories matter. How much do they matter? The Coca-Cola Company does not want people seeing a bottle of Coke and not hearing the story they have spent US $2.4 billion telling. The last thing the Company wants is consumers thinking about their product rather than associating
it with memories or feelings, things that do not sit well with awkward questions. The stories I have heard on these trips challenge the corporate narrative. The bundles of stories on scribbled notes and Edirol recordings matter, and they matter to the Company as much as to the people who told them. Each time they get told it is another chip away at the brand value. Sure, the Company will continue making profit, but they won’t make as much as they could do…and believe me that really hurts them.
As epiphanies go this one lacks the dramatic gesture of being struck blind on the way to Damascus but it does mean I can make it out of the hall without stumbling for help.
It is time for me to go. I take leave of B Wardlaw, wave goodbye to Amit and search out Lew to try and get a lift back to Brooklyn. As I get to the top of the steps one of the Company staff stops me.
‘Sir.’
‘Pardon?’
‘Have you got your shareholder’s card?’
‘Er…no…’
She tuts. ‘Doesn’t matter, you have one anyway. You should hand over your shareholder’s card to receive one but it doesn’t matter. There you go.’
Conspiratorially she hands me a thin cardboard box. ‘Here you go, sir,’ she says winking.
‘Thank you.’
Heading to the hotel entrance I open the box. Inside is a slim silver metal commemorative Coca-Cola Company pen, a gift to the shareholders. ‘Wow,’ I think, ‘they even give me the ink with which to write.’
POSTSCRIPT: BRAND LOYALTY
‘Over the last thirty years, the employees in the Drogheda plant have made a very valuable contribution to the Coca-Cola business.’
Hugo Reidy, General Manager, Drogheda Concentrates, 29 August 20071
Jerry Farrell is travelling to a football match with his brother and their children when his mobile rings. Jerry is in his early fifties and works as a line manager at Drogheda Concentrates where he oversees about eighteen workers. The plant, north of Dublin, is where The Coca-Cola Company makes the syrup and concentrates for their drinks. Jerry is a union official there for SIPTU (Services, Industrial, Professional and Technical Union). He is also the Co-Chair of the Coca-Cola Communications Forum. It is a grand title but essentially this is where managers and workers discuss how the company’s long-term plans will affect employees. But today the business of work is relegated to its proper place and the matter in hand is football. Tomorrow Drogheda United will play against Helsingborg in the UEFA Cup in Sweden and the most important thing is to get to the hotel.
The mobile rings again, showing a number he isn’t expecting. Not today leastways, today is holiday time. The voice on the end of the line is Coke’s General Manager in Ireland.
‘Jerry, sorry to disturb you, I know you are away at a football match, but I have to tell you there is an announcement being to be made in under an hour.’
‘About what?’
‘We are going to shut the plant in Drogheda.’
It is 29 August 2007, the day before Drogheda lost to Helsingborg 3-0. There are about 200 fans travelling to see the match, out of which fifty work at the plant. Jerry hangs up and goes to give them the news.
The plant employs 256 workers, probably 350 when you include the contract staff, the canteen, security and cleaners. As Jerry is the Co-Chair of the Coca-Cola Communications Forum the company informs him of the closure an hour before it is announced publicly; the call, says the General Manager, is out of respect.
Eleven months after that phone call and the plant is all but closed. ‘Respect…’ Jerry shakes, his head as he tells the story, ‘an hour before they make the announcement and they call it respect.’ Most workers left for the last time on 27 June 2008, leaving the plant to be run down for good by the end of August. By the time you read this it will be shut.
I had phoned SIPTU a few weeks ago and they had put me in touch with Jerry, so this is the first time I have meet him. Jerry is fifty-two, dresses well but not too flash, has a wife, two kids: he’s a typical working-class guy. But the thing that defines him today is his anger and resignation, he exudes a kind of fuming fatalism. In his car he talks non-stop during the forty-five-minute drive from Dublin to Drogheda along the motorway, then on through the quieter lanes, following the lush riverbanks. ‘This is where they fought the Battle of the Boyne’ he says, pointing at a gateway, ‘the tourist folk have done it really nicely.’
As we head through Drogheda he explains that they call it a ‘Bed and Breakfast town, so many people work in Dublin and commute.’ But driving through the industrial area is a different story. We seem to pass rows of disused warehouses and industrial units. Jerry nods at each and starts every sentence with the words, ‘This was the place where the so and so factory used to be…’ or ‘This is the site of the old so and so place…’ Row upon row of empty factories and businesses, the stillborn pups of the Celtic Tiger.
Sitting in a near-empty hotel bar just by the river we drink tea and natter for two hours while waiters in standard black shirts and white aprons glide around the room to the sound of discreet hotel tunes, ‘lobby house music’ or a compilation that is probably on sale at reception.
Jerry explains the significance of the plant, ‘Seven out of every ten of Coca-Cola’s drinks drank around the world on any given day start in Ireland, the concentrate is made in Ireland.’ Given that 1.5 billion servings of Coke’s products are consumed every day - that’s a lot of concentrate.2 This is the hub of Coke’s operations.
Different drinks require different types of ‘beverage base’ some are liquid concentrates, some are powder, the various mixes leave the plant in various forms and head off as far afield as Australia. ‘The flavourings come over from Sidcup in the UK,’ says Jerry explaining that The Coca-Cola Company’s secret ingredient called ‘7X’ is manufactured there. ‘But the main ingredient that goes into Coke for concentrate is caramel. Then you have things like phosphoric acid and obviously the 7X and then you have all these little flavours. So in a batch of Coke there are probably ten ingredients.’ As there is little automation in the plant Jerry says the process of making the concentrate is quite skilled. ‘It tends to be people weighing out ingredients into tanks, it is very, very manual. So it is very hands on, so that is why they rely so much on experienced operators knowing what they are doing cos if you make a mistake in any of this and it is not picked up by the labs and it goes out to the fields…’ He shakes his head.
I am curious about the concentrate business. ‘How much did the plant make?’ I ask.
‘Drogheda would make about 8 million units of concentrate a year,’ Jerry replies.
‘And how big is a unit?’
‘For Coca-Cola a unit is a US gallon.’
‘How many drinks would you get out of a unit?’
‘Depends what it is, it varies from drink to drink.’
‘Coca-Cola…’
‘I think it is about two units make 100,000 or somewhere around there.’
‘How much does a unit cost to make?’
‘Drogheda made it for about $3.67.’
‘So roughly $3.67 is enough for about 50,000 drinks…’
‘The $3.67 is for the ingredients and labour costs to make it.’
I believe my next word is ‘Fuck…’
According to Jerry the cost of concentrate was even lower in Ballina, ‘US $2.60 a unit,’ he says. The differences in production costs was used by the company, ‘so if Drogheda didn’t get down to Ballina’s level the company shift work from Drogheda to Ballina. What they have is an internal competition going on. The company create a very competitive internal environment.’
The company might say they had overcapacity in Drogheda but the lure of cheaper concentrate could have played a part in the decision to shut down the plant here.
Drogheda Concentrates is owned by Atlantic Industries, which is registered in the Cayman Islands and is a direct subsidiary of The Coca-Cola Company. There is a distinct whiff of ‘tax efficiencies’ in the air. And by a ‘distinct whiff’ I mea
n ‘stink’. For most of its history, Ireland has been a predominantly agricultural economy but in the Seventies it made some radical changes to its tax system to encourage investment. Corporation Tax for some industries was slashed to 10 per cent and it now stands at 12.5 per cent, offering one ‘of the most beneficial corporate tax environments in the world’.3 It is not surprising therefore that Ireland was by 2004, the world’s most profitable country for US corporations.4 (Though for lovers of irony and gossip the anti-poverty campaigner and musician Bono moved his music publishing company to the Netherlands after Ireland scrapped a tax break on royalties.5)
According to Jerry, ‘Coca-Cola came here purely for the taxes. Nothing else.’ And logically he has a point, why else would a company establish its operations in Ireland and send ‘seven out of ten’ of its concentrates around the world from there?
Coke Throat in Mexico had explained that the concentrate for Coca-Cola made in Mexico came from Ireland, ‘Well, we have a huge manufacturing facility here in Mexico that used to supply all the concentrate, we have the capability, the problem was that producing it here, and paying taxes here was less attractive than the full incentive of bringing it from Ireland and shipping it on a ship, on a freight to Mexico…it’s just accounting.’ For the Company it is a way of ensuring large profits remain in low tax regimes. As Coke Throat said, ‘that way you reduce jobs in the country your bottling plants operate and you reduce tax paying, and this transfers all the benefits to Coca-Cola.’