'America' Was Wrong Word for O'Neill

Will a man who paid Mexican factory workers $25 per week, then stripped the name of “America” from the company he ran, become the next secretary of the U.S. Treasury?

The answer is yes, if former Alcoa Chairman Paul O’Neill is confirmed.

The Aluminum Company of America-Alcoa-was founded in 1888 in the heyday of American capitalism. From the Spanish-American War to the Cold War, it provided American workers with stable jobs, good pay and an opportunity to build some of the products that helped the United States become the greatest power on earth.

But then, two years ago, Alcoa divorced America. As corporate chairman and CEO, Paul O’Neill delivered the official papers.

The company, he said, was stripping its legal name down to just its acronym-Alcoa. The word “America” was dropped from the corporate title.

“The new identity reflects the global scope of Alcoa,” said O’Neill. “We operate at 250 locations in 30 countries around the world and more than half of our employees are based outside the U.S.”

But before the Senate confirms O’Neill, it ought to examine how the company he led represented America around the world when it still called itself an American company.

Sister Susan v. Chairman Paul

Like many multinationals, Alcoa did some downsizing in recent years. Well-paid U.S. workers were laid off, poorly paid foreign workers were hired.

In a joint venture with a Japanese firm, Alcoa Fujikura Ltd., the company now operates a number of factories in the small Mexican towns of Ciudad Acuna and Piedras Negras-just across the border from George W.’s Texas.

In 1995, the dismal estate of workers in these factories attracted the attention of Sister Susan Mika, a member of Benedictine Sisters of Boerne, Tex. She told me her story last week (The Alcoa press office did not respond to a call requesting their version of events.)

The Benedictines own 50 shares of Alcoa stock, which makes them, along with other Alcoa shareholders, Paul O’Neill’s employers.

When they learned that Alcoa owned factories across the border in Mexico, they decided to investigate conditions there. What they found was that Alcoa’s Mexican workers generally were paid between $22 to $25 per week, with the highest salary being $35 per week. In many families, father, mother and children all worked. And they often lived in houses pieced together from wooden pallets and concrete blocks, without plumbing. Their weekly wages allowed them to just barely survive-as long as they did not buy meat or other “luxuries.”

In the factories, the bathrooms were sometimes locked and, when open, did not have soap or toilet paper.

On a few of occasions, as documented by Mexican newspaper reports, workers were overcome by fumes at their workspaces and needed to be taken to the hospital.

In November 1995, Sister Susan filed a stockholder resolution in anticipation of Alcoa’s May 1996 annual stockholder meeting. The resolution asked Alcoa stockholders to approve a review of conditions and wages in the Mexican factories. Just before Christmas, Alcoa’s corporate secretary Dennis Demblowski called her. Would she come to Pittsburgh to discuss the issue?

She asked him to come to the border instead, so he could meet with some of Alcoa’s Mexican workers.

In January, Demblowski came. He met with 15 workers and their families at a restaurant in Ciudad Acuna. To illustrate what their life was like, the workers brought along a meager basket of groceries that represented the sum of what they could buy each week with their $25 in wages. They also brought along the articles from Mexican newspapers describing the incidents in which workers were overcome by fumes.

“He said he would bring all of this information back,” said Sister Susan. “So afterwards I wrote a letter summarizing all the major points to Paul O’Neill and I sent him the newspaper articles. I wanted to make sure he got the information.”

“He never did answer my letter,” she said.

But that only strengthened her resolve. Alcoa had blocked her stockholder resolution from formal consideration. So she decided she would go to the meeting herself, bringing with her some workers from Alcoa’s Mexican factories.

Not long before the big showdown, the chairman himself got wind of her plan. On May 8, he picked up the phone.

“Paul O’Neill called me before the meeting when he found out I was planning on coming,” she says. “He was trying to find out if I was actually coming and if I was actually bringing workers, and he was pretty intense about it.”

“I told him that I had just sent him a letter in January and never gotten an answer, so we were coming,” she said. “He said that he had looked into what I had written about, but he never said what he had found.”

When Sister Susan, two other organizers, and two Mexican workers first arrived at the stockholders meeting in Pittsburgh, they were detained at the door. When they were finally let in, they had to sit at the very back of the crowded room. But when the meeting was thrown open to questions from the shareholders, Sister Susan and the workers marched up to the microphone to tell their story.

“After the two workers spoke, you could have heard a pin drop in the room,” she said. “In a room full of 200 or 300 people, there was absolute silence. And to his credit, Paul O’Neill did not try to interrupt them.”

But when Sister Susan thanked the crowd for listening, he did interrupt. “He wanted me to stay at the microphone and answer his questions,” she said. “He asked me if the Benedictine Sisters wanted them to get out of Poland and all the other places around the world where Alcoa was. I said, No, what we wanted was for him to look at the conditions and their practices in all of the places they were, including Mexico, and to look at paying their workers sustainable salaries.”

“He said he was not going to raise those wages because they were competitive in Mexico,” she said.

As to the condition of their Mexican facilities, he said, “You can eat off the floor in these plants.”

After the meeting, Sister Susan and the two workers met with O’Neill directly. They asked him why, given that he had just announced an annual profit for Alcoa, they had not been awarded profit-sharing as called for by Mexican law. He told them, said Sister Susan, that their particular Mexican joint-venture had not been profitable. He then produced a computer printout that indicated there had been no loss of manhours at the factories in question at the time of the alleged fume inhalations. They presented him with the newspapers stories to the contrary.

He asked for six weeks to investigate the matter.

Meanwhile, the Pittsburgh Post-Gazette ran an editorial about Sister Susan’s confrontation with the chairman, and the Associated Press sent out a story.

$10 Million for O’Neill

The day after the meeting, said Sister Susan, the bathrooms were opened at the factories and stocked with soap and toilet paper. Soon, O’Neill himself went to Mexico to inspect the facilities. He then fired the executive in charge of Alcoa’s Mexican operations for not reporting the inhalation incidents, gave the Mexican workers a $5.30 per week raise, and ordered profit-sharing payments.

In a July 3, 1996, letter to Sister Susan, he blamed the living standards of his own Mexican employees on the Mexican government. “As I shared with you during our shareholders meeting,” he wrote, “we recognize that the standard of living for people in the region is far below the level found in other parts of the world due largely to the current monetary and social policy of the Mexican government.”

Sister Susan did not let up on O’Neill, however. Alcoa workers in Mexico are now paid $40 to $45 per week. But that is still not a living wage, she insists.

It is hard to argue with that conclusion-considering that a few miles away, across the Rio Grande, at a McDonalds or a Burger King, an American teenager can make at least that much in one shift of flipping burgers and burning fries.

Perhaps Paul O’Neill was on to something when he removed “America” from the name of his new global company. More and more, its employees are not Americans, they are not paid American wages, and they do not live by any standard of life recognizably American.

But O’Neill himself made out all right at Alcoa. The same year he was paying Mexicans $25 per week in factories just across the Rio Grande from George W.’s Texas, he was raking in $10.8 million to labor at the corporate headquarters in Pittsburgh.

Now apparently he’s saved up enough to retire and serve-with compassionate conservatism, no doubt-as secretary of the U.S. Treasury.

Let’s hope he doesn’t drop the U.S. from that title, too.