Kim, Welcome to the Lake.

Jeff, Thank you for Hosting today’s Book Salon.

Of course, glad to be with you.

Lovely to be here. I’m looking forward to this.

I guess we’ll get started then. The book is really fascinating in that it is really not a corporate history like many other similar books, but really wrestles with globalization, justice and the nature of the corporation today.

Yes, that’s what I had hoped for. I was interested in Starbucks, of course, but mostly in what it meant for our life in the global economy and community.

How about starting from the beginning. You have a chapter about the global production chain for coffee. Let’s start with the growers. You travelled to guatemala to write this book. What did you take away from that experience?

Welcome to the Lake,
Did you consider any other corporations to study? Is Starbucks a one off?

A lot of different things. I was surprised to find what a large impact Starbucks had — and not in a bad way, for the most part. Because Starbucks paid more for its coffee than the commodities market, it allowed gourmet coffee farmers to survive in a downturn. On the other hand, I was also interested in the different narratives in Costa Rica and Guatemala. In Guate, where the history of colonialism and imperialism is harsher, farmers are more sensitive to the issues of economic imperialism today.

I looked at other companies peripherally. I’ve been following Wal-Mart for a while — who doesn’t in the labor community?– because it was sort of the anti-Starbucks model. Also Whole Foods, a company that is virulently anti-union while maintaining a “we’re good” persona. And, most important, I did take a look at the other coffee companies. Nestle, Procter & Gamble and the former Sara Lee are much larger than SBUX — and much worse.

“…. However, to others, they are a responsible corporation, providing health care to even part-time employees and paying a fair price to the coffee producers in Central America and Africa.”

Starbucks coffee cup seems half-full on this front, as they have only committed to a relatively small amount of purchases of Fair Trade coffee. On the other hand, they are certainly not WalMart, but it certainly seems as if there is room for improvement in their treatment of suppliers/farmers.

Yes, there was a coffee crisis a few years back that affected many countries, and in particular Guatemala. I was there a few years ago and was struck to see how many small farmers had been affected. Who was successful in making it through this crisis? Did the smallholders survive, or larger plantations? And what has been your experience of the working conditions of workers on the coffee fincas of Guatemala?

The Fair Trade story is pretty complex. SBUX is the largest North American purchaser of Fair Trade coffee, but it’s only a small percentage of the coffee that it purchases. More than half their coffee is purchased under their own CAFE Practices code. The question isn’t really one of price–SBUX purchases tend to be at Fair Trade rates or higher–it’s more a question of agency. Fair Trade helps small cooperatives gain some power. SBUX is more concerned with the quality of the coffee. But Paul Rice, the head of Transfair USA considers SBUX far better than the other large coffee companies.

Welcome to Fdl Kim and Jeff.

I have not had a chance to read the book but this statement from your write-up Jeff:

She also thinks about the nature of the global corporation, and whether it can ever be “responsible.”

Unfortunately, I’m not sure myself if any global corp can ever be truly responsible. Even if the founders start with all good intentions, intentions get overtaken by events OR the company goes public and new management comes in and those original ways of doing business fall by the wayside.

My $.02

With SBUX, we have also seen the reemergence of the IWW, a labor organization founded by Big Bill Haywood, and associated with the industrial labor struggles of the 1930s. So why is the IWW trying to organize SBUX? Are they successful? And are they going about it the right way? Does 1930s radical, class-based message work today?

Also Whole Foods, a company that is virulently anti-union while maintaining a “we’re good” persona.

Do you attribute that to their Texas present roots or is that a newer management philosophy? I thought that they were once upon a time “Bread and Circuses” up in Cambridge, certainly not a hotbed of anti-union activity or was that a grocery company they bought up on their way being “Synergistical” (sort of like being strategeryical?)

I did not know that you were here today with this book… time to go pick it up at the local indy book shop. My post later today on is on the EFCA, so many labor issues, so little time…

That is one of the central questions of this book. If a corporation is public and has shareholders looking to maximize wealth, what social good (beyond job creation) can be done within that context. I’ll let Kim speak to this…

Lots of larger and smaller coffee holders went under when the cheap Vietnamese coffee hit the market about 7 years or so ago. The price of coffee on the commodities market plummeted to barely 50 cents. The interesting thing is that premium coffee of the kind that SBUX buys is grown almost exclusively at higher elevations and on smaller farms. And SBUX, to its credit, realized that its suppliers wouldn’t survive unless it took some action. They unilaterally decided to give their suppliers multiyear contracts at 2 and 3 times the rate that coffee was trading on the market. And because they were big enough, that created a kind of artificial floor for gourmet coffee. Other companies had to pay close to that price if they wanted to buy good coffee beans. This may be the thing that really surprised me, in that it created systemic change, and SBUX never really bragged on it. Doesn’t make them always good, but this was one really good move.

I remember years ago that 5 companies controlled the price of coffee. This was in those days that we were protesting the LIC wars in CA (& all sold & drank ONLY Nica coffee, don’t ya’ know). BitD before the battle of seattle & those broken windows which forced starbucks to green wash their green logo, we hated them because they didn’t sell iced coffee and the @#$& what they did sell !@#$%^&.

So my question is, how does starbucks effect the real socially responsible companies, like Equal Exchange, in the coffee business?

It’s a really good question — one for which I don’t have a really good answer. I puzzle over the issue of can a corporation be big and good at the same time. How big? How good? Howard Schultz, the Starbucks CEO, has this mantra about “growing big while staying small,” but I think that’s one tall–make that vente–order.

BTW, it’s not so easy for social justice organizations to get big and stay democratic and vibrant either… but it’s even more problematic if your imperative to be profitable is mandated by law, while virtue is merely a suggestion, as is the case with free market capitalism.

I had a client with a nice coffee business, bought from local roasters, provided internet connections in the days before wi-fi, bought sandwiches and godies from local bakeries for resale, and hired 10 workers. Starbucks opened a store about a block away. My guy was out of business six months later. He still had 70% of his original business, but it wasn’t worth it with the marginal loss of customers.

Now those profits go to Seattle and the SBUX investors, instead of my guy.

Wow– so many questions! Way cool.. I’ll try and get to as many as I can. Starbucks claims it’s “Not anti-union, it’s pro-partner,” but while there’s something to be said for the latter, it’s behavior has definitely been anti-union, and it has aggressively fought unionization both at the roasting plant and in the stores.

That being said, the IWW organizing effort does not really seem to have much traction with most of the workers. Around the country, few had heard of the organizing effort and fewer had heard from the IWW. The Wobbly effort seems wobbly indeed, more like a left cultural formation than a union, and reflecting those issues. Even where workers had issues with SBUX over hours (the most common) and wages, they seldom saw the IWW as an option, and were often alienated by the culture and tactics. Plus a goodly number of the IWW folks have been white males of some privilege, not necessarily mirroring the SBUX urban workforce. I am a big believer in the role of culture in organizing, but this did all raise some questions for me.

Mackey, the head of Whole Foods is a libertarian… there’s not much sympathy for a collective voice for workers. The reason the impact of Whole Foods is worse than that of SBUX is that the supermarket sector is, to some extent, organized, and therefore the existence of a nonunion entity makes it harder for the union to survive at Safeway, etc. SBUX operates in a virtually un-unionized sector, so it doesn’t have the same impact.

In both cases though, there’s the real problem of decent conditions being dependent on the good will of the employer, or the CEO. What happens when the company gets sold or tanks? Without representation, the workers are out of luck. That’s benevolent paternalism for you. However, it must be said that even though SBUX stock is about 25% of its former value, the company still hasn’t cut its health benefits for employees…

Kim

WElcome.

I confess I’ve gotten just a couple of chapters into the book. But the thing that most fascinates me about Starbucks is its near ubiquity in China. I used to do business with car dealers there a couple of years ago and I was happy to be able to get a big latte to help me through jet lag.

That said, I was really self-conscious of how much more expensive Starbucks was in China, proportionally–a good chunk of a days wage even for people selling cars in smaller cities.

What’s the demographic driving the Starbucks in China–and is that really sustainable given wages there? Is there much backlash against it, in that it caters to the really wealthy (unlike the equally ubiquitous KFC)?

Fascinating topic and book Kim and thanks Jeff for hosting. When not being a blogger, I work with big companies who are trying to become more responsible and it’s good to see the multilayered issues raised as Kim is doing.

More and more companies are seeing the value in looking at their practices – not just for goodwill but also because they make the company more efficient and successful – it’s a hard process to shift the corporate thinking that way … then again it’s hard for all of use to live up to our values so hopefully we will all, customers and corporates, keep working to do better. The more we support and “encourage” the corps who try, the more they will try.

Generally, it seems that the smaller roasting companies with truly great values and also indie coffee houses are doing pretty well. It’s sort of an irony that SBUX, for all its bigness, expanded the market for good coffee. It has a larger share of the market than in its early days, but the market is also larger as a whole.

In the final chapter, you liken Starbucks to Bill Clinton. An interesting comparison…two figures that draw complex feelings (from anger to admiration) depending of course on your point of view. Can you develop this comparison…once you have had a chance to respond to the many other questions…

I wish the grocery store price of coffee had plummeted too! It’s never gone down, not that I can recall.

Yeah, the anecdotal evidence of these situations is large. Where SBUX generally affects the indies is in the real estate end (or at least until recently). It can afford to pay more for the locations it wants, and there’s no question that it tends toward the predatory. I say in the book that it values biodiversity in the growing countries more than in our urban landscape. However, numerically, there are actually more indies now than before. Like so much about this company, the story is seldom simple.

Kim, thanks for the answer. I went out and looked up Mackey and “benevolent paternalism” is certainly an excellent descriptor. On Wikipedia is a story of their store in Austin being flooded out several years ago and not having insurance. Neighbors and customers showed up to help get them back on their feet, so I guess that there is substantial goodwill for them in their customer base (and not without good reason in some cases).

I like “Whole Paycheck” for some things, and have always been intrigued by their willingness to do right by their local communities in many ways. Letting a union in, would as you point out, give workers a voice in continuing the brand in some ways if the company were to be swallowed like a free sample on a Saturday by a mega-corp like Kraft or grocery chain like Kroger or Giant Foods or someone else.

I’m not sure I know the answer to that. My friends who’ve been to China and my nephew who lives in Shanghai say that the SBUX stores are always crowded with a mix of expats and upwardly mobile younger folks. It’s a place to be seen, and to practice one’s English. I think there’s also a slightly different attitude there, as we found in Japan, about consuming something expensive. You might buy a cup of expensive coffee and then linger for hours with a friend. While here, even though many of the stores are meeting places, most of the business is carry-out.

As someone who’s spent most of her life fighting corporations, this consideration was a bit of a stretch for me, didn’t always make me comfortable, but it did make me think. I really think that the question isn’t so much about whether companies do good — and we should continue to push them to become better, and then better again — but the problem of how workers and consumers get a voice and power in the global economy. That requires collective action. Starbucks, like a few other more socially responsible corporations, likes to deal company to farmer, company to worker, company to consumer. But it cannot — doesn’t really have the job description — of advancing the interests of those constituents separate from its own interests. Which is, of course, why I work in the labor movement.

You’re so right! Nestle (one trader called it Satan) and P&G push the price of coffee — mostly the cheaper coffee — down, down, down. But they don’t pass those savings to you, or to their workers. Bah!

I do see Starbucks kind of like I see Bill Clinton, both for their charms and their aggravating reticence to really use the full extent of their power to advance a progressive agenda. There’s a dissonance between the surface and the interior that tends to be a bit disappointing. I think the other piece of this is that we on the left really maintain a kind of conspiracy theory when it comes to corporations, or to badness. And it’s sometimes warranted, but not always. Sometimes a company just does something dumb, but not necessarily with venal intent. Bill is so smart, but he sometimes does something so stupid. Starbucks is sometimes like that too, we just have a hard time believing that it’s a misstep rather than out and out malevolence.

Good point – and one that I think will need new and creative thinking as we work to reinvisage the way corporations think too.

Kim, Jeff, great honor to have you here at FDL.

So, in the lull, let me just talk a bit about doing the research for this book, which was one of the most interesting things. As you know, Jeff, I became interested in this topic after going to demonstrate against the WTO in what became the Battle of Seattle. When I did my first story for ColorLines in 2004, I just went to the Starbucks PR department and told them the truth — who I was, what my politics were — and was shocked when they actually set up interviews for me with their VPs for social responsibility, human resources, and coffee sourcing. My second surprise was that 3 of the 4 officers I initially interviewed were African American women.

As the company has been under greater pressure from the left and economic pressure, it has become somewhat less open. I don’t think they’d grant me access if I were starting my research today.

You interview several people associated with Starbucks, from CEO Howard Schultz to the local barista. Have either Schultz or the baristas you have talked to read this book (or drafts)? What has been their take? And as you have grown to develop a rather nuanced perspective on this company, do you think anyone associated with SBUX has developed a greater appreciation for your progressive labor perspective because of your interviews and investigations.

Thanks. This is fun. I seem to recall this is the name of a key character in To Kill a Mockingbird. Neat.

It’s a real challenge, not just for corporations, but also for unions. We need to imagine some different ways to be and operate in the global economy so that we fulfill our mission of providing working people a collective way of being heard and having an impact. And it may not be tied in a conventional way to a specific workplace or contract. More of us need to explore this in more imaginative ways.

Good question. I did send Howard Schultz a copy and a note, but I haven’t heard back yet. And I know that others there have read it. On the whole, the silence has been pretty deafening. On the other hand, a number of baristas I interviewed have read it and seem to think it’s a pretty good portrayal. I keep hoping the folks at SBUX HQ will invite me to talk with them about the worker stuff, but I might be waiting a long time…

Interestingly, in all but one of my talks so far, there has been at least one person in the audience who worked at SBUX. To a person, they have had fairly kind things to say about their experiences, especially about the health benefits, the training, the upward mobility — although the last of these seems to be diminished by the downturn in SBUX market fortunes… fewer stores, fewer opportunities. In fact, the company will be challenged to maintain its values in the current economy. So far, they’ve made what seem to me to be better rather than worse decisions — they’ve cut the number of stores rather than health care, they’re reducing the number of workers, and providing the remaining workers with more hours.

Well, the salon is almost over… any closing comments? Any lessons for us as consumers, as unionists, as communities, in how we work for fairness in the global economy?

I was just in Paris and the Starbucks in the Marais was both a shock and a comfort (I’m ashamed to say, lol) … the bastards just never seem to have hot decaf in the US, I’ve given up on them here …

my mistake…have another half hour

…but I still throw the question out there.

It seems to me, that for a union to work at Starbucks, they might need to establish a track record of organizing other low income places that pay mostly minimum wage. Say the “MacDonalds/Burger King/Dairy Queen/Starbucks/Sonic local whatever union of underpaid service workers”

Yes, of course. I think this project gave me a new sense of perspective. I think it’s a good thing to hold Starbucks accountable for the way it treats coffee growers, its workers, and the environment — all issues where it has some control and ability to create change. However, holding it accountable for excesses of consumerism and capitalism is kind of a waste.

Also, the energies of the left are limited, and we should use them to aggressively tackle the most serious problems. Starbucks is, for god sakes, a chain of coffee shops. It is not an extractive industry, it does not threaten its supervisors to vote Republican(as did Wal Mart), it has not had a PAC, it does not oppose raises in the minimum wage, it pays higher wages to its workers and its coffee suppliers than most. That doesn’t mean it’s a paragon of virtue, but it’s also not the epitome of evil. If it weren’t for the union stuff, I’d think it was more or less OK.

I finally came to the conclusion that water should be free, milk should be reasonable, and I don’t care how much we pay for a cup of coffee. I’d rather fight the privatization of water and resist the bottling of water than worry about Starbucks (although I did think it worth pushing SBUX about becoming a purveyor of bottled water–read the book!). And I think it’s more important for us to figure out how to organize Wal-Mart because it pushes wages and conditions down.

Finally, I want to ask for all of your help in promoting the book. Give it to your friends. Blog about it, etc. etc. It’s pretty cool, and fun to read.

Though most thinks of unions as representing industrial workers, unions are no stranger to low income worker organizing. One of the recent initiatives is organizing the carwashers in LA, in a joint labor/community organizing effort. The AFL-CIO is also supporting the work of day labor centers around the country.

But there are other efforts afoot…the Coalition of Imokalee workers pressured Taco Bell and Burger king to pay more for tomatoes, thus increasing the wages of tomato pickers in Florida.

Kim, thoughts?

My husband Alec and I were quite surprised by the SBUX stores in Paris. They were all packed. There, and in other countries, the draw seemed to be a cosmopolitan international crowd and a non-smoking environment — although a few of the Paris patrons saw the latter as a major drawback!

Yes, read the book!

I don’t think the issue is low-wage. Both in the industrial and in the public sector, unions have done some interesting things to organize low-wage workers. Justice for Janitors and the efforts in home health care are some additional examples, and the Imokalee workers and other farmworker efforts as well. However, I do think it’s true that organizing workers in the retail sector has largely eluded us, and we do need a new way to organize McDonald’s workers et.al. As I discuss in the book, the issue is not just the employers, but also the culture and generational deafness of our labor movement. But I do believe we’ll eventually come up with some new kinds of formations that make new inroads.

what do you imagine those new formations to look like?

Well, I work at Working America, which organizes workers with a progressive economic message in their communities rather than at their workplaces… part of what Joel Rogers would call open source unionism. I think that’s one avenue. However, where we seem to be missing something is with younger workers, where unions have little traction. I think bring back a sense of the collective rather than merely the individual entrepreneurial is somehow central to that. When we see the McCain response to Obama’s comment about benefiting lots more people by spreading the wealth around, we know we have a ways to go. And it provides an in to have the discussion with younger colleagues. I was surprised, in a way, by how predominant the individual entrepreneurial avenue to success dominated the thinking of young workers. We could maybe try some new collective kinds of enterprises. After all, we’ve got Facebook?!

As we come to the end of this Book Salon,

Kim, Thank you for stopping by the Lake and spending the afternoon with us discussing your new book.

Jeff, Thank you very much for Hosting this interesting Book Salon.

Everyone, if you haven’t bought Kim’s book yet, there is a link above.

Thanks all.

And thanks back at you. Thanks Jeff. It was a blast.

thank you

Costa Rica has experienced a serious decline in coffee production. Many growers have switched to the profitable sugar cane crop which is horrible for the environment. This was due to the decline in whosesale coffee prices.

In Costa Rica, I was told that it is difficult to get organic certification, but once a grower gets it, it is easy (and typical) to resume the use of chemical pesticides and fertilizers. This is because follow-up inspections are not done. Does this ring true?

Kim and Jeff thank you for an informative Book Salon!

I know the book salon is officially over, but yes, this does ring true. There does seem to be some move to sugar cane, and I went to at least one collective that had both coffee and sugar cane production. However, sugar cane is more of a plantation crop than gourmet coffee, so smallholders aren’t likely to make that switch. Also, the organic cert is the one with the most problems, lots of suspect stuff going on with some of the certifiers. Ironically, SBUX probably has some of the most stringent regs, their growers can’t go back to toxics and still be SBUX suppliers. The whole certification process was quite an education for me.

I was a brand director at Starbucks for a number of years. Coming into it deeply suspicious of big corps myself, I was and still am pretty pleased with the company when all was said and done. And I appreciate the even-handed approach you’ve taken Kim, because I recognize in what you observed a pretty similar experience of my own. I also can’t tell you how much I had to explain that, yes some mom and pops went out of business, but more actually sprang up because the market expanded.

The other thing I experienced was how hard it is to run a socially-responsible company because of 1) the pressure of quarterly profits and shareholders, and 2) the difficulty of running a coffee company. It is hard to be profitable in any food service business, and that Starbucks is because of a pretty disciplined focus on it. I never felt like the company was anti-union, though I’m sure some were. But I did feel that some thought unions were obsolete and extraneous, and in the buzz of employee ownership in the dotcom days, they had the wind at their backs.

Now, not so much.

Yes, I do think the shift in the economic landscape will have some impact here — both on SBUX and on unions. I thought the most egregious SBUX behavior took place at the Kent roasting plant, where the folks who joined the union were systematically drummed out of their jobs; that’s a more conventional industrial setting, and SBUX behaved pretty much the way union-busting companies behave. But I also thought that the SBUX model offered some lessons for the labor movement and for building a union culture more suited to our current moment.

Cheers, Kim (kim@kimfellner.com)