The Top Six Reasons Why Small Communities Can’t Trust Nestle Waters, Part II

In Part I of “The Top Six Reasons Why Small Communities Can’t Trust Nestle Waters,” I looked at Nestle Waters of North America’s less savory behaviors, including their tendency to:

  • #1. Negotiate deals in private
  • #2. Use aggressive (and questionable) legal tactics to bend small towns to their will
  • #3. Ignore environmental studies and impacts – even as they proclaim their environmental sensitivity

Sadly, that was only the first half of the list; cataloging Nestle’s least-attractive behaviors required two articles. What’s left?

#4. Nestle Promises Jobs They Don’t Deliver

Nestle’s only real lever in its negotiations with rural communities is the promise of jobs. To poor, economically depressed rural communities, jobs are like red meat to a starving lion, and Nestle’s promises of employment often turn the tide in favor of their bottling plants.

But how real are those promises?

The St. Petersburg Times newspaper delivered a crippling blow to Nestle’s credibility when it reported on the Nestle bottling plant in Madison County, Florida (Madison Blue Springs).

Nestle promised Madison county 300 jobs, but never employed more than 250, and now only employs 205 – 46 of which aren’t even from Florida.

The state did much more than fight to get Nestle the right to pump as much water as possible from the spring.

As an added incentive for Nestle, the state approved a tax refund of up to $1.68-million for the Madison bottling operation. To date, Nestle has received two refunds totaling $196,000 and requested a third tax refund.

Nestle had promised to create 300 jobs over five years. The most people it has ever employed was about 250. The number dropped to 205 late last year, 46 of them from Georgia, which Nestle defends as common for a work force along a state line.

The net result is half the jobs promised to the state of Florida actually accrued to the state of Florida. To get those jobs, that state struck an awful bargain: they approved a tax refund, and also overrode the recommendation of the local water management district scientists, giving Nestle the right to take 1.47-million gallons a day from the drought-stricken spring (at its lowest recorded flows ever) instead of the 400,000-gallons a day sought by staff.

The Negative Economics of Water Bottling

Nestle’s proposed one-million sq.ft. water bottling plant in McCloud (the largest bottling plant in the USA, and thankfully one that’s not being built right now) promised 240 jobs, but an EcoNorthwest economic study looked hard at the positive AND negative economic effects of the plant.

The results weren’t encouraging for the tiny town of McCloud. From the report synopsis:

  • The Nestle proposed facility would impose costs and obligations on the community that would likely outweigh the benefits.
  • People from outside McCloud would likely fill higher paying jobs. (Pages: 35-40)
  • Nestle will not improve unemployment rates or overall employment levels in McCloud or Siskiyou
    County
  • Nestle may cause losses of other jobs, firms, and residents in the county, thereby offsetting the 1 million annually in property taxes they might eventually generate.
  • The facility would likely displace current employment at existing firms and employment that would have materialized in the future thus the net job increase at full build out is likely closer to 70 jobs.
  • Hidden costs of truck traffic include traffic accidents, congestion, air pollution, negative health effects, increased road maintenance, and possibly the need for additional law-enforcement services. (Pages: 54- 57)

Some residents of McCloud were clearly hoping the Nestle bottling plant would revive the fortunes of this former mill town, but with $9/hour jobs going begging at two other nearby water bottling plants – and most of the better-paying jobs typically going to outside management teams brought in by Nestle – the economic boon many are hoping for isn’t likely to happen.

#5. Nestle Recommends Consultants to Towns With Conflict of Interest Issues

Nestle’s modus operandi in small towns often involves “helping” small towns with recommendations for “experts” burdened by conflicts of interest.

For example, Clinton, Maine’s Board of Selectman – already in trouble with a citizen’s group for negotiating with Nestle in secret and destroying a signed memorandum of understanding – used a Nestle-recommended hydrologist to review a project and make supposedly unbiased, science-based recommendations to the board.

From the Worcester Telegram:

They have also been asked whether they consider destruction of the signed memorandum of agreement to be advisable or appropriate; why they hired the same hydrogeologist that Nestlé uses (even though not for this project); why they would use this hydrogeologist to review records and data of the hydrogeologist’s own client (Nestlé), for purposes of advising another of its client’s (Sterling)

As you can see, the hydrologist worked with Nestle on other projects, reviewed only Nestle data, and had his fee paid out of an escrow account established by Nestle.

That escrow account was also expected to fund the production a legal opinion about whether a zoning change was needed to allow the Nestle project, and get that zoning change written if necessary.

Taken as a whole, these actions are akin to the police relying on criminals to report the details of their own crimes; the conflicts of interest abound, and citizens can hardly be expected to trust the information, conclusions and contracts drawn from these machinations.

#6. Nestle Interferes With Local Politics and Splits Communities With Divisive Tactics

Of all Nestle’s tactics, this is probably the least savory, and because examples abound, this has become our longest topic.

After all, pitting residents of a small community against each other is a despicable-yet-effective tactic – one that’s played out time and time again wherever Nestle arrives.

Part of the problem is Nestle’s attempts to negotiate contracts in secret, then rush approval before citizen review can take place. In the town of McCloud, this had the effect of electrifying opponents of the negotiated-in-secret deal.

Outraged that the McCloud Services District signed Nestle’s rapacious contract without public review, residents soon discovered just how bad the contract was – and the town quickly divided into two factions.

In an International Herald Tribune article, Curtis Knight of CalTrout perceptively said:

“It’s the issue in town,” said Curtis Knight, the Mount Shasta area manager of California Trout, a wild fishery conservation group. “You know, who are you and are you pro-Nestle or are you anti-Nestle? It’s really been a wedge through town, and I think it’s unfortunate.”

Nestle furthered this split when it funded a slate of Pro-Nestle candidates for the McCloud Services District Board election in 2006 (the entity that negotiated the Nestle contract). Nestle slyly maintained a “hands off” policy right up until the day before the election, when they wrote a check to the Pro-Nestle slate for $2500.

The timing was critical; this allowed Nestle to state they were steering clear of the election right up until it occurred, the kind of shrewd political maneuver little seen in small town elections.

The total spent spent by the slate was only $3680, so Nestle’s $2500 contribution had a big impact; all three Pro-Nestle candidates won election to the board.

To a multinational bent on securing profits from a rapacious water contract, $2500 doesn’t even register as petty cash. To a small town trying to come to grips with a proposal to build the largest water bottling plant in the world, it feels like millions.

Since then, Nestle – facing a storm of protest over its inadequate EIR, potential project impacts and the reality of high fuel costs – backed out of the original contract and is seeking a new contract.

Unfortunately, the divisive rhetoric from its local operative has also ratcheted up a notch. Speaking in a recent interview in the Mount Shasta Herald (a local weekly paper), Nestle spokesperson Dave Palais played the “outside agitator” card when asked an unrelated question about the California Attorney General’s opposition to Nestle’s wholly incomplete Environmental Impact Report:

The real point, the important point, is not that the AG wrote the letter. It’s that a large portion of the opposition to the project comes from outside McCloud. Non-permanent residents. I’m not saying that’s all of the opposition. Some local residents do oppose it. But a large part of the financial and political influence being used in coming from outside of McCloud.

Palais’ counterpart in Maine – Mark DuBois – echoed the eerily divisive screed:

Much of the opposition, he said, is coming from organizations from out of state [ed: emphasis added] that are concerned about global water privatization or use and sale of water in arid or dry climates that have scarce renewable water supplies.

In the context of their local battles, both statements are largely untrue, and wholly divisive.

Opposition to the McCloud contract was spearheaded by two local citizens groups, and CalTrout – a California coldwater fisheries-based advocacy group – has every right to challenge Nestle’s clear lack of environmental concern for one of California’s Blue Ribbon trout streams (Nestle performed no flow studies downstream of their proposed plant).

Both Palais’ and Dubois’ statements are clearly designed to foster resentment among residents, and they’re a good example of Nestle at its divisive worst.

Of course, the irony of either statement can’t be ignored; Palais himself lives an hour away from the town of McCloud, and Nestle is a multinational headquartered in Switzerland.

So we’re forced to ask the obvious: Who, exactly, is the non-local unduly influencing local politics?

Community of Fryeburg Split by Cost of Nestle Lawsuits

In Fryeburg, Maine, one activist spoke about the deterioration of relationships in the small town as it deals with Nestle’s repeated attempts to force a tanker loading station on the town’s planning commission – a station that will run 250 trucks per day through a residential area and offers little in the way of economic benefit to the town:

“People are afraid to speak up; relationships that have existed for 50-60 years in Fryeburg have been busted by the Nestle issue. If this precedent is set – allowing a loading 100 truck trips per day, 365 days per year – then the integrity of every residential neighborhood in Maine is in jeopardy.”

The result of all Nestle’s lawsuits and appeals on the residents of the town?

“People are tired of the fight; they don’t want to talk about water and they’re sick of the issue.”

With the coalition fighting Nestle’s loading station already $20,000 in debt (an enormous sum in an economically depressed rural area), it’s possible Nestle will accomplish its goal – winning the right to run 100 truck trips per day through a residential neighborhood through sheer force of legal attrition.

If that happens, residents will be reminded of their loss – as Nestle’s 50 trucks first enter then leave their neighborhoods every day.

Internet, Media Bringing Nestle’s Questionable Practices to Light

In the past, Nestle’s aggressive (and questionable) tactics received little attention in the national media, and local citizen’s groups had no way to connect and share information.

That meant they could employ the same untrustworthy tactics in one small community after another, secure in the knowledge there would never be a wholesale, nationwide accounting of their actions.

The growth of Internet accessibility in rural areas has changed that dynamic; activists in small communities can communicate and share information. Search engines now speed the retrieval of information from other locales; when Nestle shows up at a town, it’s likely to find people waiting for it – people armed with information about the secret meetings, rushed contracts, lack of environmental review, punishing legal challenges, and divisive tactics.

BusinessWeek touched on the power of the Internet in this statement:

Time was when multinationals could arrive in economically depressed communities and pretty much have their way. But in the age of hyper connectedness, residents in McCloud were able to turn their issue into an international sensation. Now Nestle has capitulated. The management lesson: no company can afford to go forward with projects like these without engaging ALL stakeholders, not just supporters. Yes, this is David versus Goliath. But the Davids now have megaphones.

Nestle’s efforts to build new water bottling plants and tap new sources of water have been stymied as of late, and in one sense, it’s an opportunity for them to stop dealing to small rural communities from the bottom of the deck.

Whether they do so – or simply retrench and employ a new arsenal of questionable, untrustworthy tactics – is entirely up to them.

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4 thoughts on “The Top Six Reasons Why Small Communities Can’t Trust Nestle Waters, Part II

  1. Another tactic that Nestle uses in small towns is to offer up large donations. In Western Maine, Nestle’s Poland Spring offered up a portable classroom to the school district as a way to relieve overcrowding that Mark Dubois “saw when he was touring the elementary school”. The discussions with the district were not publicized and I don’t know if they were held in secret. But, all of a sudden, it came time to have a very immediate school board meeting to make the final vote on the offer, or they would loose the window for ordering the classroom. Several school board members were obviously missing. Of those attending, many were visibly silent on the matter.

    The discussion (and I may be paraphrasing) that did ensue was basically that this was “for the children”; or, “why shouldn’t we accept this gift as long is it does not cost the taxpayers any money? It’s money that the taxpayer will not have to pick up, and solves a need.” One lone school board member did speak up about the ethics of this gift asking how the school board can accept the classroom when Nestle is continually suing the largest town in the district.

    In the end, you can imagine what happened. It was too bad that ethics and ethical behavior cannot enter into a discussion and alter the outcome.

  2. Given the potential profits of a water bottling plant, gifts like you mentioned – and others I’ve seen connected to the town of McCloud – are peanuts to Nestle.

    And it’s not limited to gifts; questions abound about who is on the Nestle payroll in some capacity (“consultant”?), and even if they’re not, it’s a strong indicator of the divide that forms in most communities after Nestle arrives and starts recruiting selected locals to the cause (paid or not).

    Honestly, my “Top Six” list could have easily become a “Top Dozen” list, but time pressures force some economy here.

    Thanks for commenting – and keep us updated as to what’s happening.

  3. Nestle is currently contracting with a local rancher in a rural county in Colorado for the rights to bottle the water from a high yielding spring. This greatly affects the recharge into the Arkansas river as well as the underlying aquifer which is already being innundated with wells. The folks at Nestle are at least being candid about job creation in the County (none) and because they are simply taking the water out they are avioding county taxes while their trucks would tear up county roads and create a dust problem where local livestock is raised. Water is like gold in Colorado because there is a very finite supply and I could see this causing issues for many years to come.

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