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Detroit Resident Calls Bullshit on “Food Desert” Propaganda

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Though not every neighborhood is served, Detroit has many local independent grocers, including ground-breaking models

By James Griffioen
Published by Sweet Juniper, January 24, 2011

I’m just one of about 800,000 people still living in the city of Detroit, Michigan, the nation’s 11th most-populated city. Because of the events of the last half century, this is a city that journalists and academics love to examine and study. In focusing on the sensational, they often concoct maddening generalizations about what they’ve found here. In the time I’ve lived in Detroit, I’ve come to realize that the most sensational claims and the public perception they create often have little to do with the day-to-day reality of being a Detroiter. This is a complicated city, and even in the most sincere efforts to cull some truth from it, visiting journalists often end up spreading damaging falsehoods.

One of the most annoying is that Detroit has no grocery stores.

This is something that I have been hearing about for many years. While attending law school in nearby Ann Arbor, I was told that everyone who lives in Detroit has to go to the suburbs to do their grocery shopping. With the recent spate of journalists visiting Detroit, this “fact” has gained even more traction. NBC’s Chris Hansen recently took some time away from his grueling schedule of catching predators to draw attention to how difficult it is to find groceries in Detroit: “ There are more than 400 liquor stores in Detroit. But if you want to buy food, good luck. In the entire 140 square miles of the city, there are no Krogers, no Safeways, only eight supermarkets, and they’re discount stores .” (Dateline NBC, April 20, 2010). Andrew Grossman of the Wall Street Journal emphasized that Detroit lacks “chain” grocers: “No national grocery chain operates a store here. A lack of outlets that sell fresh produce and meat has led the United Food and Commercial Workers union and a community group to think about building a grocery store of its own.” (WSJ, June 16, 2009) And most recently, Richard C. Longworth (senior fellow at the Chicago Council on Global Affairs and former Distinguished Visiting Scholar at DePaul University) writes in Good Magazine: “This seems incredible—a city of nearly 1 million people without a supermarket—but it’s true. No A&P. No Meijer’s. Not even a Wal-Mart. Any Detroiters who want fresh store-bought fruits and vegetables or wrapped meats have to get in their car and drive to the suburbs. That is, if they have a car.”

I’m tired of being nice about this. That is such utter and total bullshit.

I know the traditional media is suffering. Reporters are overworked and underpaid. Scholars like Mr. Longworth, too, might not have the research assistants they once enjoyed, but I would certainly expect anyone who makes an unequivocal statement like Detroit “is a city of nearly 1 million people without a supermarket” to at least have done a 4-second google search to confirm it (six seconds, I guess, if google isn’t your homepage). In four seconds, here’s what I found:

Each of those orange dots is a supermarket, not a liquor or discount store. A couple of them are even Aldi stores, a chain supermarket operated by the same company that owns Trader Joes. Many of those dots represent “ Spartan Stores,” associated with a regional food distributor that “supplies 40,000 private label and national brand products to nearly 400 independent grocery stores.” A quick search on the Spartan website shows how many affiliates exist within Detroit city limits:

While not the same as a national chain, an affiliation with Spartan Foods provides some uniformity among the products sold in these independently-owned Detroit stores. Many of these stores are operated by individuals and families from the large Chaldean (Iraqi Christian) community living in metro Detroit. The cleanliness and quality of merchandise and services provided by these stores definitely varies, and your average New York reporter might not be able to find his favorite lemon-infused chevre or organic arugula at all of them, but that doesn’t mean these supermarkets don’t exist, or that they somehow fail to serve the demands of their community. I went out looking for some of these mythical Detroit grocery stores, and while some aren’t particularly inviting, plenty of them are actually quite nice inside and out.

There is no question that many of the neighborhoods served by these independent stores are desperately poor. Sticking a pristine Whole Foods or even a Super Wal-Mart in these neighborhoods is not going to somehow solve the dietary issues poverty has created among their residents or provide jobs without displacing others. Those are incredibly complex problems and simply spreading hyperbole about a uniform lack of shopping options across a 138-square-mile city does nothing to solve it. Detroit does have individuals and organizations working hard to solve the problem of access to produce where it exists, and their efforts are often ignored by a media obsessed with the myth that Detroit has no grocery stores. A Detroit church recently opened a produce market called Peaches and Greens with an ice-cream truck that travels to the neighborhoods most in need of such options. The Eastern Market Corporation is working to create a CSA for seniors and others who cannot make it to the market but want fresh produce delivered. Several groups are also working diligently to put more fresh food options in the corner stores that may be the closest option for some neighborhoods. While a reality for some Detroiters, all this pervasive talk about the “food desert” is insulting to the large swath of the population that does have transportation and does make an effort to forgo fast food and cook with those healthier options that may be a few steps or blocks further down the road, but are nonetheless there.

What surprises most people who’ve heard that there are no grocery stores in Detroit is that there are actually independent stores far more appealing than any chain. One of the nicest grocery stores in Detroit is Honeybee La Colmena (I wrote an extensive profile about the store here). Honeybee is owned and operated by individuals who grew up and still live in the neighborhood where the store is located and they have created dozens of jobs for their neighbors. Honeybee has some of the best produce and prepared foods in the metro area, and it is actually a Detroit supermarket where people from the suburbs come into the city to shop.

In addition to Honeybee, Southwest Detroit is also served by several other excellent Supermercados, including E & L, La Fiesta Market, Gigante Prince, Ryan’s, and dozens of smaller mom-and-pop grocery stores. The far east side has Joe Randazzo’s Produce Market for extremely affordable produce, and the far westside has Metro Foodland, a fine independent supermarket serving Rosedale and Grandmont for more than 25 years. An individual recently purchased a vacant storefront in the middle class neighborhood of Lafayette Park (where I live) and plans to open a full-service supermarket there this Spring. He’s bullish on its prospects despite another supermarket operating three blocks down the road and the neighborhood’s close proximity to Eastern Market. A family that’s been in the Detroit grocery business since the 1950s is reopening their Ye Olde Butcher Shoppe on Woodward Avenue in a new Midtown location this year, complimenting the offerings at Kim’s Produce just down the road, as well as Goodwells Natural Foods a few blocks over.

No, none of these places are a Wal-Mart or a Kroger. They’re much better for our community. The money that thousands of Detroiters spend at these establishments every week doesn’t pay salaries of executives in Bentonville or Cincinnati. It pays to support families that still live in this community and pays to support the livelihoods of their employees. It pays to support reinvestment in the stores themselves and the surrounding community. Further, it pays to sustain a unique shopping opportunity that is quite unlike any other.

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The myth of a city without supermarkets is hard to kill, even faced with the evidence above. Ultimately, that myth perseveres because the mainstream media and its audience is steeped in a suburban mentality where the only grocery stores that really seem to count are those large, big-box chain stores that are the only option in so many communities these days, largely because they have put locally-owned and independent stores like the ones you find in Detroit out of business. It is true that the big chain stores have forsaken or ignored Detroit, for any number of understandable (and sometimes despicable) reasons. But in their absence, a diverse system of food options has risen to take their place, and the tired old narrative that Detroit has nowhere to shop for groceries needs to be replaced by a more complex truth: with a diversity of options ranging from the dismal to the sublime, Detroit may be one of the most interesting places in America to shop for food .

Much has been written about urban farming in Detroit. No one really believes these tiny farms will ever sustain the produce needs of an entire city, but few doubt that they will continue to play an important role in the city’s transformation and they will only grow in importance as an integral part of the city’s food culture. The vegetables and fruits grown in Detroit’s gardens are so bountiful that neighborhood produce stands pop up; a coalition of inner-city gardeners sells thousands of pounds of affordable produce almost daily during the growing season at local farmer’s markets. Soup kitchens and schools supply their own produce from extensive and expertly farmed plots. In 2010, several Detroit farmers banded together to start the first CSA deliveries consisting entirely of produce grown in the city. Small-scale farming in Detroit has actually become a viable part of the urban food system and not just a novelty as it is in other cities.

Even if Detroit didn’t have these independent grocery stores or its hundreds of urban farms, it would still have Eastern Market. Covering 43-acres at the heart of downtown Detroit, with convenient access to freeways and major bus lines, Eastern Market is the largest historic public market district in the United States. And no one is in a better position to swat down the stories of Detroit’s lack of produce or the pervasive and patronizing myth of the food desert than Dan Carmody, the energetic President of the Eastern Market Corporation. “How can they call this city a food desert?” Dan asks me. “When Detroit sits right in the middle of the best local and regional foodshed in the United States after the central valley of California!” Dan points out that Michigan is second only to California in the diversity of crops grown, and besides it has immediate proximity to Canada’s “sun belt” in Southwest Ontario (where excellent hydroponic tomatoes and other fresh vegetables are grown year-round in nearby Leamington, home the largest number of commercial greenhouses in all of North America) as well as the Amish/Mennonite belt that stretches from Pennsylvania to Indiana. Metro Detroit, with a population of nearly 5.4 million people, provides a huge market for these local and regional farmers, and the nerve center for distribution of their products is in Eastern Market at the heart of Detroit city.

Most Detroiters are keenly aware of the Saturday public market in the newly renovated turn-of-the-century market sheds, where as many as 40,000 people come downtown to shop for fresh local produce every week, and many have been doing it for decades. “If all these reporters are right when they say Detroiters have to travel to the suburbs to buy fresh produce, why do 15,000 or more suburbanites drive down here every weekend to buy fresh produce?” asks Mr. Carmody. The Eastern Market Corporation has worked hard to make the produce sold by its vendors accessible to all Detroiters. Saturday vendors accept tokens created through a program in effect since 2007 where shoppers can use their Bridge card to buy fresh produce. It has created the innovative “ Double Up Food Bucks” program that “provides families receiving food assistance benefits with the means to purchase more fresh fruits and vegetables at farmers’ markets.” And the “ Michigan Mo’ Bucks” program aims to stretch the amount of money families receiving assistance get when that money is spent on fresh produce. Eastern Market is not just for the overpriced localvore yuppie/foodie crowd, but it succeeds in serving the needs of all Detroiters. And nowhere is this region’s diversity on better display than a Saturday morning at Eastern Market, when tens of thousands of people from all backgrounds converge to buy fresh and affordable local produce.

What many people don’t realize is that Eastern Market buzzes with activity Monday through Friday. The wholesale business of distributing fresh produce to groceries and supermarkets throughout the region gets underway well before most people wake up in the morning. Mr. Carmody tells me that some of fanciest independent grocery stores in the metro area (Papa Joe’s, Plum, Westborn, etc.) all send buyers down to Eastern Market before dawn to pick out the best local and regional produce for their stores. That means the expensive tomatoes and apples sitting on shelves in suburban Birmingham and St. Clair Shores likely came through the “food desert” of Detroit. These wholesale buyers come to Eastern Market for local products first, before they head to the Produce Terminal (also in Detroit) for produce trucked in from California or elsewhere. As “buying local” becomes more and more important to consumers, so will Eastern Market and its longstanding ties to local and regional farmers.

In addition to produce, Eastern Market is a center of meat processing and butchering in the region. Many of the wholesalers welcome the public during the week, so Eastern Market is not just a year-round weekly farmer’s market where you can buy pretty much anything that’s grown regionally, it is a daily shopping experience that one might liken to shopping in an ancient European capitol, where you can go from shop to shop to buy bread, wine, dry goods, produce, cheese, fish, and any kind of meat you could possibly want from rib-eyes to raccoon. It is close enough to downtown that Eastern Market is convenient for office workers to swing by on their lunch breaks to pick up some groceries while grabbing a slice of Detroit’s best pizza or a sandwich at one of the city’s best delis. I profiled one of my favorite Eastern Market merchants,. R. Hirt Jr. (a business that has been in the same location and family since 1890) here, and I also wrote about a hardware store that has been doing business on the same spot in Eastern Market since 1918. I consider Eastern Market my own “super center” and I walk there with my kids several times a week. Many of the shop owners and food sellers know me and my family by name, and shopping there is a unique experience that I treasure. Here is an excellent video that tells a bit more about Eastern Market, showing some of the farmers, wholesale buyers, and shoppers who make this Detroit institution such an incredible place even though it is always ignored by journalists eager to spread the shocking lie that Detroiters must leave their city to shop for groceries.

In addition to the Saturday market, there are also farmer’s markets in various neighborhoods around the city several other days a week, including a nice one on the campus of Wayne State University in Midtown (one of Detroit’s most walkable neighborhoods), one in Northwest Detroit, and one on Warren Avenue on the city’s east side.

In the end, I hope this tirade accomplishes my primary goal of eliminating the gross generalization that there are no grocery stores in the city of Detroit and that its citizens are forced to leave the city borders to buy fresh meats and produce. That myth is fueled by the unfair assumption that big-box chain stores are the best and only places to shop, which is particularly nefarious in my opinion because the model used by those stores is largely unsustainable for our cities’ futures. Chinese-manufactured goods shipped and trucked tens of thousands of miles and sold for razor-thin profit margins may seem convenient, but I truly believe we still haven’t learned their true cost. In my opinion, it is the exurban and small town shoppers who must choose between the uniform selections of a Wal-Mart, Kroger, or Meijer that truly have limited options. I prefer to celebrate the absence of these national retailers in this city rather than add it to the heap of things we already have to complain about here. Grocery shopping in Detroit may not be as convenient as it is in the suburbs, but the model we have here is more sustainable, more diverse in its options, and certainly more fun and interesting. I just wish more visiting journalists would take the time to see that.

© 2005 Sweet Juniper

Walmart Poised to Take Over South African Retail

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By Tom Bawden
First published by The Guardian

Walmart, the world’s biggest retailer, is close to agreeing a deal marking its first foray into Africa after bidding 16.5bn rand (£1.5bn) for control of South Africa’s Massmart.

The deal, which has been agreed with Massmart’s board but needs shareholder approval, faces strong opposition from the South African retailer’s main union, which mounted a legal challenge to the takeover, threatened strike action and said it planned to participate in the competition review.

Walmart, which owns the Asda supermarket chain in the UK , hopes to acquire 51% of Massmart, which operates 288 low-cost stores in 14 African countries. These sell products through a handful of retail brands, spanning construction materials to home appliances, most of which are based in South Africa .

Andy Bond, chairman of Asda, who is responsible for operations in Africa, said acquiring Massmart would give Walmart a good platform to enter the continent and expand into some of its faster-growing, more politically stable countries.

However, he insisted that Massmart’s direction would be set by the South African retailer’s existing senior management, who would remain in place and that Walmart’s involvement would simply “accelerate the current strategy”.

“Massmart has historically grown through smaller scale acquisitions and may well continue to do so,” said Bond, adding that there could also be significant organic growth and, possibly, some larger acquisitions. Massmart expects to open up to 40 new outlets annually in the coming years, with an emphasis on countries such as Nigeria , Malawi and Zambia , where it already has a presence. Furthermore, Massmart is targeting new markets such as Senegal , Cameroon and Angola .

“Walmart likes emerging markets and South Africa in particular is a genuine emerging market,” said Bond. Walmart is expanding into emerging markets to make up for a slowdown in the US , where like-for-like sales have declined for six quarters in a row, amid strong competition and a prolonged economic downturn.

Bond said Walmart would help Massmart to significantly increase its food offering, which is presently largely confined to its wholesale operation, and will help expand the number of own-label products offered by the South African retailer.

“Our ambition is to reduce prices for our customers by buying better and operating better. We can help Massmart with its supply chain, distribution, IT, infrastructure and sourcing,” Bond said.

Walmart’s negotiations to buy Massmart have not run entirely smoothly. In September, the two groups announced they were in talks in a deal that would have handed 100% of Massmart’s shares to its American suitor.

However, Walmart has since scaled back its ambition after several Massmart investors said they wanted to retain their shares to tap into expected growth in South Africa and some of its key markets.

In its announcement of the deal, which would be Walmart’s largest since buying Asda in 1999, the US retailer said institutional shareholders representing 35% of its shares had given irrevocable undertakings to approve the deal. Shareholders representing a further 15% had given non-binding support, added Walmart, which needs three-quarters of the votes for the deal to go through.

Walmart, which has long battled with trade unions in the US , pledged today to “respect and honour all pre-existing contracts with organised labour bodies” and insisted it would continue to use local suppliers and manufacturers.

However, the South African Commercial, Catering and Allied Workers’ Union (Saccawu), which claims to represent about 70% of Massmart’s staff, said it opposed the deal as another step in the “Walmatisation” of the retail industry.

A union spokesman said: “We have instructed a firm of attorneys to represent us in the legal process. As for strike action, this will be determined by the unfolding of the campaign and it shouldn’t be excluded.”

Massmart’s retail brands include the discount chain Game, Builders Warehouse for construction and DIY, and DionWired, a home appliance retailer.

© Guardian News and Media Limited 2010

 

Walmart Renews Push Into New York City with Smaller Scale Stores

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By Daniel Massey
First published by Crains NY, Nov. 7, 2010

To close an analysts meeting last month, a choir of Walmart associates belted out “New York, New York.” A few days later, the Arkansas retail giant announced that it had hired Bradley Tusk, Mayor Michael Bloomberg’s former campaign manager, to bolster its efforts to open a store in the Big Apple.

Four years after failed attempts in Queens and Staten Island led former Chief Executive H. Lee Scott to write off New York City as not “worth the effort,” Walmart is indeed singing a different tune. Five straight quarters of same-store sales declines in the U.S., disappointing forays abroad and bold moves into the city by such competitors as Costco and Target have forced Walmart to push harder than ever for a foothold here and in other urban areas.To close an analysts meeting last month, a choir of Walmart associates belted out “New York, New York.” A few days later, the Arkansas retail giant announced that it had hired Bradley Tusk, Mayor Michael Bloomberg’s former campaign manager, to bolster its efforts to open a store in the Big Apple.

“They’re looking all over,” says Faith Hope Consolo, chairwoman of Prudential Douglas Elliman’s retail group. “This is aggressive now. This is not just thinking about it and dabbling. They’re dancing around the city.”

And the retailer might find a real estate partner this time.

Last month, Walmart announced that it would consider stores far smaller than its typical 150,000-square-foot supercenter. With no shortage of 30,000- to 60,000-square-foot spaces in the city, the “Smallmart” strategy could nullify longtime opponents’ most potent weapon—the City Council’s zoning hammer. No matter how loudly labor and political foes shout about Walmart’s potential impact on nearby small businesses, its antiunion policies or its alleged discrimination against women, the downsized approach makes for a smoother entry into New York.

Ms. Consolo says a team of at least a dozen Walmart real estate experts is looking at space all over Manhattan—from East Harlem to the Sixth Avenue Ladies’ Mile strip. And she says the company has not ruled out entering the local market via pop-up stores, as Target did. It could also purchase an existing big-box chain, such as Pathmark, whose parent, A&P, is choking on $1 billion in debt. Walmart is sitting on $10 billion in cash.

In a down economy, Walmart hopes to build community support by highlighting its potential economic impact. Last year, the company spent $5.7 billion with 835 New York City suppliers, and its foundation has given more than $9 million in grants to nonprofits here in the past three years.

Though smaller formats are likely, Walmart isn’t giving up on stores of 80,000 to 150,000 square feet, says Director of Community Affairs Steven Restivo. It’s looking “across the entire city,” he says, and will probably zero in on poor neighborhoods, where unemployment is high and fresh-food options are limited.

“We can be part of the solution in terms of addressing unemployment and improving access to affordable, healthy food,” Mr. Restivo adds.

Walmart has a stalwart local supporter in the mayor, who said last week through a spokesman that “we shouldn’t tell businesses that want to invest and create jobs in New York City that they can’t.”

Working the community angle

In Chicago, Walmart eventually won over ministers, community leaders and construction unions by focusing on jobs, and it will use the same strategy in New York.

Already, the Hip-Hop Summit Youth Council and community leaders have launched Walmart 2 New York City, arguing that the retailer would create jobs. Walmart officials say it has no ties to the group, but it has partnered with Russell Simmons’ Hip-Hop Summit Action Network, a sister organization of HHSYC.

Meanwhile, leaders of the city’s building trades are still irritated that the retail union engineered the defeat of a proposed mall at the Kingsbridge Armory last year, killing 1,000 construction jobs. With its members facing 30%-plus unemployment rates, the trades have little incentive to join the retail unions in fighting Walmart, which said it will build with union labor. The Building and Construction Trades Council declined comment.

Walmart’s competitors are thriving here. Costco has five stores in New York and wants additional locations in the outer boroughs. The stores averaged sales of $185 million in fiscal 2010, 35% more than the company average, Costco says.

Target has 10 stores in the city, and supermarket union officials say its growing food and beverage operations could make the company a focus of labor opposition. Each Target store here brings in an estimated $25 million a year in grocery sales alone, says Burt Flickinger, a retail analyst with Strategic Resource Group.

Brian Sozzi, a retail analyst at Wall Street Strategies, says, “Walmart’s desperately trying to ramp up growth, and urban areas [in the U.S.] are the next frontier.”

All eyes on East New York

But many labor leaders and their political allies, worried that the non-union retailer will erode the shrinking market share of unionized stores in New York, are equally desperate to stop Walmart.

“When you look at the places [it] has gone, they’re just pushing out the longtime mom-and-pop jobs and replacing them with their jobs in a cannibalistic way,” says City Council Speaker Christine Quinn.

The fight has begun in East New York, Brooklyn, where Walmart is eyeing 180,000 square feet at The Related Companies’ Gateway II complex. The City Council OK’d plans for a 630,000-square-foot shopping center there last year, but the vote didn’t take into account the “higher order of environmental impact” of a Walmart, says Richard Lipsky, a lobbyist for the Retail, Wholesale and Department Store Union. Mr. Lipsky is preparing a legal challenge to the initial approval.

Even if opponents prevail in East New York, it’s just a matter of time before Walmart secures an “as-of-right” site—one without zoning hurdles-—which will reduce union leverage. In the end, labor might have to settle for more modest concessions. One blueprint is a deal Walmart agreed to at its Pullman neighborhood location in Chicago to pay workers up to $9.35 an hour after their first year on the job. But the price of admission in New York will be a lot higher.

“Walmart can say, ‘We have an as-of-right site and want to sit at the table and talk about how we can go into a community without the tremendous backlash we know is coming,’ or it can fight,” says Pat Purcell, assistant to the president of United Food and Commercial Workers Local 1500. “They want to fight, we’ll fight. They want to talk, we’ll talk.”

© 2010 Crains

Wal-Mart vs. a Million Angry Women

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By Greg Stohr 
First published by Bloomberg/Business Week, November, 2010

Chris Kwapnoski says she watched for 15 years as one male colleague after another leapfrogged over her into management jobs at the Sam’s Club in Concord , Calif. When Kwapnoski asked a supervisor what was holding her back, she recalls getting a curt reply: “Blow the cobwebs off your makeup and doll up.”

Kwapnoski’s lawyers say her experience is common—so common that they are seeking to sue Wal-Mart Stores, which owns the Sam’s Club chain, for discrimination on behalf of more than a million female employees. The suit would be the largest job-bias case ever against a U.S. employer. Wal-Mart is seeking a Supreme Court hearing , and the dispute could become the most important business case of the court’s nine-month term. It’s an “800-pound gorilla,” says Robin S. Conrad, who heads the U.S. Chamber of Commerce’s litigation unit.Chris Kwapnoski says she watched for 15 years as one male colleague after another leapfrogged over her into management jobs at the Sam’s Club in Concord , Calif. When Kwapnoski asked a supervisor what was holding her back, she recalls getting a curt reply: “Blow the cobwebs off your makeup and doll up.”

The high court will say as early as Nov. 29 whether it will review a ruling by a San Francisco-based federal appeals court , which in April let the case go forward as a class action for women working at the company. (The original lawsuit was filed nine years ago on behalf of six women.) The company, which has 4,400 Wal-Mart and Sam’s Club stores, says a case involving that many workers would be so unwieldy it would violate the Constitution’s due process protections, including the company’s right to defend itself against the charges. The plaintiffs’ legal fight has become a business unto itself, involving seven law firms and several million dollars in expenses. Lawyers built their case in part through online surveys that female workers submitted on a website devoted to the litigation.

The court, with a conservative majority led by Chief Justice John Roberts , has made little secret of its skepticism for what it views as lawyer-driven litigation. The court has already trimmed the federal securities fraud laws and required more specificity from plaintiffs when they file complaints. The Roberts court is “skeptical of litigation as a policy tool,” says Jonathan Adler, a business law professor at Case Western Reserve University .

As a testament to its significance, 19 companies, including Altria Group , Bank of America , General Electric, and Microsoft, are urging the court to take up the appeal. The companies say the lower court ruling makes it too easy for workers challenging employment practices to secure class-action status and then extract large settlements. Even with meritless claims, “class certification decisions are often tantamount to a decision on the merits,” the companies say in a court filing. Several companies have concrete stakes in the outcome. A suit on behalf of more than 700 women against Costco Wholesale is on hold until the Supreme Court resolves the Wal-Mart case. Altria and other tobacco companies say the Wal-Mart case may affect their challenge to a Louisiana court order requiring them to spend more than $270 million on a smoking cessation program.

For Wal-Mart, the case could mean billions in damages, though the lawyers for the women haven’t specified how much they are seeking. A multibillion-dollar award would be a blow, but one Wal-Mart could absorb. The world’s largest retailer had more than $400 billion in sales and $15 billion in profit over the past 12 months.

The complaint says women working for Wal-Mart have been paid less than men for the same jobs and received fewer promotions. Instead of posting management openings, Wal-Mart relied on a “tap on the shoulder” system that let managers steer jobs to male colleagues, says Joseph Sellers, a partner in the Washington-based law firm of Cohen, Milstein, Sellers & Toll who represents the women. “Wal-Mart’s promotion system departed very substantially from what virtually every other large company at this time was doing,” he says.

Wal-Mart, with 1.4 million U.S. employees, says any problem was isolated. Letting the case go forward would deprive the company of its right to contest the claims of each woman individually, says Theodore Boutrous, a partner with the Los Angeles law firm Gibson, Dunn & Crutcher who represents Wal-Mart before the Supreme Court. “To assume that every employee has been subject to discrimination flies in the face of the facts and really subjects the company to an extraordinarily unfair process,” Boutrous says. The company says it now posts management openings.

The women will press ahead, possibly in a series of smaller class actions , if the Supreme Court rules against them, Sellers says. Kwapnoski, for one, is eager to focus public attention on her employer’s treatment of female workers. Now an assistant manager, the 46-year-old says her $60,000 salary is less than half what she might be earning had she been promoted in step with her male peers. “I really, honestly would like to change the public’s view of Wal-Mart,” she says.

Stohr is a reporter for Bloomberg News.

© 2010 Bloomberg/Business Week

Walmart, Costco and Others Exploit State Energy Tax Credit Program

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By Harry Esteve 
First published Dec 29, 2009 by The Oregonian

When Oregon started handing out jumbo tax subsidies for renewable energy projects two years ago, one of the biggest beneficiaries was also one of the world’s richest corporations — Walmart.

No, the retail giant hasn’t branched to solar panels or wind turbines.

Instead, Walmart took advantage of a provision in Oregon’s Business Energy Tax Credit that allows third parties with no ties to the green power industry to buy the credits at a discount and reduce their state income tax bills.

More Read The Oregonian’s earlier coverage of the Business Energy Tax Credit. State records show Walmart paid $22.6 million in cash last year for the right to claim $33.6 million in energy tax credits. The cash went to seven projects, including two eastern Oregon wind farms and SolarWorld’s manufacturing plant in Hillsboro. In return, Walmart profits $11 million on the deal because that’s the difference between what it paid for the tax credit and the amount of its tax reduction.

The loser in the transaction is Oregon’s general fund — which pays for public schools, prisons and health care programs — because the state is out the full $33.6 million in tax revenues.

Walmart isn’t alone. An analysis by The Oregonian shows Costco and U.S. Bank, which also rank among the nation’s top 200 wealthiest businesses, have made millions by buying up energy tax credits to cut their Oregon tax bills. Dozens of other companies and hundreds of individual Oregon taxpayers also have cut their tax bills by buying up the tax credits.

The practice, known as “pass-through,” has become a popular, nearly risk-free way for profitable corporations and high wage-earners to avoid paying taxes in Oregon. But it also has become one more target for critics of the green energy subsidies, which spend state tax dollars to attract low-carbon industry and jobs to Oregon.

“It’s so convoluted,” says Eric Fruits, an adjunct economics professor at Portland State University who has studied Oregon’s energy incentives. “You’ve got all these dollars swirling around. Everyone is trying to grab them as fast as they can.”

The pass-through option “turns what would otherwise be an incentive to make energy investments into a windfall that may not have anything to do with energy,” Fruits says.

Program under fire 
For years, Oregon has subsidized renewable energy and energy conservation projects by granting tax credits, which can be used as a dollar-for-dollar reduction on state income tax bills. The pass-through practice was put in place in 2001 as a way to allow government agencies and nonprofit organizations to take advantage of the subsidies. Since those groups don’t pay state taxes, the credits are worthless unless they can be sold to a third party.

The ability to sell the credits also allowed start-up companies with no Oregon tax liability to leverage upfront cash for their green energy projects.

The tax credits, known as BETC, or “Betsy,” have come under increasing fire this year because the cost to taxpayers skyrocketed. It went from about $10 million in 2007 to an estimated $167 million in the 2009-11 biennium at the same time the economic recession hammered other areas of the state budget.

A previous investigation by the newspaper showed state officials intentionally downplayed the estimated cost of the program before the 2007 Legislature voted for substantial increases to the maximum subsidies. The newspaper’s latest analysis also found:

Walmart, Costco and U.S. Bank, which top the list of energy credit buyers, shelled out a combined $67 million to avoid paying $97 million in Oregon income taxes.

Walmart and others are making money on projects that were closed, went belly up or never produced the energy or energy savings they initially claimed.

Out-of-state corporations and others looking for tax breaks are claiming an increasing share of the money that is supposed to pay for clean energy and conservation.

Weyerhaeuser/Walmart 
The head-scratching nature of the subsidy program perhaps is best illustrated by a case study of what happened at the former Weyerhaeuser Paper Mill in Albany.

Weyerhaeuser, based in Federal Way, Wash., received $3.3 million in Oregon energy tax credits in 2008 for rejuvenating a biomass plant that burned wood waste for heat and steam, and for capturing much of the heat to dry paper. The company, which apparently didn’t need the tax offset, turned around and sold the credits to Walmart for $2.3 million in cash.

Walmart then gets to deduct the full $3.3 million from its Oregon income tax bill over five years for a payback of $1 million. But there’s a twist.

Last year, International Paper bought a number of Weyerhaeuser mills, including the one in Albany. And last week, I-P shut down production at the Albany mill as part of a corporate cost-saving plan.

The end result: The mill no longer produces nor saves the energy for which it got the tax credits. Walmart, however, retains the full benefit of the subsidy.

Walmart, which ranked second to Exxon this year on the Fortune 500 list, shouldn’t be cast as the bad guy, says Karianne Fallow, a spokeswoman for the Arkansas-based company. Oregon officials asked Walmart to become a “pass-through partner,” Fallow says.

“The state approached us with this investment offer and we participated in the opportunity,” Fallow says. The tax benefits were clear, she says, but bringing green jobs and companies to Oregon “is very much a goal that we support.”

Legislative overhaul 

Similar examples abound. FUSP, a Portland wood recycling company, garnered $2.6 million in tax credits last year and sold them to 17 individual investors for $1.9 million in cash. The money, according to a company official, was used to buy grinding equipment and other machinery that turns old wood into new lumber and pallets.

Shortly after the credits were issued, the housing market crashed. The equipment now sits idle in a lumberyard in Turner, outside Salem. The 17 investors, however, continue to receive the tax break.

“The problem is, we’re taking taxpayer money that is supposed to be accomplishing energy efficiency or power generation and instead we’re putting it into the financial market,” says Jody Wiser, who leads a watchdog group that wants changes to the energy subsidies. A better way, Wiser suggests, would be to give clean energy or energy conservation companies outright grants, thereby saving millions that wind up in the hands of investors.

Corporations doing business in Oregon took a keener interest in the tax credits after the 2007 expansion of the program, which upped the maximum incentives to $20 million for solar facilities and $10 million for wind farms. State records show the amount of tax credits bought by third parties shot up to $152 million — more than triple the amount of the previous year.

Gov. Ted Kulongoski and state energy officials say they recognize problems with the energy tax credits and are working to overhaul the program when state lawmakers convene for a short session in February. Among the targets of the overhaul is the pass-through option.

“The governor believes there’s been a public value to the program,” says Anna Richter Taylor, Kulongoski’s spokeswoman. “That said, he also is very supportive of efforts to align the rate better with other public investment portfolios.”

The current rules allow third parties to buy the tax credits at about 67 cents on the dollar and take the tax breaks over five years. For most, that means an annualized rate of return of about 10 percent – a rate that far exceeds what most people are getting on short term investments, such as bank CDs. Acting state Energy Department director Mark Long is pushing for a rate that would be more in line with other types of market investments — about 3.5 percent a year.

“That means more money goes to the actual project,” rather than to the investors who buy the tax credits, Long says.

Wal-Mart Plays the Victim

by

By Phil Mattera 
First published by Dirt Diggers Digest, Sept 23, 2010

In the mid-1990s business groups such as the American Trucking Association – then led by Thomas Donohue, currently head of the U.S. Chamber of Commerce – launched a crusade to ban union corporate campaigns. The effort fizzled out, but now Wal-Mart may be trying something similar to thwart site fights pursued by community groups opposed to the opening of the giant retailer’s stores and distribution centers.

The company is pouncing on a story published in the Wall Street Journal in June reporting that rival grocery chains such as Safeway and SuperValu helped to pay for the services of a firm called Saint Consulting Group, which has worked with community groups around the country in campaigns against Wal-Mart projects. The article also reported that Saint’s fees are sometimes paid by the United Food and Commercial Workers. The UFCW does not hide the fact that it works with community groups opposed to the virulently anti-union Wal-Mart, whose expansion threatens the jobs of UFCW members at unionized competitors. The UFCW confirmed to the Journal that it has funded Saint and insisted it had every right to do so. The newspaper said that the rival chains declined to comment.

In a just-published follow-up article , the Journal reports that Wal-Mart is asking courts to compel its opponents to disclose who is paying their legal bills in various environmental lawsuits challenging the company’s expansion. This could be the first step in an effort to get courts and perhaps friendly legislatures to put restrictions on site fights and their funding. While Wal-Mart claims to be most upset about the involvement of its competitors, the company may try to use this issue to weaken community groups and the UFCW, its long-time nemesis.

It is the height of hypocrisy for Wal-Mart to complain about collusion among its adversaries. The beast from Bentonville has never hesitated to use every trick at its disposal – including the funding of front groups – to advance its expansion efforts. Over the summer it succeeded in getting permission to build a second store in Chicago by using tactics such as creating fake community groups and hiring low-income people to pose as demonstrators supposedly eager to get a Wal-Mart job. The company also pretended to have seriously negotiated with unions on wage rates for the store.

Several years ago, Wal-Mart sought to defuse criticism of its detrimental impact on local businesses by launching an “Opportunity Zone” program that amounted to little more than bribing small firms to back its agenda. In 2006 it came to light that two blogs that appeared to be written by independent supporters of the company were actually created by Wal-Mart’s public relations firm, Edelman. That was in addition to reports that the company was cultivating real bloggers, some of whom were repeating company talking points verbatim.

The amount of money Wal-Mart’s competitors have contributed to site fights probably does not compare to what Wal-Mart has spent itself. Apart from the direct costs of those site battles, the company cultivates political support through direct means such as campaign contributions and is believed to make wide use of indirect means such as giving consulting contracts to relatives of public officials.

State and local governments end up paying for the company’s campaigning through the economic development subsidies (estimated at more than $1.2 billion) they give to Wal-Mart and the forms of tax avoidance (estimated at billions more) that the company arranges for itself.

Wal-Mart may feel that the likes of Safeway and Supervalu are violating some unspoken rule by supporting site fights, but it has broken every rule in the book itself in pursuit of endless expansion. But rather than defending those rivals, the most important thing is to be sure Wal-Mart does not exploit this issue to put shackles on community groups and unions, which are often the only forces working against the company’s quest to take over everything.