Tales of perfidy from the business pages

Hey, working folks, hope you enjoyed Labor Day. Yep, you got your one day; the other 364 belong to the employers.

We’ve got two examples of capitalism at work in Vermont: another shifty move from the formerly conscience-ridden Keurig Green Mountain, and a T-shirt factory meets its inevitable demise.

First up, from the Reuters news service:

When Keurig Green Mountain Inc said last December it was shifting its coffee buying operation to Lausanne in Switzerland from its headquarters in Waterbury, Vermont, it said the move would establish the company as a “global beverage player.”

The seller of brewing machines and single-serve coffee pods said nothing about a little-known exemption in the U.S. tax code…

Ah yes, the tax code: refuge of capitalist scoundrels.

The exemption is for commodities trading. It will allow KGM’s Swiss operation to buy green coffee beans at market price, and sell them at a markup to its US-based roasting and retailing business. The markup will be subject to a 10% tax in Switzerland, dodging the US corporate tax of up to 35% plus Vermont state taxes.

All perfectly legal, of course. Indeed, Starbucks pulled the same maneuver in 2001, so you could say KGM is just keeping up with the Joneses. But this is one more example why I no longer think of KGM as a Vermont company. Whatever moral or ethical imperatives may have been at work in good old Green Mountain Coffee Roasters are long gone.

Also, their coffee sucks.

And now, we turn to T-shirts. The news broke last week that Northfield-based Comfort Colors will close later this fall, costing 60 Vermonters their jobs. The company was sold earlier this year to Gildan Activewear, a multinational textile firm.

At the time, Comfort Colors founder Barry Chouinard said “there would be no changes in the near term.” And now we know: “the near term” means less than six months.

The news was widely reported, but the fullest account was penned by David Delcore for the (paywalled) Times Argus. His account makes clear that the closure of Comfort Colors was a fait accompli from the very beginning.

First of all, Gildan spokesflack Genevieve Gosselin said the closure was “part of a planned reorganization… and the functions performed in [Vermont] could easily be absorbed in other locations.”

“Planned reorganizations” don’t happen overnight. It’s more likely that the Comfort Colors purchase was part of the plan, than that the plan is less than six months old.

And second:

Chouinard didn’t sell the Northfield building with the business, though it is unclear what he might have in mind for that space when it closes on Oct. 31.

Get that? Gildan bought the business, but it didn’t buy the building.

It paid $100 million for Comfort Colors; by comparison, the cost of the building would have been a rounding error. But hey, if you plan to consolidate operations elsewhere, the last thing you want is to be stuck with an orphaned building.

It seems clear that the $100 mlilion asset was Comfort Colors’ market share, which will now be “easily absorbed” by Gildan.

Easy peasy, eh, Vermont workers?

Gosselin is obviously a professional, because she managed to say “We deeply regret the impact that this difficult decision will have on these dedicated employees” AND “We will make every effort to alleviate the impact of this transition for the employees without breaking into maniacal laughter.

Nobody did anything “wrong” here. Chouinard built a company from the ground up, and profited richly from all his hard work. Gildan is only doing what big corporations do every day — buy up small competitors and “easily absorb” them. Just like the Borg.

But Chouniard’s bland assurances at the time of the sale? Pure eyewash.

If I can tie these stories to a broader point, it’s this: Vermont will never be competitive in the global “race to the bottom” that sends coffee trading to Switzerland or T-shirt manufacturing to North Carolina and Honduras. We’re spitting into the wind if we think we can influence corporate decisions by offering the odd tax break here or there. And we sure as hell aren’t buying their “loyalty,” because that doesn’t exist.

If we’re going to encourage business growth through public policy, we have to target our efforts where they will actually make a difference: Vermont-based startups, small businesses, and companies that can’t easily export our jobs.

Advertisements

4 thoughts on “Tales of perfidy from the business pages

  1. rp

    This is always a risk – companies that expand so much that they are no longer Vermonters. Ben and Jerry’s –> Unilever for example. I wonder if the B Corporation would retain more startups in VT.

    And the corporations (Jay Peak et.al.) that are really foreign-investment funded.

    Yes, I agree, Starbucks coffee is no good. I’ve heard some people add a lot of fat and sugar to it and they seem to like it ($$).

    Reply
  2. Steve Beck

    GMC IS indeed e.bad coffee. Rarely purchased and now I will not for sure.

    And this Gosslin person, any relation to the Gosslin who ran the state’s ECONOMIC DEVELOPMENT office for what, a year maybe, under Shumlin’s watchful eye? I think she came from Eating Well.

    Reply
  3. Walter Carpenter

    I have not had a Starbucks coffee since they opened, and probably never will as long as I can possibly avoid it. It is ironic that our local company here, GMC, is heading a division to a nation with universal health care to dodge taxes in a nation without it.

    Reply

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s