The Coke Machine - Michael Blanding [76]
“We’re not multinational, we’re multilocal,” said Austin, who after the Arab boycott began actively trying to walk the walk in living up to the image of international harmony espoused by Coke’s “Teach the World to Sing” commercials. As the idea of corporate social responsibility (CSR) caught on, Austin set out to make Coke a leader. In addition to buying Aqua-Chem, the subsidiary that made desalinization plants to provide fresh water in the Middle East, he invested money in sports programs and nutritious milk-based drinks to sell in Latin America alongside sugary sodas. Austin’s efforts to create his so-called halo effect seemed genuinely aimed at improving the lot of people in countries where Coke was sold. If it had a secondary effect of selling more Coke in markets where Coke struggled, that was just the “perfect harmony” of the company’s business plan.
In the campaign for president in 1976, Austin cultivated corporate peanut farmer-turned-Georgia governor Jimmy Carter, throwing the candidate multiple fund-raisers and offering free use of Coke’s corporate jet. “We have our own built-in State Department in the Coca-Cola Company,” Carter said in one interview, claiming Coke execs gave him “penetrating analyses” of foreign countries, “what its problems are, who its leaders are, and when I arrive there, provide me with an introduction to the leaders of that country.” The strategy paid off for Coke after Carter’s election, when Portugal suddenly reversed its long-standing resistance to a Coke bottling plant (maintained out of deference to citrus growers). Shortly after Coke went on sale there, the State Department approved a $300 million loan to the country, a coincidence that did not go unnoticed by U.S. editorial writers.
The limits of Austin’s “halo effect” were most evident—violently so—in Guatemala, a sliver of a country southeast of Chiapas that shares its indigenous Maya population. The Coke franchise in Guatemala City had passed from United Fruit in the 1950s, and was now run by Texas businessman John Trotter. A lawyer who loved polyester suits and hated communism, Trotter flew in on his Piper Club plane every few weeks to give pep talks to local managers. Mostly he harped on one theme—the evil of unions, which he ranked second only to communists in their desire to snatch away the god-given profits of the working businessman. Under no circumstances, he told them, should the cancer of unionism be allowed to affect the plant.
Workers at the Coke plant at the time suffered under inhuman working conditions, spending twelve-hour shifts loading crates at the minimum wage of $2 a day. By spring of 1976, more than 80 percent of the two hundred-some workers signed papers to unionize in an effort to improve their lot. When union leaders Israel Márquez and Pedro Quevedo presented the petition to Trotter, however, the Texan refused to recognize it, firing 154 workers. With the law on their side, the workers successfully sued for reinstatement—but Trotter and local executives continued to break up the union, subdividing the bottler into other companies to make it more difficult for workers to organize. The Coke workers reached out to the Catholic Church for help, and were answered by a Philadelphia-based order of nuns called the Sisters of Providence, who owned two hundred shares of Coca-Cola stock—as a way to generate wealth for their order and to influence policy abroad.
Horrified to hear of the situation, its leader, Sister Dorothy Garland, contacted the Coca-Cola Company to demand changes. Coke’s president, Luke Smith, admitted tension, but said the franchise agreement tied the company’s hands. “There is no provision in the bottlers’ agreement . . . which give us any right to intervene on such a dispute,” he explained. Undeterred, the nuns filed a shareholders’ resolution at the company’s annual meeting in 1977 to demand an independent investigation into the issue.
Before the vote, Coke announced its own investigation, which came back a few months later, exonerating Trotter. The nuns cried foul, even as a new president