Union Carbide — Assault on the Ohio Valley
The Ohio Valley pollution problem was a landmark case in environmental protectionism. Union Carbide began production in the valley in 1950, and the next year a citizens' committee was formed to address the pollution problem. This gained very little traction, and it took several years until the long-term health effects on local residents became evident.
The company had a consummate lack of concern about the soot produced by its factory, as this was hardly uncommon in heavy industry, and steadfastly refused to accommodate the demands for pollution control. They would give critics the standard brush - that they were "giving the matter careful consideration" but ultimately did nothing about it.
In the fall of 1970, a series of anti-pollution episodes brought UC into the spotlight, and the New York Times took on a campaign to expose the problem in the Ohio Valley. Public concern lead to the Clean Air Act of 1970 and the establishment fo the Environmental Protection Agency, which singled out Union Carbide as a test case in the enforcement of the act.
In 1971, Union Carbide capitulated, and agreed to significant modifications to their plant to reduce emissions. But to fight back, the company shut down production and cut jobs, which turned the people against the EPA. This was exposed, and backfired on the company, which needed the production and eventually capitulated to the EPA demands for the company to spend some $50 million over the next several years to clean up its plants in several locations.
Analysis
While the core problem seems fairly modest, the debacle involved agencies of the federal government and two different states and cost the company a great deal of damage in the media.
The problem was exacerbated by the following:
- At the time the plants were constructed, there was no public concern about pollution
- Union carbide was in a highly competitive industry with tight margins, so paying for the upgrades would require price increases, which would damage its sales.
- Government authority over environmental issues was diffused across a number of separate organizations, and there were no legal precedents
- Union carbide underestimated the effect of the media and overestimated the support from local communities.
- The technology to clean factory emissions was new, expensive, and largely untested.
From the company's perspective, they were doing business as usual, in the manner that all players in their sector did, the concern about pollution were new and unprecedented, and addressing this concern would be very harmful to the company's profitability.
Lessons Learned
Business has a symbiotic relationship with the communities in which it operates. The business provides jobs and economic support to a community, and harm to the business has an economic impact on the community. However, community contributes labor and other resources to a business, and harm to those resources will eventually harm the company.
Sensitivity to societal demands, even the oddball ones, can have a negative impact on a company. While a company must be on guard against those who would abuse a company's desire to maintain good community relations, the company should avoid becoming defensive and myopic to seemingly minor issues.
The value of "jobs" to a community is balanced against the collateral damage a company does. When citizens have the impression that a company is doing more harm than good, public sentiment will abruptly turn against the company.
A firm should include environmental and community impact in its total planning process, and consider the imapct of unintentional or precipitating "side effects" of doing business.