Happy talk aside, the sale of M&I will mean job losses for Wisconsin.
Mergers and acquiescence
Members of the Milwaukee business community were busy painting smiley faces in the wake of the sale of M&I Bank to the Bank of Montreal. They have little choice but to act this way, but the sound you hear in the background is the echo of their voices in the empty office spaces sure to follow the takeover.
M&I was once a towering giant in the world of Wisconsin financial institutions. But when the $4.1 billion acquisition was announced last week, M&I was still struggling to regain its footing, another victim of turbulent economic times that have changed all the rules.
Despite the efforts to spin the takeover story the other way, the cold truths are simple: The evidence is overwhelming that mergers and acquisitions are bad for local communities. "Nothing will change," the little people are told. Jobs will be safe. A strong local presence will be maintained. All will be well.
When the deal is done, something very different happens. High-paying jobs go elsewhere. For that matter, so do lower-paying jobs. As one merger consultant told the Milwaukee Journal Sentinel, purchasers have no choice but to look for ways to mitigate the cost of pricey acquisitions, and the cost-cutting is unlikely to come at some faraway corporate headquarters.
Those of us who have endured corporate takeovers have real stories to tell. They would fill volumes, but they're not pleasant reading. They are the stories of reduced pay and benefits, jobs lost, dreams dashed.
It is precisely why the words "community development" are more important than "economic development." Let's hope Governor-elect Scott Walker will recognize this and stand up for Wisconsin's communities and the people who live in them, not the business giants that loot them. If he fails to do this, the people who make up our work force will continue to be pawns in the economic development game.
Walker would do well to study the history of mergers and acquisitions and their impacts on people in our communities. If he does, it might sink in that they generally are bad news. If the current economic mess offers any enduring lessons, it's that the little people on Main Street need a lot more help than the corporate elite who live in faraway places. Just tossing out a slogan that Wisconsin is open for business might be an invitation to plunder our social capital and natural resources for economic rewards that leave our communities at the close of business every day.
Another Wisconsin business story that emerged this month is instructive. NewPage, an Ohio-based company, announced it was closing its paper mill in the little community of Whiting, just south of Stevens Point, snuffing out 360 jobs. The closing follows a trend in the paper industry as locally owned mills were acquired by outsiders in the past few decades: unrelenting work force reductions in what had been a bedrock employer. Sure, much of this happened because of worldwide economic trends, reductions in demand and so on. But it's hard not to conclude that killing Wisconsin jobs is a lot easier when done in Ohio or Sweden or, as we will see in the case of M&I, Montreal. Do we really want to be open for this kind of business?
Maybe if the new governor studies up on this, he will learn that social capital in the form of hardworking people in Wisconsin is more enduring than so-called economic development that leads to profit-taking in faraway places.
If he learns this, maybe Walker will understand a corollary. Wisconsin workers in the 21st century must be highly trained and educated, which means our technical colleges and universities need to be able to respond to the needs of our job-challenged citizens now more than ever. It's one thing to be open for business. It's another to be open for the kind of business that values the people who live here.
December 21, 2010
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Bill Berry is a FightingBob.com contributing editor who lives in Stevens Point and writes columns for the Capital Times and other publications.