True Morality

Robert A. Sirico
Forbes
December 2, 1996

BUSINESS LEADERS have a natural interest in promoting a public understanding of market economics, yet they often cave in when the left-wing opposition wraps itself in religious banners.

It doesn't have to be that way. Take the case of Milwaukee's Briggs & Stratton, manufacturer of small and medium-size engines. It was attacked in December 1994 by the moguls of the liberal Catholic press for laying off workers. Now the company is fighting back with a libel lawsuit and a countercampaign on behalf of the market economy. In a one-sided broadside, editor Thomas Fox and the National Catholic Reporter identified three of the Briggs senior executives as Catholics and charged that they had "strayed from the social teachings of the church." The paper accused the three of being in "denial or moral blindness" about the evil of the layoffs.

The assumption behind the article was that it is immoral for a company to move operations even if such a move is necessary for survival. According to the NCR's moral code, employers must guarantee present workers high-paying jobs for life, whether or not the workers are earning their keep.

Let's consider what really happened. In 1983 all Briggs & Stratton engines were made in Milwaukee by union workers. With 65% of the U.S. lawn-mower-engine market, the company paid wages roughly 30% higher than its competitors, supporting a middle-class lifestyle for many Milwaukeeans. Relations with the union were friendly.

With its comfortable lead in the market, the company was able to meet most of the union's demands and pay for them by raising the prices of its engines. But this eventually drew other domestic and Japanese competitors into the market. Management realized that changes had to be made in order to maintain its lead.

Fred Stratton, Briggs' chief executive and president, explained to the union the necessity for wage freezes, lower starting wages for new hires and greater flexibility in organizing work flow. But the radical Briggs workers who controlled the union refused the requests and staged a three-month strike.

As the union intended, it forced a crisis. The company could not fulfill orders, and its customers began looking elsewhere for their engines. Briggs responded by moving some production to plants in Murray, Ky. and Poplar Bluff, Mo., which could employ cheaper labor. Note that it was not management "greed" but union intransigence that forced the move. Note, too, that most Briggs production remained in Milwaukee.

Things got worse. In 1989 Briggs experienced a $20 million net loss. Still, the company tried to keep most of its operations in Milwaukee. Briggs' management got the union to accept a four-year wage freeze and promised not to move more operations for three and a half years. The union proceeded systematically to violate the spirit of the deal. Union leadership refused to staff new departments, orchestrated an illegal slowdown and in many ways refused to cooperate.

With competition mounting and costs out of line with those of rivals, Briggs gave a year's notice to 2,000 workers and began moving jobs to newer plants in lower-wage areas. If the NCR had really wanted to help Milwaukee workers, it should not have condemned the managers but should instead have told workers to accept economic reality and cooperate in cost-cutting moves. It should have reminded the workers that they, too, have moral obligations. They must give a day's work for a day's pay and avoid inflicting harm on the business that employs them.

But people like Thomas Fox--and the rest of the religious left--are less interested in helping workers than in making antibusiness propaganda. Given the difficult choices that confronted them, what the Briggs executives did, satisfying consumers and creating new jobs, was consistent with being good Catholics and with their obligations to society. It is not they but the NCR and the union that have violated social justice and moral precepts.