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Electrolux warned to play fair in local contracting

by Tony Jones
Special to the Tri-State Defender

With “crunch time” having arrived, Electrolux is taking heat for having not moved more forcefully to involve “local and minority participation” in the building of its multi-million dollar Memphis appliance plant.

A letter clearly designed to dial up the pressure on Electrolux began circulating on Wednesday. It was written to Jacob Burroughs of Electrolux Major Appliances and signed by Shelby County Delegation Chair, Beverly Marrero; Shelby County Commission Chairman, Sidney Chism; and Memphis City Council Chairman, Myron Lowery.

“We have been informed that construction is moving forward after the third bidding process. In addition to supporting the jobs that will employ our local citizens, we also expect that our Memphis & Shelby County businesses would benefit from the approximately $90 million dollar construction budget,” the trio states in the letter.

“Since nearly a year ago, we have been in full support of this project.  However we cannot support a project that does not provide a return on investment to the communities that funded over $100 Million of taxpayer dollars.”

So what is the trio demanding? A written report “regarding participation levels prior to state and local approval and distribution of funds.”

Electrolux spokesperson Eloise Hale said the company is fully committed to assuring that minority and small businesses have a fair chance at gaining business from the plant’s contracting process. The company is nearing the awarding of an $80-million construction contract.

“I can assure you we fully appreciate the support of the state and city governments in this project. We are committed to spending $30 million during this process in the local business community,” said Hale.

“We are already using local companies during the early stages of the work. And by ‘local’ we do mean Memphis-area companies.”

The employment impact Electrolux brings to the table will definitely be of greatest benefit within the city’s limits, Hale added.

“The commitments in the contract that state we will be hiring from the Memphis area will be met.”

Commissioner Chism’s explanation of why the letter was written featured much more direct language than that conveyed in the letter.

“We gave them $40 million dollars (in incentives) to come here and they are not utilizing minority contractors,” Chism told the New Tri-State Defender on Wednesday. “And when I say minority contractors, I mean black contractors; and no small businesses from Shelby County. So far, they are spending their money with Mississippi contractors and we are not going to stand for it.

“They need to be doing business here in Memphis and Shelby County, not Mississippi. If we are going to be contributing to your bottom line, our only concern is jobs for our people.”

Known for his bluntness in the political arena after decades as a Teamster union leader, Chism continued.

“The point is they have the money and they feel they can do what they want.  They are being hard nosed and we have to be hard nosed. We have to rise up and loudly protest these types of deals. We’ve played fair and we demand to be treated fair,” he said.

“Both mayors need to get in there and pressure them to get this done right. We understand that corporate incentives are needed in many situations, but not if you think you can come in here and ignore our black and local businesses.”

Mayor AC Wharton Jr. could not be reached for an in-depth response before press time, but his office issued a statement outlining his and Shelby County Mayor Mark Luttrell’s position.

“Both Mayor Luttrell and I have been in constant communication with top Electrolux officials to ensure that they understand fully that it is imperative to us that local residents and businesses, whose taxes were the source of a $40 million local contribution, enjoy full participation in all aspects of this project,” Wharton said in the statement.

“Electrolux officials and contractors have assured us they understand exactly what is expected of them and will cooperate with us to that end.”

Wharton is backed up by the new CEO/President of EDGE Memphis, Reid Dulberger. Just given the job, Reed was physically moving from his old office in the Chamber of Commerce building into his new office when the letter hit his email. He stopped what he was doing to give an explanation of the Electrolux deal and the responsibility of EDGE, which stands for Economic Development Growth Engine.

“We have done everything possible to assure that our minority- and women- owned businesses are given a real chance at gaining business with Electrolux and they have cooperated fully so far,” said Dulberger.

“While in the formal bidding process they made it very clear that they would not enter into a formal diversity assurance plan and any of the bidders could pull out if they wanted to. Not only did we decide to go forward with our bid, we made it a priority part of the process to outline where opportunities will lie. In every round of doing the work to win this contract we have emphasized without question our concern about making opportunities for our MWBEs (Minority- and Women-Owned Business Enterprises),” said Dulberger.

“And we even went a step beyond the expected,” Dulberger recounted. “This is a huge, important and positive deal for the working force in this city and for small businesses, but also a unique one in the level of its intricateness. That is why we hired the firm of Allen & Hoshall to represent the city in this particular instance. They have not only identified the potential lines of business, but also developed a process to educate MWBEs and sought out the qualified ones to make sure they have a fair chance at doing business with Electrolux.”

Dulberger said EDGE contracts through WIN (Workforce Investment Network) to make sure that all facets of the community have “a fair chance at the jobs we bring in through the large corporate process.’

“The thing is, it’s down to crunch time and the biggest part of the contract is about to begin and we greatly anticipate a real benefit to our MWBEs and the workforce,” he said.

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