Recalling the End of a Fascinating Company
Last week I described one of the existential challenges that faced the Butler County Mushroom Farm – intense competition from China and, later, other Asian countries, who shipped massive volumes of low-quality mushrooms into the US.
Previously in this series: Bye Bye Fungi
As BCMF’s revenues and profits declined, another existential challenge arose – the company’s own workforce. BCMF employed more than 900 workers and most of them were unionized. As a result, the company had little control over its biggest operating cost – wages.
It didn’t matter during the company’s salad days, but as BCMF’s business dwindled, it mattered a lot.
BCMF’s wage rates weren’t just an internal matter. Steel mills, coal mines, and other manufacturing companies – including a nearby Pullman box car plant – were shutting down in droves across Western Pennsylvania. That meant there were very few employers that paid living wages, that is, a wage that allowed employees to support their families on one income. In fact, most employers in the area paid minimum wage.
But BCMF paid good wages, at least for that area, and both the company and the union were proud of it. And not only did BCMF pay well, but thanks to the closings of other manufacturing firms, it had become the largest private employer in that large area of small towns and farms east of Butler, Pennsylvania and all the way to Altoona and Johnstown.
As a result, the company was extremely reluctant to seek wage concessions from its employees and the union was extremely reluctant to grant them. Part of the problem was that while BCMF did pay a living wage, it did so only barely. Any reduction in wage rates would mean that workers could no longer support their families on their incomes at BCMF alone. They would have to find second jobs or put other family members to work.
Still, with the wolf at the door, BCMF insisted that wage concessions – and work rule changes – were necessary to the continued operation of the enterprise.
But while BCMF clearly had its troubles, so did the union. Like the company, the union had long bragged that its members made a living wage, significantly higher than workers could get anywhere else in the area. As a result, any talk of cutting wages infuriated the union membership and caused the union leadership to dig in its heels.
The union also faced a difficult dilemma. If it accepted wage reductions its members would no longer earn a living wage, but at least most of them would still be employed. If the union refused to consider reductions, many of its members would be laid off and would have no income at all.
Push came to shove in the early 2000s when BCMF demanded wage concessions or it would cease operations altogether. The union called the company’s bluff and that was the end of the line for the Butler County Mushroom Farm. It had survived – and mostly thrived – since 1937, but now it was all over.
It may have been the end for BCMF and its unionized work force but, interestingly, it wasn’t quite the end of Moonlight Mushrooms. A long-term employee of BCMF rounded up some investors and bought the company’s assets. Operating as Creekside Mushrooms, the new company continued to produce Moonlight Mushrooms for a few years before throwing in the towel.
The sad fate of Butler County Mushroom Farm is a stark reminder that seemingly remote and irrelevant geopolitical events can come home to bite you, even if you live in West Winfield, Pennsylvania. (Or the even smaller village of Worthington, Pennsylvania. BCMF also grew mushrooms in a limestone mine in Worthington and eventually consolidated production there.)
When the US began trying to curry favor with Mao Tse-tung (as he was then known, even to the Chinese, but is now known as Mao Zedong), they weren’t specifically trying to kill BCMF and its workforce, they were just heedless of the second-order consequences of their actions.
Very shortly afterward, though, encouraging the import of cheap goods of all kinds became a core feature of globalization as sponsored by the liberal world order headed by the US. Globalization boosted economic growth, especially in the Third World, and offered developed country consumers less expensive and therefore more plentiful goods.
Unfortunately, the burden of foreign competition wasn’t spread equally, but fell on narrower parts of the US workforce. Better educated and higher skilled workers thrived under globalization, while steelworkers, auto workers, garment industry workers, minorities, and mushroom pickers suffered disproportionately.
The collapse of Butler County Mushroom Farm is a small but poignant reminder that policies that helped some of us badly hurt others – the greatest good for the greatest number is a utilitarian maxim that leaves a lot of people out in the cold.
My BCMF adventure began when I was summoned to the office of Mr. S, a senior partner in my law firm, and was handed the file for BCMF. I was astounded to learn that Mr. S was leaving both the law firm and the practice of law.
Yet, only a few years later, I would do the same thing – I left the law firm and the practice of law and became head of a family office.
Technically, to be sure, I’m still a member of the bar and still discharge all my continuing legal education obligations every year. I’m not sure why I keep that up, though, since my legal skills have followed the same trajectory as BCMF – straight downhill. If I needed a lawyer, I’d be the last person I’d call.
Although I haven’t been associated with BCMF for decades, I made a copy of the Brooks Brothers gift certificate Mr. Y presented to me at a special shareholder’s meeting and have kept it to this day. Butler County Mushroom Farm was a highly unusual but very special company, and Mr. Y was a remarkable man and, at least for a time, my friend.
Next up: VA
Gregory Curtis is the founder and Chairman of Greycourt & Co., Inc., a wealth management firm. He is the author of three investment books, including his most recent, Family Capital. He can be reached at gcurtis@greycourt.com. Please note that this post is intended to provide interested persons with an insight on the capital markets and is not intended to promote any manager or firm, nor does it intend to advertise their performance. All opinions expressed are those of Gregory Curtis and do not necessarily represent the views of Greycourt & Co., Inc., the wealth management firm with which he is associated. The information in this report is not intended to address the needs of any particular investor.
