March 4, 2001
Gipper Meets 'Survivor' as G.E.'s Image Hardens
By KIRK JOHNSON
|G. Paul Burnett/ The New York Times
|In December, demonstrators in Saratoga Springs,
N.Y., showed support for dredging. G.E. has spent millions fighting it.
|G.E. has mounted an aggressive advertising
campaign over the last year to fight plans by the federal government to
dredge the Hudson River near Albany. The E.P.A. has proposed a $460 million
plan to remove the river's pollution at G.E.'s expense.
|Reagan Presidential Library
|Ronald Reagan was the genial face of G.E.
when ``General Electric Theater'' was on TV. ``Now they're tough in all
the areas it's fashionable to be tough in,'' one analyst said, noting G.E.'s
ads against dredging on the Hudson.
ne of the more upbeat theories
of postmodern capitalism is that nice companies will eventually finish
first. In a market of instant information, where perception and image are
increasingly linked to stock prices, investors will reward the environmentally
green and the socially conscious because such companies have fewer potential
liabilities, or so the thinking goes.
But the nice-guy theory is getting a major test in upstate New York,
where General Electric is waging a vehement, line-in-the- sand battle against
dredging the Hudson River to remove the PCB's that its factories leaked
or dumped into the water in the decades after World War II.
Environmentalists, economists and stock market experts say that as the
company has poured tens of millions of dollars into a campaign of television
infomercials, billboards and lobbying over the last year, an argument about
the future of the river has increasingly mutated into an argument about
G.E. itself. The messenger has become the message. Whether the federal
Environmental Protection Agency's proposed $460 million dredging plan to
remove the river's pollution at G.E.'s expense is the right scientific
answer has become a battle instead over which side to trust.
And that in turn presents a whole series of questions, not only for
the local residents who are being bombarded with sound-bites about E.P.A.
high-handedness and river hydrology, but for the legions of investors who
for years on end have worshiped the company and its chief executive, John
F. Welch Jr. Last month, G.E. was declared the most admired corporation
in the world for the fourth year in a row by Fortune magazine.
Is there a point at which G.E.'s Hudson strategy backfires and becomes
an environmental liability? Is G.E.'s dismissive tone about the federal
government a mark of arrogance, as critics suggest, or the righteousness
of a just cause in the face of a dictatorial federal bureaucracy, as company
Perhaps most crucially, what does the campaign say about its intended
audience? What, in the end, do Americans really admire — the stand-up citizen
who admits responsibility and takes a poke in the eye, or the win-at- any-cost
competitor? Do people want the most decent person in the Australian outback
to win a million dollars, or the most cunning?
Some experts on corporate behavior and the environment say the most
revealing thing about the Hudson- G.E. fight is that it could occur at
"It's a testament to how much times have changed that a company can
even float a campaign like this," said Andrew J. Hoffman, a professor of
management at Boston University who has studied the frontier of business
and the environment. In the early days of environmental regulation, Professor
Hoffman said, corporate public relations efforts mostly focused on damage
control — like Exxon's strategy after the Valdez oil spill or Union Carbide's
after the chemical disaster in Bhopal, India.
A proactive campaign like G.E.'s, charging that the environmental regulators
are simply wrong, incompetent or politically motivated, shows not only
how much more complex environmental issues have become, he said, but also
how much the power bases have shifted. Fewer people believe the government
has all the answers, and corporations have charged in to fill the gap.
General Electric used polychlorinated biphenyls for nearly three decades
at two factories in the towns of Hudson Falls and Fort Edward. An estimated
1.3 million pounds of PCB's, oily chemicals that were later linked to cancer
in humans and various problems in wildlife, leaked or were discharged into
the river. Most of it is gone, E.P.A. officials say — absorbed into the
tissues of fish, animals and people, or washed out to sea. The government's
plan, announced in December, would try to recover about 100,000 pounds
of PCB's from the most polluted hot spots along a 40-mile stretch north
The company's counterattack to dredging — on which it has spent by some
estimates $60 million or more over the last year in the Albany media market
alone — is stark and stylistically striking. The G.E. spokesmen are invariably
tieless and looking relaxed, often before an inviting river backdrop. Everyone
looks windblown and outdoorsy — at home in the natural world.
Film clips of E.P.A. officials, by contrast, especially the former administrator,
Carol M. Browner, show her standing awkwardly at a lectern, with the clear
suggestion that she is a woman of the indoors — or worse, a Washington
insider. Harsh, metallic background music that sounds like something from
the movie "Hannibal" surges up whenever a clip is shown of an E.P.A. dredging
site. Even city buses in Albany now carry anti-dredging billboards.
General Electric's vice president for corporate communications, Beth
Comstock, said that G.E.'s strategy was simply to educate. The company's
scientific inquiries have shown the E.P.A.'s dredging plan to be ill conceived
and potentially disastrous for the Hudson's ecosystem and the local economy,
Ms. Comstock said, and G.E. has an obligation to make sure residents are
informed of that. Under the E.P.A.'s rules, the government must consider
local opinion in the area of any proposed environmental remediation — a
comment period that in the Hudson case runs through mid-April.
The fight is not about saving the company half a billion dollars, Ms.
Comstock said. "The easiest thing in the world would be for G.E. to write
a check, but that's not what this is about; it's about finding the right
answer for the river. People admire G.E. because we're willing to fight
for what we believe in."
Stock market analysts say that for now G.E. seems to be suffering not
at all for its defiance.
"Those appreciative of G.E. tend to be appreciative of Jack Welch's
hard-charging style," said James N. Kelleher, a senior analyst at Argus
Research in New York. "G.E.'s aggressive brand of capitalism and unwillingness
to kowtow to environmentalists may not be winning them any enemies in the
investment community, and may be winning them some adherents."
But there are also some subtle indications that what had been a kind
of fire wall within G.E.'s image — investors cheering on one side, environmentalists
booing on the other — may be eroding a little. Last year, a resolution
put to the company's shareholders by a coalition of religious groups asking
G.E. to give a full report of how much it was spending on media and lobbying
drew more than 8 percent of all votes cast. That was nearly three times
the number needed to keep the resolution alive for presentation a second
year. And in February, a column in Fortune magazine — in the same issue
crowning the company as most admired — forcefully called on G.E. to "just
do it," and announce a cleanup of the river.
Sociologists and other researchers who study corporate behavior say
that G.E. has long been a mirror for American society, because so much
of its culture has been bound up in the presentation and cultivation of
its own image. In the 1950's, for example, when Ronald Reagan became G.E.'s
front man and "General Electric Theater" was the company's national television
platform, G.E. was paternal and competent, an unflappable commander just
back from the war, said Peter D. Kinder, the president of Kinder, Lydenberg,
Domini & Company, a Boston-based firm that does social research for
institutional investors. But beginning in the 1980's and 1990's, he added,
a different ethos emerged in America, and at General Electric.
"Now they're tough in all the areas it's fashionable to be tough in,"
Mr. Kinder said. And while he stressed that G.E. failed most of his tests
to qualify as a socially responsible investment, he confessed to a certain
admiration for its "They're brilliant," he said.
Some experts on science and economics say that part of the backdrop
of G.E.'s fight is that environmentalism itself has changed. The anti-
establishment, anti-business youth culture groups that put together the
first Earth Day in 1970 have in many cases become powerful and well-financed
environmental lobbying organizations. Many corporations, meanwhile, have
seen that environmentalism can be good for business, and have actively
marketed themselves as ecologically correct pillars of hardheaded real
Instead of passively embracing the values of environmentalism, some
business researchers say, companies are redefining what it means to be
green at all. In the same way that many once-radical environmentalists
of the street were tamed, so too were anti-environmentalists of the boardroom.
What has not changed, at least at the E.P.A., is the idea that rational
science will carry the day. The agency's mission on the Hudson, a spokeswoman
said, is not to manipulate public opinion, or use emotion on the river's
behalf, but rather to put forward the best evidence available and trust
in the intelligence of the public.
"We are not out there to sell this like a can of soup," said Ann C.
Rychlenski, a spokeswoman for the agency.