On July 24, a sixty-three-year-old Georgia-Pacific employee named Lydia Faircloth was leaving her shift at the company’s mill in Cedar Springs, Georgia. Just two years earlier, Faircloth had been featured in an internal Georgia-Pacific safety bulletin. She had coined a phrase to promote safety awareness: “LET OTHERS SEE SAFETY IN YOU,” according to the bulletin. It was close to midnight when Faircloth was leaving. She cut through an area where industrial loader trucks were transporting big loads of product. She crossed the floor in a crosswalk marked for pedestrians, but was hit by a truck driven by her coworker and died from severe internal injuries.
It was less than a month after this that Wesson was killed at the mill in Crossett. Roughly ninety days after that, a contractor named Bobby Creech at the Crossett mill was performing lawn maintenance at the mill while riding an off-road four-wheel vehicle. When Creech traveled over a hill, the vehicle rolled over and killed him. This contractor’s name was spelled variously in internal Koch documents as Bobby Creech and Bobby Creach, but there is scant documentary evidence of his death.
By Christmas 2014, six workers had been killed in Georgia-Pacific. And the injury rate and total number of injuries continued to climb. The accident rate jumped 18 percent from the year before. The total number of reportable injuries jumped by 22 percent.
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Between 2015 and 2017, accidents and injuries continued to climb each year, along with the rate of injuries. The increasing danger at work seemed tightly linked to increasing production: the upward trend of injuries still mirrored the upward trend in new home construction and economic growth.
The chart below documents recordable injuries, drawn from Koch’s own internal tracking system, TRAX. The total number of accidents increased by 30 percent between 2010 and 2017:
The injury rates rose even more sharply during this period. Koch’s TRAX system recorded two injury rates: the “OSHA Rate,” which tracked injuries, and the “DART Rate,” which basically tracks lost work time due to injuries. The OSHA rate increased by 45 percent, and the DART rate increased by 57 percent:
Koch Industries needed to change the way it did business at Georgia-Pacific. But it wasn’t clear how it would do so. In the past, Koch changed dangerous procedures after strict government enforcement, coupled with publicity of the company’s wrongdoing. In the 1990s, the raft of criminal charges and civil fines for environmental violations prompted Charles Koch to develop the 10,000 percent compliance doctrine. The crisis of workplace injuries appeared to follow a different path. Federal regulators ruled that Koch Industries had violated dozens of federal worker-safety regulations at its Georgia-Pacific facilities, but the fines for doing so were relatively paltry.
Georgia-Pacific was fined $5,000 for violations related to the death of Robert Wesson, according to OSHA records. The company was fined $14,000 for violations related to the burn-related deaths of Charles Kovar and Kenny Morris. It was fined $35,050 for a series of violations dubbed “serious” by OSHA related to Lydia Faircloth’s death. These deaths were scattered around the country and garnered little mention outside of local media accounts, which often characterized the deaths as accidents and provided little information beyond that. By contrast, the EPA and the Department of Justice fined Koch $30 million for a series of pipeline leaks and other violations in 2000, grabbing national media attention because it was the largest such fine in history.
In the absence of headlines and fines, Koch Industries responded to the Georgia-Pacific safety crisis by reemphasizing the need of employees to follow the guidelines of Market-Based Management. An internal Koch Industries presentation prepared in 2017 referred to the crisis in terms that military commanders might use to describe a large-scale insurgency. The “Headline Discussion” of the presentation said that Koch needed to “Engage Hearts & Minds” of employees to reverse the increasingly dangerous conditions. “Are we putting too much emphasis on ‘we are improving’ versus we are not satisfied with where we are and our rate of improvement?” the presentation asked. The presentation noticed that serious injuries were “flat to increasing” between 2016 and 2017, in spite of the company’s efforts.
The presentation noted that Georgia-Pacific was more unsafe than Koch’s competitors. One internal chart showed that Georgia-Pacific’s safety metrics ranked in the bottom half of paper and pulp companies in the United Statets. Significantly, Georgia-Pacific ranked below its three major US competitors: Weyerhaeuser, International Paper, and Pratt Industries. The only companies that ranked below Georgia-Pacific were relatively obscure and sometimes small firms, such as Deltic Timber Corporation, Flambeau River Papers, and Turners Falls Paper.
This chart was a challenge to Koch’s senior leadership. None of the companies that ranked ahead of Koch subscribed to Market-Based Management, yet they all did better than Koch. The numbers challenged the company’s orthodoxy.
Koch’s response was to renew its commitment to Charles Koch’s philosophy and to reduce risk by “applying 5 MBM® dimensions throughout the organization.” The leadership team set out an ambitious goal. It sought to achieve “zero significant incidents” at Georgia-Pacific in the future. One chart showed a “Georgia-Pacific Safety Risk Glide Path” that would gradually reduce accidents to a level near zero by the year 2035. A different chart noted that every 10 percent decrease in serious incidents would yield between $5 million and $25 million for the company.
Another chart, entitled “Georgia-Pacific 20 Year Bet,” was written in the classic style of Market-Based Management materials. It featured colored boxes connected by dark lines in a wheel-and-spoke formation. The box in the center said, “Critical Risk Focus Areas,” and the connected boxes listed various Georgia-Pacific operations and risk hazards like “Combustible Dust” and “Electrical Safe Work Practices.” (Electrical shocks had skyrocketed at Georgia Pacific, rising from one in 2010, to twenty-three in 2015, and to thirty-one in 2017.) The chart said that risk could be reduced by changing “hearts and minds” in the workforce. It said the company workers must change their mind-set and “Go from Have To—To Want To” in terms of staying safe. In spite of this approach, workplace accident rates continued to accelerate that year.
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In past decades, worker safety was a top priority for labor union negotiators. Industrial accidents were a driving force behind unionization in the early years of the New Deal. By 2016, however, unions were so marginalized and overpowered that they were playing a defensive game, simply trying to hold on to what benefits they had left.
This was the reality faced by the Dodger and the Hammer as they prepared to negotiate a new contract with Koch in 2016. Hammond knew that this would likely be the last contract he negotiated on behalf of the IBU, his last chance after nearly a decade to make things better.
Before negotiations even began, Georgia-Pacific sent powerful and ominous signals to the IBU. In 2015, Koch Industries told the IBU that it was pulling Georgia-Pacific’s representatives off the board of trustees that oversaw both the IBU’s pension and the health care trust. It was common for companies to help oversee the funds, and Koch’s withdrawal seemed like the first step toward ending all support for the pension and health care plans.