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Conference Introduction Telling the Story: The 1999 Heartland Labor Capital Conference On April 29-30, 1999, the Heartland Project held its second national conference. Co-sponsored by the United Steelworkers of America and the Center for Working Capital, the conference took place in Washington, DC, and highlighted new strategies for workers and communities to direct their assets into long-term, prudent, job-generating investments in domestic industries. More than 150 participants attended the event, including labor leaders, pension trustees, federal and state officials, community development practitioners, investment activists, scholars and economic analysts from the U.S. and Canada. Featured speakers at the conference included AFL-CIO Secretary-Treasurer Richard Trumka, Representative David Bonior, Senator Paul Wellstone, and senior representatives of the Quebec Solidarity Fund, the first and largest of the Canadian labor-sponsored investment funds. Leo Gerard, international secretary-treasurer of the Steelworkers and chair of the Heartland Project, unveiled the outlines of a Heartland Fund, a national investment vehicle designed to bankroll high-wage, high-road manufacturing and related firms and promote economic development on a regional scale. In addition, the research team assembled by Heartland presented an array of findings and cutting-edge recommendations on subjects ranging from asset valuation to private equity investments by pension funds. The conference also provided a forum for discussion of new public policy ideas inspired by Heartland. Panelists in this forum included Philip Singerman, chief of the U.S. Economic Development Administration, Millicent Hodge, director of President Clinton’s New Markets Initiative, and Jim Hill, Oregon state treasurer and immediate past president of the National Association of State Treasurers. The Washington conference successfully brought Heartland’s efforts into public view and received extensive coverage from the Los Angeles Times, Boston Globe, Pensions & Investments, the Bureau of National Affairs and other media outlets. These efforts will continue to draw public attention with the upcoming publication of Heartland Project research papers. At the same time, the Heartland Project has achieved some of its most important results through the patient, low-visibility process of networking, relationship-building, sharing ideas and creating capacity for high-impact regional development finance. Over the course of two-and-a-half years, the Project spawned a labor capital network with active organizational participants in eight U.S. communities. Under the leadership of the Pittsburgh-based Steel Valley Authority, the Heartland Regional Network gained commitments from at least three sources to capitalize a strategic investment pool that would help invest in small and mid-sized enterprises, employee-owned firms and other businesses with alternative ownership or management structures. In developing this Regional Network, the Heartland Project sponsored a model market analysis and capital gaps survey for use in building regional investment capacity. The Project also produced a large investment database that builds inventories for potential sources of financing for the development, seed funding and capitalization of regional investment funds. The model market analysis, capital gaps survey and database form key portions of a tool kit for Network partners that also includes extensive background information on local organizing and the economics of investment funds. Employing many of the tools in this kit, the Steel Valley Authority completed a business and marketing plan for the Pittsburgh Heartland Regional Fund, a to-be-capitalized state accredited, state-funded, labor-oriented manufacturing loan program In the course of building its Regional Network, the Heartland Project also provided a broader educational function by organizing bi-national tours that enabled U.S. leaders to see first-hand the effectiveness of Canada’s labor-sponsored investment funds and establish relationships with top LSIF officials. These tours not only informed key actors in the Regional Network but also helped catalyze new federal and state policy initiatives aimed at creating community investment mechanisms that borrow from the Canadian model. By combining high-profile research and public education with persistent organizing and enterprise development, the Heartland Project seeks to foster an economy that enables workers and communities to invest in themselves. The April conference report summaries in this conference report section underscore the importance of that objective and the rewards of achieving it. As Leo Gerard
asked, in concluding his remarks, "Why should U.S. pension
funds be invested in plants in Vietnam and China and Malaysia and
not in Pittsburgh and Baltimore?" Conference Overview The Emergence of the Heartland Project In the fall of 1995, United Steelworkers of America Secretary-Treasurer Leo Gerard called together an informal group of representatives from trade unions, industrial retention organizations, think tanks and financial firms to examine the dynamics behind continuing job losses in key American industries. Despite the economic expansion of the mid-1990s, layoffs had reached historically high levels. And despite record corporate profits, working families were seeing their real wages fall as they worked harder and more productively. Meanwhile, a growing capital gap, caused partly by financial industry restructuring, was hobbling investment in small and medium-sized firms which employ a large portion of industrial union members. As Gerard’s Heartland Working Group analyzed these trends, it found a short-term mentality gripping the financial markets and Corporate America. Largely as a result of this mentality, workers' own pension funds were in the extraordinary position of fueling investment manias in emerging markets and domestic corporate mergers that contributed to the loss of U.S. manufacturing jobs. In June 1996, the group sponsored a Heartland Forum that focused on this great anomaly — and on the dual need for a healthy domestic manufacturing sector and advanced labor-management relations. In the forum’s keynote address, AFL-CIO Secretary-Treasurer Richard L. Trumka stated, "there is no more important strategy for the labor movement than harnessing our pension funds and developing capital strategies so we can stop our money from cutting our own throats."
In addition to dissecting the problem, the Heartland Forum also presented a range of strategies through which unions and their communities could end the economic hemorrhaging and mobilize their own money to promote quality jobs. Research reports prepared for the forum chronicled successful efforts by U.S. unions to craft activist shareholder initiatives and long-term investment strategies for their own pension funds. The reports also spotlighted a series of landmark collaborations by Canadian unions, workers and governments to create new vehicles for investing in regional manufacturing enterprises. The 1996 forum confirmed the importance of raising public awareness about the use and misuse of workers' investment funds. And subsequent economic events further convinced the Heartland Working Group of the need to broaden its discussion of strategies for mobilizing worker and community capital on behalf of ordinary citizens’ prosperity and security.
Three Years Later. During the second half of the 1990s, pension funds have grown to $7 trillion in the U.S. and workers' investments in mutual funds have mushroomed as well. But as workers’ financial assets have swelled in size, so too has the "collateral damage" attributable to flawed investment assumptions and practices.
At the same time, however, there is also growing good news. Organized labor in the U.S. and Canada, working with its community allies, has made dramatic headway in the stewardship of workers' capital for productive, long-term investment in domestic prosperity.
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