Steelabor, United Steelworkers of America - May/June 1999

Capital Idea

USWA, UNITE, IUE
Help Advance Heartland Investment Fund

A recent Washington, D.C. conference advanced the development of The Heartland Fund, an ambitious plan to fill a growing investment capital gap that is preventing small and medium-sized businesses from expanding. Many of the businesses employ large numbers of industrial union members.

USWA Secretary-Treasurer Leo Gerard said the objective of the meeting was to establish a labor investment fund that would put to "positive use" the millions of dollars in workers' pension and individual retirement savings accounts.

The Heartland Fund will pool around $40 to $50 million in workers' pension money to make direct investment, or loans, to smaller businesses that have good prospects for survival, but often find it hard to get money for expansion or new technology, Gerard explained.

Tom Croft, director of the Steel Valley Authority, a key player in developing the fund, said that banking industry consolidation and branch closings have narrowed credit access or raised the cost of credit for many businesses in inner cities, older industrial communities and rural areas.

Yet, it is these smaller and medium firms that employ the bulk of American workers and continue to be the largest job creators, Croft said. Raising funds to expand or stay in business is critical for them.

AFL-CIO Secretary-Treasurer Richard Trumka told the conference that employee pension funds have been used to finance some of the most destructive buyouts and takeovers that have resulted in massive layoffs.

U.S. pension funds invested in Asian "tiger" economies helped create the financial crisis there that has led to, among other things, a flood of steel dumping in the United States, which has cost 10,000 Steelworkers their jobs.

"Why should US. pension funds be invested in plants in Vietnam and China and Malaysia and not in Pittsburgh and Baltimore?" Gerard asked.

The USWA took the lead in creation of the fund, and the Union of Needletrades, Industrial and Textile Employees (UNITE) and the International Union of Electrical Workers have pledged support. The fund will favor companies that are unionized or at least not hostile to unions.

Cities involved in the proposed Heartland Fund Regional Network are Pittsburgh, Milwaukee, Seattle, Cleveland, Chicago, Bay Area, Boston and New York.