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Saving Jobs

A New Use for Eminent Domain

by Show Mao Chen

Eminent domain, the ageold prerogative of governments to "condemn" or appropriate private property for public use, may prove to be an effective new tool for labor and citizen activists.

The test case involves the plant of Morse Cutting Tools in New Bedford, Mass., a 120year-old machine tool manufacturing operation owned by Gulf + Western Industries Inc. The New York based conglomerate has put the plant up for sale as part of a divestment program started last August. Morse currently employs about 450 workers in New Bedford, a city with an unemployment rate of 7.7 percentcompared to 4.5 percent for the rest of the state.

Two years ago, a major screw manufacturing mill closed, costing New Bedford 1.000 jobs. Mayor Brian Lawler is not about to let it happen again. Fearing that Gulf + Western will liquidate the plant if no buyer is found or that the company will sell the fast obsolescing plant to buyers who only intend to run it for a year or two, the city has announced its intention of using eminent domain to take over the Morse plant if no suitable buyer is found.

The power of eminent domain is limited by two clauses found in the fifth amendment and most state constitutions: private property may be condemned only for "public use" and only if "just compensation" is made. Eminent domain has traditionally been used for the condemnation of private lands for highways, the razing of slums and the public takeover of utility companies. To use it for the takeover of a manufacturing plant is rare. Such use requires that "public use" be interpreted broadly, in this case synonymously with the public purpose of preventing unemployment. A 45-page legal memorandum to Mayor Lawler argues that New Bedford has the authority under Massachusetts state law to acquire the Morse plant through eminent domain for the purpose of "maintaining a healthy local economy." The report was prepared by Andrew Buchsbaum, staff attorney at the Institute for Public Representation, a Washington, D.C. public interest law firm.

Indeed, the trend in law is towards such a broad interpretation of "public use." The state of Hawaii used eminent domain to take land from large landowners for redistribution among their former lessees; the City of Detroit used eminent domain to acquire a neighborhood called Poletown in order to sell the land to General Motors for the construction of a new plant which promised the city 6,000 jobs; the City of Oakland appears posed to "condemn" the erstwhile Oakland Raiders football team under eminent domain in order to keep the team in the city. And this march, the U.S. Supreme Court unanimously held that it "will not substitute its judgment for a legislature's judgment as to what constitutes `public use' unless the use is palpably without reasonable foundation."

This judicial deference to legislature translates into greater freedom for the governments to invoke eminent domain as they are able to apply increasingly broader interpretations of "public use." And following the retreat of the federal government under Reagan's "New Federalism," it is the local governments particularly that are becoming thus empowered.

To Buchsbaum, this empowerment of the local governments can represent the empowerment of citizens. As citizens are better able to bring pressure to bear directly on the local (in contrast to federal) government, they now have a greater say in decisions that affect their lives-such as keeping their factories open.

Buchsbaum sees the New Bedford case as unique in two aspects: first, most cities worry about the adverse effects of eminent domain on the local "business climate" and are therefore wary of supporting the local unions in their efforts to oppose plant shutdowns. In New Bedford, however, the Mayor is taking the side of the union. This support can be traced to a successful strike in 1982. That year the United Electrical Workers (UE) Local 277, which organized Morse Cutting Tools, exposed Gulf + Western's unannounced systematic divestment in the plant. The divestment resulted in obsolescing plant equipment which led to a drop in productivity. Gulf + Western, however, attributed the drop in productivity to high labor costs and in negotiation demanded wage cutbacks from the workers. Engaging the services of a professional consulting firm, the union conducted research into the pattern of divestment at Morse to support its case, and was then able to negotiate a new contract with no concessions.

A second factor which often prevents governments from condemning manufacturing operations is economic. The plants facing shutdown are usually so antiquated and poorly managed that a turnaround is unlikely. New Bedford is lucky to have detected Gulf + Western's divestment in the Morse plant early enough. With proper management and adequate investment, the New Bedford community believes the plant will remain competitive. In an interview with the New Bedford Standard Times, U.S. Representative Terry Studds (DMass.) said he was "convinced that Morse Cutting Tools can once again be profitable."

Some observers have called the New Bedford case "nationalization." But there is a distinct difference: the use of eminent domain may mean community decisions (made through the local governments), but it does not necessarily imply community ownership. In fact, operating the Morse plant through a municipal corporation is only one, and not the most attractive, of the options open to Mayor Lawler. The city would rather turn the plant over to a suitable buyer who will keep it open.

Show Mao Chen is a freelance writer and a student at Harvard University.

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