Wednesday, June 25, 2008

State of Florida Buys Historic Company to Shut It Down

The state of Florida just announced a plan to buy out a privately held state business, United States Sugar Corporation for $1.75 billion dollars. The purpose behind the plan is to reunite a vast swath of the Everglades and allow the state to regain control of sufficient land to be able to restore the Everglades as a functional ecosystem.

Florida Governor Charlie Crist has declared the agreement "as monumental as the creation of our nation's first national park, Yellowstone."

Under the deal, the state would buy U.S. Sugar's holdings in the Everglades south of Lake Okeechobee, including its cane fields, mill and railroad line. The company would retain rights to the use of the land, a vast swath of 187,000 acres for six more years, after which it would go out of business.

U.S. Sugar chief executive Robert Buker called the deal "monumental" but said he was saddened to see the demise of his company. Its 1,700 employees, including those who work in the mill and operate the cane-cutting machinery, will lose their jobs, though the state is offering them retraining

Company VP, Robert Coker, said U.S. Sugar began talks with the governor last year "to make sure our business for the long-term was sustainable."

"Out of those discussions with the governor, he put on the table that maybe we should just buy U.S. Sugar out," Coker said. "After we caught our breath and picked ourselves up off the floor ... we all decided that this was a good deal for the people of Florida, for the Everglades and the environment, and a good deal for our employees and our shareholders."

U.S. Sugar employees are the largest shareholders in the Company through an ESOP (Employee Stock Ownership Plan). The Company is primarily owned by its employees and charitable foundations set up by Mr. Mott -- The C.S. Mott Foundation and The Mott Children's Health Center.

The United States Sugar Corporation came into being during the Great Depression, at a time when the little southern town of Clewiston was little more than a dot on the map near the southern tip of Lake Okeechobee.

On April 28, 1931, automotive pioneer, industrialist, and philanthropist Charles Stewart Mott transformed the bankrupt old Southern Sugar Company into United States Sugar Corporation, acquiring all its lands, sugar mill, and other assets. With much of his own money, Mott revived the company and convinced other investors and creditors that the dream of growing sugar in the rich muck soils around Lake Okeechobee was not only possible, but profitable.

Now a company started by an automotive industrialist, and evolved into an employee/philanthropically owned business will shut itself down due to a combination of competitive factors, and a unique The deal with U.S. Sugar Corp. results from a convergence of interests: Florida want to restore the Everglades and clean up pollution caused by Big Sugar and other growers, while the American sugar industry is being squeezed by low-price imports.

It is an elegant solution that aids the interest of all parties in a way that allows employees to plan their transition while providing a safety net. There will be impacts to the company and the local economy, but perhaps this is one of those times when it is for the greater good.

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