Gather around, students. Gather around. Today, in Mrs. Beam’s introduction to business ethics class, we’ll be completing a case study on a charming French company named Sodexo.
No, they do not manufacture the traditional French delicacies of kisses, fries or toast like one might expect. They’re in, of all things, the food and facilities management business. In fact, New Albany-Floyd County Consolidated School Corp. hired this company in 2011 to provide outsourced custodial services to the schools in their system.
The courtship between Sodexo and NA-FC schools was as romantic as April in Paris. In lieu of roses or wine, Sodexo bid considerably lower than the other companies attempting to win the contract. Too low, some thought.
Going into the deal, an NA-FC official acknowledged in this newspaper that the company would most likely lose money the first year, but Sodexo was looking toward being together for the long term and hoped to make money down the road. Knowing how to charm, they also promised to donate $25,000 to the NA-FC Education Foundation and another $5,000 to local scholarships.
So Sodexo took the contract knowing they’d initially lose money while agreeing to pay a pretty nice chunk of change to an NA-FC nonprofit? Sacrebleu! What a deal. But, since we’re studying business, is it a realistic deal?
School board President Mark Boone at the time raised concern over the too-good-to-be-true arrangement. In the Sept. 20, 2011, edition of the News and Tribune, Boone said “What company in their right mind would lose $1 million and donate another $30,000 to the corporation?” and “Something doesn’t add up right.”
Despite these questions, NA-FC schools hired Sodexo and the custodians, voila, became outsourced employees.
Fast forward one year. Summer love has a way of losing its magic. Not being able to live up to its relationship obligation, Sodexo returned to NA-FC and demanded more money or they were walking out of the marriage. Guess why. Low and behold, they were losing money. Twice as much supposedly as they previously had anticipated.
Yes, a company that underbid all the other businesses seeking a contract that they knew would take a loss took a loss. Mr. Boone must be experiencing some sort of déjà vu.
Last month, the NA-FC school board granted a short contract extension to Sodexo to the tune of $150,000 while they search for a new custodial provider. Oh, yeah, and they might need to lay off some employees. Pardon my French, but what the foie gras is going on here?
So I decided to investigate a little bit. I’m no Woodward or Bernstein, but I sure can search the Internet like a modern day Sherlock. And low and behold, I found some interesting reading about our little Sodexo.
First off, Sodexo isn’t so little. It’s one of the largest companies of its kind in the world. According to CNN, the company earned $557.5 million in profits worldwide in 2010, a 5.1 percent increase from the year before. No wonder they thought they could survive a couple of years of loss here in Floyd County.
More importantly, the company seems to have a certain panache for attracting protesters. More than one organization has accused them of using unfair business practices. In fact, the state of New York and Sodexo reached a $20 million dollar settlement in July 2010 for allegedly overcharging public schools they serviced during a five-year time period.
Other watchdog groups contend that Sodexo engages in even more questionable procedures. Human rights group TransAfrica Forum released a 32-page report that listed numerous concerns about the company including low worker pay and unfair labor practices.
“Sodexo routinely hires poor and undereducated workers who are often geographically isolated, pays them low wages, and at times, reportedly fails to pay in full for hours worked including overtime pay,” the report stated. “In the United States, many Sodexo workers report they earn so little they qualify for federal anti-poverty programs and are proactively denied requests for overtime.”
Students are campaigning at more than 12 American universities, including Purdue, to have Sodexo fired as a provider at their respective institutions due to the reasons outlined above. United Students Against Sweatshops created a website, www.kickoutsodexo.usas.org, to chronicle their fight.
What can we do locally? We need to support our custodians and call for them to be treated with fairness and respect. These employees have been loyal to NA-FC through a heck of a lot of changes. Now it’s time to return that loyalty and take a stand for them. No more cuts. No more layoffs.
And Sodexo should be held accountable to its promises. They knew the risks and still went forward with the contract. Schools try to teach our kids about responsibility. Maybe this would be a good lesson for a Fortune 500 company to learn too.
Above all, it’s time to say au revoir to Sodexo once this contract extension is up. Our children — and custodians — deserve better. Class dismissed.
— Amanda Beam is a Floyd County resident and Jeffersonville native. Contact her by email at email@example.com