Station Owners May Lose Big From Boycott
More than 13,000 Texaco dealers nationwide are bracing for a civil rights boycott amid scattered signs that their gasoline sales have already suffered in response to disclosures of alleged racism in Texaco’s corporate offices.
The boycott, called by the Rev. Jesse Jackson to pressure Texaco executives for a quick settlement of a discrimination lawsuit and for concrete steps to promote minorities, is to take effect Saturday, although all parties involved--from dealers to Wall Street to civil rights leaders--were hoping a settlement would stave off the action.
In New York, company executives and lawyers representing more than 1,000 minority employees attempted to negotiate a settlement of a discrimination lawsuit--an agreement that would head off the boycott.
Southern California dealers said the pickets to be thrown up around their pumps would hurt them and their families more than they would hurt Texaco Inc. Looming at a time when profits are squeezed because of a Southern California gasoline war, a boycott could be devastating to their businesses.
“We have had a gallonage loss that has been dropping steadily since last weekend,” said Joe Balistrieri, owner of a San Diego Texaco station that does half its business with African American customers. “When you are working on just a small margin and your overhead doesn’t change, that cuts a deep hole.”
The owner of several Texaco stations in Los Angeles, who asked not be named, said sales are already down 5% to 8% since the disclosure of apparently racist tape recordings of a meeting of top Texaco executives.
Only 1,000 of the 14,000 Texaco stations nationwide are owned by the company, said Tom West, executive vice president of the National Assn. of Texaco Wholesalers in Springfield, Va. Nearly all the rest are owned by independent businessmen and women.
“The injustice is that all it’s going to do is put dealers out of business. It’s not going to hurt Texaco,” West said.
As evidence, dealers pointed to a boycott of Exxon service stations after the Alaskan oil spill in 1989. In a letter to Jackson’s Rainbow Coalition on Thursday, the Automotive Trade Organizations of California, a group representing owners of 2,500 gas stations, said:
“Many Exxon dealers were financially damaged by the boycotts, but the Exxon Corp. absorbed its losses and is bigger than ever.”
Pressure mounted on Texaco from another front Thursday, as the National Assn. for the Advancement of Colored People threatened a stock divestiture campaign unless the oil company came up with a plan to increase opportunities for minority employees.
NAACP President Kweisi Mfume outlined eight demands, including hiring and promoting more blacks and developing a plan to increase tolerance in the workplace “that goes beyond traditional diversity training.”
Mfume said a divestiture campaign would be directed at individual investment portfolios and mutual funds.
As they prepared to meet today with regional Texaco executives to discuss the boycott, Los Angeles- area civil rights leaders conceded that a boycott would hurt innocent dealers. But Celes King III, state chairman of the Congress of Racial Equality of California, said the action is the best instrument available to achieve a “model of change at Texaco.”
King said support for the boycott is significant in the black community. The recent passage of Proposition 209, seeking to end affirmative action in the state, has helped galvanize support for antiracism movements in general and for a Texaco boycott specifically, he said.
“After 209, we certainly have to utilize the one thing we have left, which is spending power,” King said.
Wall Street seemed to agree that a boycott would not cause much damage to Texaco. Some analysts said the company, which gets less than 20% of its worldwide earnings from U.S. gasoline retailing, was more at risk from a hasty, multimillion-dollar settlement of the class-action suit than from the boycott. Texaco stock continued to recover from last week’s declines, closing up 37.5 cents Thursday at $98.375 a share on the New York Stock Exchange.
“What I do worry about is will the company have to give up $300 million in the lawsuit, which is the number being bounced around, which would be unfortunate and an excessive amount of money. You can’t give away the corporation because someone made an unfortunate and ridiculous statement,” said Rothschild Inc. oil analyst Sal Ilacqua.
But boycott experts warned that prolonged consumer movements such as that threatened by Jackson can cause lasting harm to a company and its brand of products
“It’s potentially pretty bad,” said Richard Feinberg, a professor who heads the Retailing Institute at Purdue University. “There are 36 other places where people can get gas.” Potentially more damaging than lost sales, he said, is the long-term risk to Texaco’s image.
By reallocating their spending power, African Americans, who compose nearly 13% of the population and had income of $324 billion last year, can wield enormous clout in the marketplace, said Stephen Brobeck, executive director of the Consumer Federation of America. “They could have a determining influence at the margin, and since profits exist at the margin, it ought to be of great concern to Texaco,” Brobeck said.
Others said Jackson has a strong track record in past disputes with corporate America. His Operation PUSH has led boycotts of Nike, Revlon, Anheuser-Busch and others over the last 15 years that “generally have been successful” in affecting corporate policies, said Todd Putnam, president of National Boycott News, a Seattle-based Web page.
Ironically, of the 34 Texaco stations in Los Angeles that buy gasoline from Texaco distributor J.E. DeWitt of South El Monte, 23 are owned by minorities, “who have no control over what goes on in corporate offices,” said President John DeWitt.
Several of those are African American. Through DeWitt, those dealers declined to be interviewed because they said that calling attention to themselves as Texaco dealers would make them vulnerable to retribution, according to DeWitt.
“They’re a little bit fearful about saying anything to anyone in the media. They fear that the boycott may escalate into something not just economically damaging,” said DeWitt.
In line to be hurt--financially and, if trouble arises, physically--are dealers such as Balistrieri of San Diego, who would rather close up shop for security reasons if the boycott starts. But he and most other dealers are bound contractually by their leases to remain open for business.
Still, many Texaco dealers said they have not lost any business yet. One of them, Sam Eid, owner of an East Los Angeles Texaco station, said, “The only concern from consumers I hear is the price, that’s it, and that they have good- quality gas.”
Associated Press contributed to this report.
