Welcome to Google, the Company Town


Past is prologue, so they say. In 1903, as chocolate magnate Milton Hershey was preparing to build his new, utopian town of Hershey, Pa., he declared it would be a place with "no poverty, no nuisances, no evil."

Down through the decades, an echo reverberates: "Don't be evil," instruct Sergey Brin and Larry Page, the founders and masterminds of Google (GOOG).

Perhaps it's no coincidence, then, that the search-engine behemoth seems on the verge of constructing its own model company town. The Silicon Valley Mercury News recently described Google's plans for a new corporate campus located within NASA's Ames Research Center, not far from its current Googleplex headquarters in Mountain View. The new Google-works will include employee housing and add another 1.2 million square feet to the company's already considerable real estate holdings, currently estimated by the Mercury News to be 4 million square feet.

The Mercury News also notes that Google is encouraging the city of Mountain View to transform the area around the Googleplex, adding more housing and retail establishments.

Beyond Tar-Paper Shacks

Google is tight-lipped about such efforts. But its motivation is likely similar to that of the many company-town builders who have gone before. If workers live nearby, they won't shrink from working longer hours. If residences are nice, perhaps even coming with subsidized pricing, and if there are lots of nearby amenities, new, skilled employees can be drawn to work for the company and are likely to want to stick around.

Hershey's (HSY) sturdy, single-family houses came equipped with such novelties as indoor plumbing, central heating and free landscaping -- quite a contrast to the tar-paper shacks that characterized coal towns and to the long, ugly rows of cell-block-like dwellings found in such steel towns as Braddock, Pa. The chocolate company provided land for schools, set up a junior college with free tuition and provided workers with pensions, insurance and medical benefits.

In remote Morenci, Ariz., copper-mining giant Phelps Dodge built hundreds of new housing units in the 1940s and equipped its wholly owned town with such amenities as a 52-bed hospital, a baseball park and swimming pool, a hotel and an elaborate general store.

And high-tech glassmaker Corning (GLW) has long functioned as the guardian angel for the upstate town of Corning, N.Y. In the 1940s, it began contributing millions to help build a new library, apartments and recreation facilities. In 1972, major flooding from the remnants of Hurricane Agnes pushed the Chemung River over its banks, devastating the downtown and leaving 6,000 homeless. Corning bailed out the village and soon erected a spiffy new headquarters and a refurbished Corning Museum of Glass.

"It's Good Business"

Reflecting on the company's motivations for all this, former Chairman James Houghton told me in 2009: "What we're doing in Corning is totally in our self-interest. It's good business." The spiffy town -- a convenient tourist stopping point between New York City and Niagara Falls -- makes for good relations with the consuming public and with a skilled and in-demand workforce.

Sponsored Links

Is there a downside for companies in such developments? The term "company town" seems to carry a negative connotation, and some corporate public-relations folks mightn't be pleased to hear it associated with their companies.

More significantly, even the most idealistic such experiments haven't always been blessed with happy endings. Over a century ago, railroad sleeping-car mogul George Pullman created an elaborate model town named for himself on the outskirts of Chicago. Living there, he felt, would have an "ennobling and refining" effect on his workers. Instead, Pullman became the focal point of a brutal, nationwide strike that permanently damaged the company's reputation.

With its nap rooms, exercise classes, and free gourmet food, Google's installations hardly seem destined for such high drama. But with town-building goes responsibility. Perhaps the best thing would be for Google to avoid evil.

Green is the author of The Company Town: The Industrial Edens and Satanic Mills That Shaped the American Economy (Basic Books).

Get info on stocks mentioned in this article: