Business Week
May 28, 2008

A Community Goes Up—and Wins a Round—Against Nestle
by Michelle Conlin

A while back, I wrote a story about how some residents in the tiny, no-stoplight town of McCloud, Ca. had gone up against the multinational Nestle.

Nestle wanted to build the biggest water bottling plant in the world in McCloud, a drop-dead paradise nestled at the base of Mt. Shasta. The spectre of 600 trucks barreling in and out of town everyday—not to mention a plant the size of five Wal-Mart supercenters strung together—deeply troubled many in the town. There were others who supported the plant who were as equally troubled by the lack of good jobs in McCloud. (Nestle promised to brings jobs into the community in exchange for access to McCloud’s pristine, glacial-fed spring water).

Now comes word that Nestle has decided to radically scale back the scope of the project by 60 percent.

The company says that it is doing so for business reasons. Since Nestle began to explore the project in McCloud five years ago, a company spokesperson says, our “business needs have changed. Over that time, the company has built another plant in Denver and expanded supplies and capacity at other western sites. In addition, the cost of transportation and fuel has risen over the same period of time. These factors combined mean it no longer makes economic sense for the company to build a facility the size they originally proposed in McCloud.”

But viewed another way, this is also cautionary tale for any company. Time was when multinationals could arrive in economically depressed communities and pretty much have their way. But in the age of hyper connectedness, residents in McCloud were able to turn their issue into an international sensation. Now Nestle has capitulated. The management lesson: no company can afford to go forward with projects like these without engaging ALL stakeholders, not just supporters. Yes, this is David versus Goliath. But the David’s now have megaphones.