Hershey’s: A lost opportunity in the global war for talent

A couple of summers ago, our daughter went off to college and my wife and I had a spare bedroom. One day, I got a request from a friend who is the chief technology officer for a nanotechnology company: Would I rent out the spare bedroom to an engineering student from Germany for about 8 weeks? It sounded like an adventure.

Phillip was 28 years old. Back home, he was finishing his masters degree in engineering. He had come to the US on a J-1 visa to learn about nanotechnology, hone his English and get a feel for America. At the time, he was sharing a 2-bedroom apartment with a college student. What he really wanted was to live with an American family and not just share space.

For eight weeks, he was part of the family. We watched American TV. He showed me funny German videos online. We talked endlessly about how Germany differed from America and vice versa. We even chowed down a traditional turkey dinner with all the trimmings …. In October. Phillip wanted to experience Thanksgiving before returning home.

Meanwhile, the nano firm put him to work as an engineer. My friend, who was himself a German engineer, saw this as an opportunity to reach out to talent across the globe. He put Phillip on a team developing a new machine to manufacture tiny, precision lenses. As it turns out, he had talent. At the end of the summer, he was offered a job if he wanted to return to the US when he finished his masters.

Phillip turned down the job– he received a better offer in Germany. But you could say we all developed lasting and meaningful relationships.

I was thinking about Phillip this morning when I read a story in the New York Times about the walkout at a Hershey distribution center in Pennsylvania by foreign students visiting the US on J-1 visas.

The facts as reported by the Times are these. The State Department issues J-1 visas each year to more than 100,000 international students and professionals who come to the US to study and work for 8 weeks. Depending on their country of origin and what it takes to get here, the students pay between $3,000 and $6,000 each.

Not everyone is an engineering student who gets to work at a nanotechnology company. Many end up working at summer resorts, on farms, or, in this case, a DC. They’re paid a wage – at the Hershey DC it was $8 an hour before deductions for fees and lodging. The students say they netted between $1 and $3.50 an hour after deductions.

The advantage to the employer: Cheap labor. According to the Times, an employer can save about 8% - or 64 cents an hour at the Hershey facility – in payroll tax deductions on top of the differential between what they pay the students and a market wage.

Like Phillip, there were some talented young adults in the bunch. Among those interviewed by the Times were majors in international relations from China, a 2nd year med student from Istanbul and a 3rd year med student from Nigeria.

So, how were they spending their summer vacation? At the Hershey facility in Palmyra, Pennsylvania, they were doing mind-numbing, back-aching work, packing and palletizing cartons, on the afternoon and night shifts – the shifts that are hardest to fill. According to the Times, when the students complained that this wasn’t their idea of learning about America, they were threatened to either get in line or face deportation. A week ago, about 400 of them walked off the job in an effort to shut down the line. So much for lasting and meaningful relationships.

You can read the whole story by clicking here.

Reading the story, I had two thoughts.

The first was that no one was willing to own the situation. U.S. companies doing business overseas, like Hershey, brag in their corporate responsibility reports that they inspect foreign plants and monitor their foreign partners to make sure that business is being done ethically and appropriately. Yet in this instance, everyone involved passed the buck:

Hershey said it doesn’t actually operate the plant; the plant is operated for Hershey by a third party logistics provider. Meanwhile, the 3PL, said it didn’t hire the workers; they came to the plant through a staffing agency, over which the 3PL has little control.

The second was that this is just short-term thinking and a lost opportunity in the global war for talent. Instead of viewing this as an opportunity to check out some of the best and brightest from overseas, someone – Hershey, a 3PL or a staffing agency – viewed the situation as a chance to save 64 cents an hour for eight weeks. If the numbers in the Times are accurate, that’s about $82,000. Hershey probably spends more producing its annual Corporate Responsibility report.

Do we really want to lose the opportunity to make a good impression on talented students to save 64 cents an hour?

Or, as a friend who read this post suggested: hey, why are the students whining? Americans have been working at these kinds of jobs for years?