The Last Company Town

By Dokoupil, Tony | Newsweek, February 21, 2011 | Go to article overview

The Last Company Town


Dokoupil, Tony, Newsweek


Byline: Tony Dokoupil

There was a time when employers provided everything: houses, hospitals, bars. Such a place still exists--but not for long. Welcome to Scotia, Calif.

When the Pacific Lumber Co. started logging in 1863, there were few towns in the dense forests north of San Francisco. So the company built its own. Called Scotia for the hard-handed Nova Scotians who moved there, it became known as "lumberjack heaven"--a complete community with a school, church, post office, family homes, and a power plant that provided electric light years before the White House had it. During the holidays, the company played Saint Nick, stringing lights and giving presents: toys for kids, cash for teens, and a free turkey for every household in town. "It sounds hokey," says Stephanie Jeffers, 59, who settled in Scotia in 1981 and raised a family in the town. "But it was so, so nice."

These days Jeffers isn't the only one using the past tense to talk about Scotia, the last wholly owned company town in America. Scotia is about to change forever. Marathon Asset Management, a Manhattan-based hedge fund that reluctantly inherited this industrial Eden in a 2008 bankruptcy case, is planning to put the entire town on the market this year, a move worth at least $50 million in real estate (the hotel alone is on sale for $2.5 million) and millions more in saved annual expenses. The idea is to make Scotia just like everywhere else--a place where residents have the chance to own their own homes, elect their own officials, and generally control their own destiny. In other words, the American Dream, as two Marathon executives stressed recently over $28 eggs at the Royalton, a glamorous midtown Manhattan hotel.

But despite the happy spin, longtime residents say that Scotia--with its manicured streets and Truman Show feel--already amounts to the American Dream. What Marathon intends sounds "more like a nightmare," says Jeffers, sipping coffee in her company-owned kitchen, with her company-funded fridge covered with tourist magnets from a company cruise. "I've lived here so long, I don't know where I'd go."

It's easy to scoff at such a hyper-dependent existence, and many have. Company towns once dotted the country, meeting a need for laborers in the remote locations where timber, ore, and other natural resources were found. At their peak in the 1930s, they housed about 2 million Americans, including as many as one in five adults in places like South Carolina. But most were shuttered as a result of the post-World War II increase in affordable housing and suburban sprawl, and the name "company town" became a pejorative, immortalized most famously in the country song about a man soul-deep in debt to the company store.

Yet in this age of financial insecurity, far-flung family ties, and slackening safety nets, the company-town concept has renewed appeal. Perhaps it's no surprise, then, that Scotia's model--or at least its protective embrace--is showing signs of revival. In Redmond, Wash., Microsoft recently linked together what it calls "the world's largest corporate campus"--side-by-side parcels that include a new "town square" with shops to fulfill nearly every need (but no beer before 3 p.m.). Last week Facebook bought a 79-acre space in Menlo Park, Calif., where it similarly hopes to create a "small-community feel," according to an official statement. These campus models were pioneered by the SAS Institute, a massive Cary, N.C.-based software firm that's long been at the forefront of corporate paternalism, topping Fortune's latest list of "Best Companies to Work For" with offerings that include free medical care by an on-site staff of doctors and nurses.

Google is poised to offer the most paternalistic touch of all. The search giant's Mountain View, Calif., campus already offers a slew of Scotia-esque perks. Employees enjoy the services of a dry cleaner, hairstylist, massage therapist, and chefs who whip up three meals a day.

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