In the not so distant 2040s the world is heading towards a devastating energy crisis, climate change is slowly beginning to take its toll, and unemployment is on the rise globally. But one corporation has a scheme to partially fix some of these problems. The HAL (Hydrogen, Argon, Lithium) Corporation's scheme is this:

Building large nuclear and hydroelectric power stations and then employing the construction crews to build corporate towns around these stations. Now here's the fun part: HAL plans to keep the construction workers on their payroll and would then employ them as maintenance workers, electricians, plumbers, etc within the power station and the corporate town.

Now the maintenance workers and the workers at the power stations would be recruited from the same pool: the unemployed or disenfranchised (ex: ex-convicts). In return for building the corporate towns they would be offered cheap (as in affordable) housing within the corporate town and other benefits such as a monthly allowance for food, utilities paid for by HAL, and a health care plan provided for by HAL. Due to the nature of corporate towns HAL employees began being called "corporate citizens"

Is this scheme economically feasible or worth the effort or would HAL be buried in debt?

Note:

  • Housing includes family or legal partners
  • The idea of the corporate town is to increase loyalty and productivity within the company
  • The company recruits from disenfranchised or unemployed person's in the hopes that they will work hard and be dedicated too the company.
  • Comments are not for extended discussion; this conversation has been moved to chat. – James Dec 6 at 5:42
  • This question is way too broad. Of course, company towns are nothing new; many poor people have been downlifted into abject poverty in company towns. Please edit your question to focus on one specific topic or issue. – elemtilas Dec 10 at 5:48

Corporate towns have existed in the U.S. (and other nations) before. There is little in common with what you've described. You've described a utopia. There's no such thing. HAL corp would be bankrupt so fast an actual clap of thunder might be heard from the resulting vacuum.

In the U.S. corporate towns were a way of addicting/enslaving (that's a really harsh way to describe it...) the employees and their dependants. They didn't give stipends to the employees, they required the employees to shop at the company stores, ensuring the money never actually left corporate control. In fact, the company benefited by what of necessity is an increasing debt to the company on the part of the employee. Basically, the system was set up to guarantee the employees can never leave their employment. The East Coast (especially Pennsylvania) coal towns, 1920-1950, are probably the best example of this.

In the old U.S.S.R. (and likely still today) "corporate towns" were run by the government, especially when it involved research. Those towns were little more than prisons with incredibly strict rules to ensure the government never lost control of what valuable resource the town was set up to support. Look up closed cities for examples.

Therefore, no, I do not believe HAL Corp's scheme would be profitable. Indeed, it would be a loss and you don't describe what value those cities might have to compensate the corporation for that loss.

  • 1
    For an example of a Corporate Town which didn't "trap" the workers like that, you could always look at Bournville in Birmingham, England, which was created by George Cadbury for his workers (construction started in 1893) - however, a key point here is that it was deliberately administered by the independent Bournville Village Trust (created in 1900) and not Cadbury or his company. – Chronocidal Dec 5 at 10:39
  • I don't think it's a utopia by any means. Most of the benefits HAL offers are similar to the U.S. military. – Celestial Dragon Emperor Dec 5 at 12:50
  • @CelestialDragonEmperor, if you asked anyone from the towns I described whether or not the town you describe in your question is a utopia, they'd all say "yes." If you disagree with this, then you have not adequately described your towns and your question is unclear. – JBH Dec 5 at 15:30
  • 1
    "a way of addicting/enslaving (that's a really harsh way to describe it...) the employees" No it isn't - that's exactly correct. See Tennessee Ernie Ford's "Sixteen Tons" – VBartilucci Dec 6 at 19:43

The biggest benefit of this scheme is your choice of workers. Ex-convicts aren't particularly popular employees, that means, as JBH suggests is required, they would struggle to find work elsewhere. You could tie them to an excessive "training costs" debt to the company if you like, a loan with good terms but that falls due in full immediately on leaving the company.

The biggest problem is that the skills you're talking about are some of the most valuable technical skills available. Plumbers and electricians are incredibly well paid in the grand scheme of things, and in spite of everything else are well able to find more beneficial employment elsewhere.

If you take them out into the middle of nowhere and give them cheap housing, then the housing costs are minimal. Power and water are secondary given that you're running a power station. Company healthcare rather than a healthcare plan if you're big enough. The only real cost is shipping food in, let them shop in the company store.

Since you're suffering an energy crisis, you may be able to bring in the money to support your little utopia, but you're possibly better off adding a twist of dystopia to make it harder for your expensively trained staff to move on.

  • I'm so confused where people got the idea of a utopia, XD. 1+ to you though you at least realized that they run the power station and basic utilities already. – Celestial Dragon Emperor Dec 5 at 12:53
  • I will defiantly add that loan bit too HAL. It's only slightly dystopian and keeps people tied too the company. – Celestial Dragon Emperor Dec 5 at 13:08
  • "the middle of nowhere" has "cheap housing" because there's not much (including food, water and all the other stuff needed by urban societies) there. – RonJohn Dec 5 at 13:23
  • @RonJohn, in my experience it's just jobs. A house in London will be pushing £1m, a similar house in Grimsby will be £120k, I've seen them down at £40k. – Separatrix Dec 5 at 13:40
  • 1
    @CelestialDragonEmperor, we're picking up Utopian vibes from the amount of extras you're giving. Just housing and maybe a school would be the limit, healthcare, utilities, and food is really pushing the boat out for your people. – Separatrix Dec 5 at 13:42

A common town that does what you describe is a mining town.

For instance, in remote areas, mining must go where the minerals are. The unfortunate thing about that is there normally is no town close to there, and so infrastructure and housing must be purpose built to house workers.

A typical example of this is the Pilbara in Western Australia. Being completely remote, it makes less economic sense to fly in fly out daily (called FIFO), and more sense to FIFO monthly, as the town is too far from towns even via plane. Therefore people 'live' in camps such as these:

enter image description here

Believe it or not though, the greatest cost is not the town, nor the houses, but the people. To sustain an 'economy' in the town there you need to pump enormous amounts of money into these towns due to a number of reasons:

  • FIFO work is arduous, and if permanently there you will always be paying a premium for people to be away from family/friends/support structures
  • Resources must still be imported, rarely can a town exist as a commune by itself nowadays, at some point you would need material and resource inputs, and these would normally be expensive to deliver
  • It's not just the houses, but schools, cafes, gyms, entertainment you need to provide. No matter their origin, they are still people with wants and needs.
  • What if they want to start a family? What if they do a crime? What if they fall in love, or divorce? There are many issues with isolated communities.
  • Construction phase is different from operating phase. Normally camps are built to build a mine, once built it is operated with minimum staff, and the camp is normally disassembled and moved to a new location.

For the above reasons there is a strong drive for automation to reduce People costs. Trains, trucks and machines are now mainly automated. This saves on requiring the existence of these towns for operations and allows profitability to not be affected by them.

In your case, it may work till the facility is constructed, after that better to disband it after investing in automation.

There are quite a few problems with this scheme, but it still sounds more like a charity project to rehabilitate the ex-cons

  • Maintenance requires a lot fewer workers than construction. Once people settle down into permanent housing, you will need a bit more of service sector (restaurants, malls, etc.), but these jobs can easily be filled with spouses of plant workers.

    • You could keep only the best workers, and kick out the rest. After all, the experience of working on your project is already a huge boost their resume.
  • Ex-convicts are not the best employees. They have issues with impulse control, and respect for authority. You can hire social workers (or supervisors/guards) to help them stay on the straight and narrow, but it will cost extra money.

  • High unemployment means you can attract decent workers without providing housing or other benefits. B/c workers are desperate for any job that they can get.

  • Operating and maintaining a modern power plant requires quite a bit of education and training. Providing it to your a typical low-skill unemployed worker will again cost you extra.

As a result, from purely business prospective, your operation will not the able to compete against typical for-profit power plants, which hire workers who already have education and experience, and do not provide extra benefits. They will have lower costs than you, so they can afford to charge lower price. You can try to promote the idea that your energy is "fair trade", operated for benefit of the workers, etc. But those ideas do not matter much even now, and will matter less in an economic crisis.

You can position your scheme as a charity/rehabilitation project to help ex-cons and other unfortunates get started on the career path, and use its non-profit status to get tax breaks (or even subsidies) from the government, to gain advantage over for-profit power-plants.

You can also (secretly) use some of your ex-cons to sabotage rival power plants.

This probably is not going to work

Location - Hydro-electric: Hydro-electric generators must be built in a large water catchment area that no one will get too upset about when it is flooded as a result of the dam being built and there must be a long steep drop at the end of the dam to allow the kinetic energy of the falling water to be turned into electrical energy. In practice, this means that hydro-electric dams are in areas with really steep hills/mountains, where the land to be flooded was not considered especially valuable as farmland or for any other purpose. The gradients of the surrounding terrain often make railways impractical and a river leading into a dam with the only outflow being through near vertical metal pipes leading into turbine blades is not navigable. This means that transport in and out of such a location will typically be by steep roads and a small airstrip only - this does not make this a good location for transporting goods to and from.

Security - nuclear plants: Nuclear plants have strict security clearance for employees because governments are justifiably paranoid about misuse and security breaches in this area. HAL Corporation would go bankrupt just trying to bribe the regulators to allow the construction and/or maintenance of a nuclear plant using a workforce of ex-cons.

Town Construction: The town needs to be built before the plant starts being built. People will be living here for a long time - whether nuclear or hydro, the construction of the power plant will take years and possibly a decade or more - as an example the Snowy Mountains Scheme took 25 years to build. Therefore, all of the accommodation and support services need to be put in place first, then the plant can be built.

Ex-convict workforce: This is going to be a disaster. One of the reasons that parole conditions often prohibit certain associations is to prevent parolees from being drawn back into criminal activities. In this situation the ex-convicts will be primarily associating with a population made up entirely of ex-convicts. If HAL Corp's security forces are really on the ball then the effects may be limited to vastly more pilferage and black market activity than would normally occur on a really big work site. It is more likely that the entire town would become gang dominated and ungovernable. This is a fairly foreseeable outcome, so any ex-convicts who accepted a position with HAL Corp would either be completely unemployable elsewhere or aiming to make a name for themselves in the town's underworld. As a result the workforce would overall be corrupt and/or incompetent, to an extent that any low wages being offered would be more than offset by increased costs due to criminal activity and low productivity.

Plant is built - what now? Building a power plant requires lots of people. Running it requires very few people. How will HAL Corp employ the 95%+ of construction workers who are not required once construction is complete? There are two problems here. The first is that the location for a hydro-electric station is not ideal for doing much of anything else, as described above. (Nuclear plants may be located slightly better, but the security concerns rule them out of consideration.)

  • Any surrounding terrain that is usable for farming probably is being used for that already, and modern farming only requires a small workforce regardless.
  • The location has poor bulk transport access, making it a bad choice for manufacturing (hard to get raw materials in or finished goods out).
  • Service industries are limited - the only people who can be directly served are the ones that are in the town. By the 2040s many of the "remote" service industries will no longer require many human employees (eg call centres). Which brings up the bigger problem...

Re-skilling the entire construction workforce! I am not an expert on change management, but I have some recent training and experience. It takes careful change management to avoid resistance when introducing any change to a workplace, however small - many people are very change resistant. Without hand waving mind control, there is no way that HAL corporation can simply say at the end of the construction "Tools down - Team A will now go back to school and learn to be programmers, Team B will learn to be account managers, Team C..." Even with a long lead-in period to get people accustomed to the idea, many people are not going to be happy. If the financial penalty traps HAL Corp has built into contracts are such that the workers do not have a legal choice then the ex-convicts are likely to individually or collectively take illegal action to escape (eg fake disability), take revenge or "go slow" to reduce productivity to nothing.

In short - there are good reasons that most former "hydro towns" are ghost towns once the dam and power plant are built. HAL Corp also needs almost magic-level mind control in order to get the social aspects of this plan to work.

  • If you've built a nuclear power plant in a location, it'll have good bulk transport access by the time you've finished. The first thing you'll have to do is make sure the access to the location is good enough for heavy haulage for construction. – Separatrix Dec 6 at 14:43

The simple answer is connected to the profitability of the product. If the company is wildly successful, far past the expenses of running the town, it'll prosper. The more likely scenario is that they'll be barely subsisting, and will attempt to cut expenses but removing services for the populace.

HAL is basically destined to fail.

The first issue is your choice of employees. If, for any reason, HAL starts to look successful, someone will copy the business model, but hire more traditionally valuable employees, yielding much better results. The only way this wont happen is if your disenfranchised-only approach yields some advantage which is sufficient to outweigh any disadvantages that might come from using a recruiting model that has generally not been found to be the best plan. We'll have to revisit this.

The second issue is construction. Your construction costs are going to be massive compared to normal construction costs. Your target construction workers have 0 work experience in the construction field. You are going to have to train them all, on the job. Now for most workers, this training comes with some price. You may pay an entry level worker less now, and they accept this because they know they are learning valuable information that will buy them entry into the higher paying jobs in the field. However, your construction workers are going to apply this skill once. They will not gain benefits from any apprenticeship that may happen.

Thus your construction workers will have to be paid with more perks than the average worker, and do sub-standard work due to a lack of experience and a lack of resolve. Any company which uses a normal business model will beat HAL out.

Now you hand them a new skill. This skill does indeed have long term applications, but do they want it? Does Convict_94293 happen to want to learn how to be a plumber? Does he have any drive at all to be a plumber? Or are you just filling a need for him? If you're just filling the need, then you can expect him to leave the instant you finish filling it, with no feeling of obligation on their part. Convicts are not known for loyalty into any system they don't see the benefit of.

So you have a few options. You can prevent them from leaving, which is covered in other answers. This is basically a bait and switch. Entice the criminals in, and then don't let them leave.

Another approach is to pay them enough to stay, in dollars, housing, etc. This is your suggestion. However, by definition this will have to be better pay than they can get elsewhere, so you will have to be overpaying all of your employees. If you had just used the normal employment process, it'd be easier!

The final approach is probably the only way this could work. Instill in them a desire to be part of a community. This is not easy. In fact, it is the opinion of many that the best systems we have in place for rehabilitating criminals don't do this successfully. You would have to do better.

So perhaps the answer is not a business model, but a person. Perhaps the CEO of HAL is an enigmatic fellow, bordering on cult leader, whose real goal is to raise up an entire cast of people. This particular individual would have that unstable charismatic something which causes people to not only follow, but want to follow. The purpose of HAL is not to build power plants, but to build a civilization built around this leader's principles.

Perhaps the leader is a woman. In this current age, we see very few CEOs with this sort of personal leadership. We also see very few female CEOs. In your story, perhaps these are not just correlated; they are causal. The addition of a particularly charismatic woman who could tie everyone together would fit the story, and it fits some of the the currently popular sterotypes of female leadership just enough that you could skirt along them while simultaneously defying stereotypes enough to make people think. The shift in leadership gender might be just enough to get readers to suspend disbelief long enough to give you time to write out what you think such a leader would need to be like.

It could be a fun story to try to craft. But no matter what, your leader is going to have to bring something very special to the table to balance out the massive downsides of this approach.

  • Thanks man for this answer! Luckily I didn't make the CEO yet so female CEO it is. – Celestial Dragon Emperor Dec 7 at 0:22

Your Answer

By clicking "Post Your Answer", you acknowledge that you have read our updated terms of service, privacy policy and cookie policy, and that your continued use of the website is subject to these policies.

Not the answer you're looking for? Browse other questions tagged or ask your own question.