Migrant workers with a stake put down roots
Wis. nursery thrives on shared ownership

By Eric Ferkenhoff, Globe Correspondent  |  October 12, 2005

WATERLOO, Wis. -- With the sun beating down, sweat soaked J. J. Hernandez's
T-shirt. He had been crouched for hours in the fields of McKay Nursery, plucking
spent buds from new plants.

Hernandez, 49, who said in broken English that ''no one else would do" that sort
of back-bending work, was doing much more than simply tending to McKay's vast
fields. In a way, he was tending to his own investment.

Of McKay's 225 employees, 140 are part owners. And of those, about 90, including
Hernandez, are migrant workers from small towns dotting Mexico and southern
Texas. Many workers are from multigenerational families, having toiled at McKay
alongside fathers, brothers, and cousins for years.

Hernandez, a legal resident from Weslaco, Texas, just north of the Rio Grande,
has put in 31 years at McKay. ''The company -- they take care of us," he said.

The employee-owned nursery, a remarkable departure for an industry that is
seasonal and filled with workers who hop from state to state looking for a wage,
has drawn interest from the Harvard Business School, and praise from immigration
specialists.

''McKay Nursery is a really heartening story of what can go right with
capitalism and people thinking about social enterprise and welfare at the same
time as profits," said Laura Pochop, who coauthored a study for Harvard about
the company.

The study, published in 1996, was done about 12 years after McKay's aging owner,
with no heirs, decided against selling out to a larger corporation. All
prospective buyers, Pochop said, wanted to ditch Waterloo, a deal-breaker for
owner Karl Junginger, to go to Milwaukee, Minneapolis, even Chicago.

Just as important, according to Pochop and Tim Jonas, the company's secretary
treasurer, the suitors had made no promises about the future of the company's
employees, more than half of whom were migrants up from small Texas border
towns.

So in 1984, rather than sell out, the company sold itself to its employees,
including the migrants, through an Employee Stock Ownership Program, or ESOP. So
common today in many industries, ESOPs were new at the time, Pochop said.

''It's a nursery, not some high-tech company," she said. ''So who would have
thought of this company in little Waterloo putting in place such a progressive
succession plan? It was very rare then, and still is, especially for smaller
companies."

McKay, in a town of 3,300 about 26 miles northeast of Madison, is a big business
by the standards of its industry. With roughly $20 million in annual revenues,
McKay sells everything from shade and fruit trees to crab trees and all types of
perennials, Jonas said.

The nursery, stretching over about 1,800 acres, has an annual growth rate of
about 7 percent. It expects to buy another 200 acres every three to five years,
Jonas said. The company sells both wholesale and retail, and its products sit on
front lawns or porches everywhere from Waterloo to places in Alaska. Most of
what the nursery grows does not take well to the Southern climate.

Pictures on the walls of the company's offices show the growth, from what was
basically a barn and small tree grove around the turn of the 20th century, into
a massive operation that now has shiny new headquarters.

McKay has been hiring migrant workers since the 1950s. Every February, company
officials head south to Texas border towns to recruit. The demand to work at
McKay is usually relatively high, so turnover is generally low. Recruiters need
to hire 10 new workers in a given year.

Jonas says all of McKay's workers are in the United States legally. About 80
percent are on work visas; the rest are either permanent residents or citizens.

''Sometimes we get walk-ins," Jonas said. ''But mostly, we recruit them. We know
most of them are related or friends, so we know what kind of workers they are.

''And since they recommend each other," he added, ''they work even harder
because it's their reputation on the line as well. Karl Junginger just knew that
we had to have them and we had to keep them."

Most of the workers, who live in bunkers or old farmhouses, put in their eight
months in Waterloo, then head back to their homes in Texas or Mexico. Starting
pay is around $15,000, but over the years pay grows and old-timers easily earn
more than $20,000 between the end of March and the beginning of November.

Those pay levels are relatively high for migrant workers. A 1997 Arizona State
University study stated: ''Migrant farm workers may be the most economically
challenged working group in the United States. Migrants may earn as little as
$5,000 in a year."

The level of ownership varies according to years of service. But full-time
workers also take part in a $2.5 million trust set up by Junginger upon his
death in 1991. About 120 employees are expected to split $100,000 in
profit-sharing this year.

In fact, more and more are becoming year-round workers and starting to call
Waterloo, or nearby towns, their home. One is Bernardo Garza, 56, who has been
working at McKay since 1969.

''I came to this country when I was 12 years old, and I didn't want my family to
be like my dad's family," said Garza, who is now a supervisor. ''We used to go
all over the place. . . . But I got married. I had three children, and I didn't
want to go be going back and forth in the states and back home and have no
security."

That more of McKay's employees are planting roots in Waterloo or nearby comes as
little surprise to Audrey Singer, who specializes in immigration as a fellow at
the Brookings Institution, the research organization in Washington.

Tightened border control and other factors over the past 10 years have kept many
migrant workers settled in one spot.

''Enforcement levels are up across the border, so it's not as easy to get back
and forth," Singer said.

''And there are studies showing this buildup means more and more migrant workers
are staying put in the United States," she added.

Besides McKay, there are only a few other examples of migrant workers owning
companies. In California, former workers who used to toil in vineyards have
taken over wine-making operations, and have even put out their own labels.

It has been such a rarity to have migrants taking an ownership stake in
companies, in fact, that both Singer and Barbara Hines, an immigration
specialist at the University of Texas at Austin, doubt its effect on immigration
dynamics.

It is estimated that 5 million to 10 million undocumented immigrants are living
in the United States. This has generated much debate but, according to some
scholars, only accelerated when the United States canceled a work program in the
early 1960s that had brought millions into the country legally after World War
II to make up for a workforce shortage.

''Immigrants don't come to the United States because they think they're going to
become the owner of a company," Hines said. ''They come because they want
work. . . . I think what you're seeing is a very rare case."

Pochop added: ''The founders of this company also made a business decision. It
was a sense they were going to get better employees, longer-term employees with
less turnover if they treated people with generosity and dignity. . . .They did
well and they did good."