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Costco protest in Seattle

Bellevue annual shareholders meeting heats up after the mention of a Costco opening up in Curnavaca, Mexico
Costco's Cuernavaca site sparks protest

By Jake Batsell
Seattle Times business reporter

For most of yesterday's annual shareholders meeting in Bellevue, Costco Wholesale executives recapped a year that saw record sales and the addition of 29 stores around the world.

But at the end of the meeting, Costco's global growth was portrayed in a less favorable light. Several shareholders and activists protesting a Costco warehouse club under construction in Cuernavaca, Mexico, dominated the question-and-answer session, prompting executives to end the meeting.

While high-visibility retailers such as Starbucks, Nike and Wal-Mart routinely draw protests at their annual meetings, the rowdy scene that unfolded yesterday in front of hundreds of shareholders at the Meydenbauer Center was a first for Costco. After the meeting, Chief Executive Jim Sinegal said he'd never seen anything like it.

As Sinegal and Chairman Jeff Brotman fielded questions from shareholders, a small group of protesters, including a pair of Cuernavaca residents, carried in a green banner that said, "Costco Don't destroy Cuernavaca."

As the protesters denounced Costco's plans for a store set to open in August, a number of shareholders told them to "sit down" and "go home."

Seattle resident Mary Jo Stansbury, who said she is a longtime Costco shareholder and a friend of Brotman's, brought up the issue. Stansbury said Brotman hadn't responded to her calls raising concerns about Costco's warehouse in Cuernavaca, a popular tourist center about 50 miles south of Mexico City.

"For some reason, you don't see the chaos and the pain that you're causing in another culture," Stansbury said.

JIMI LOTT / THE SEATTLE TIMES
Marcia Fischer, a Costco shareholder, found a comfortable spot to listen to the meeting in a standing-room only crowd at Costco's annual shareholder meeting in Bellevue.
Brotman said the company investigated the issue extensively and has become convinced that no response would change opponents' views.

The warehouse in Cuernavaca is going up on the site of a former hotel, the Casino de la Selva, as part of a retail complex that also will include a cultural center and a supermarket run by Costco's Mexican affiliate, Comercial Mexicana. Activists in Mexico have campaigned against the project for months, claiming that the company destroyed murals and hundreds of trees while demolishing the hotel and saying the shopping center will hurt local retailers.

In August, 28 protesters were arrested after blocking roads around the Cuernavaca site during a demonstration that was broken up by riot police. Opponents have asked the city to drop the retail project in favor of a park.

Sinegal said Costco was invited by government officials to bid on the Casino de la Selva site, which he said had been abandoned for years. The company has said it is paying to restore some of the murals, which will be displayed in the $2.5 million cultural center and museum to open this fall.

In addition to the restored murals, the museum will be home to the Gelman Collection of Modern Mexican Art, which includes works by Frida Kahlo and Diego Rivera and recently completed a run at the Seattle Art Museum.

"We think that we have not only obeyed the law ... we have been sensitive to the culture of Mexico," Sinegal said.

Jeff Brotman
Jaime Gonzalez, senior vice president of Costco de Mexico, said the company will replant the majority of the trees removed for construction and that it has had the proper permits for every phase of the project. Sinegal said the company has donated 30,000 more trees to Cuernavaca.

In other business, shareholders re-elected Brotman, Sinegal and Chief Financial Officer Richard Galanti as directors and approved KPMG as the auditing firm.

The Issaquah-based retailer which now has 412 stores around the world, including 21 in Mexico tallied $38 billion in sales and $700 million in profits in fiscal 2002, which ended in September.

Jim Sinegal
Sinegal said the company performed better than its two main competitors, Sam's Club and BJ's, over the holidays but is seeing higher bank fees and costs for health benefits and worker's compensation and faces higher expenses for entering new markets.

The company will start recording employee stock options as expenses this year, Sinegal said, a move shareholders applauded.

Jake Batsell: 206-464-2718 or  jbatsell@seattletimes.com

Copyright 2003 The Seattle Times Company

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Dont destroy Cuernavaca 01.Feb.2003 08:09

Per

Don't destroy Cuernavaca by giving its residents much needed employment. Please keep them in their natural condition of unemployed and starving. Otherwise Cuernavaca will be destroyed.

Yes 01.Feb.2003 14:13

Juan

As a Mexican, I'm not sure why the lefties here want to keep our relatives in Mexico unemployed. Don't they realize we have to eat too? For them, this is about winning some pissing match with some company but for our people this is about survival. They just don't get it.

Juan, this is always my concern 01.Feb.2003 15:44

feed the world

i have had many a discussion with others re cheap labor and the issue of people abroad needing jobs to feed their families. i also loathe supporting sweat shop labor. what is the answer?

What's the problem? 01.Feb.2003 16:08

Bush Admirer

Costco offers customers great value for the money. What's the problem?

What's the problem? 01.Feb.2003 16:08

Bush Admirer

Costco offers customers great value for the money. What's the problem?

the problem is... 01.Feb.2003 23:41

af

that multinational corporations destroy communities, thus our ability to care of ourselves. Just look around you. Everybody is getting fatter and stupider, the schools and all our common wealth are going to total hell, every tree is being cut, water supplies are being PRIVATIZED, for God's sake, and our kids are on Prozac and getting diabetes, as we drive around in our muscle cars and watch really big TVs. The world is dying, we're choking the wild places with pavement and Costcos, and we're all depressed and on handfuls of drugs we don't have the money to pay for. We're getting squeezed by the corporations. They have to colonize every single place on the planet to continue raking in the profits. Who really profits? Who pays? And where is our food going to come from when the MAN cuts off the supply lines? You got a garden? know anybody who does? Wake up and think about why there's reallly cheap stuff at Costco. Destroying Cuernavaca so that people have a few bucks to enslave them to the corporations may not be a sustainable future.