A Town Torn Apart by Nestlé

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Alberto Mena

Dragseth was highly impressed with a Nestlé operation near Palm Springs Sian Kennedy

Palais is one of 11 people at Nestlé Waters who find new sources for bottled water Sian Kennedy

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If this plant gets built, it's going to be bad PR for Nestlé."

Nestlé employs 11 water hunters around the U.S. Besides monitoring water supplies, they search for new sources, typically in remote, pristine places like McCloud. A big part of their job is building relationships with locals, few of whom have dealt with a multinational. Dave Palais, 44, is one of the 11. Sturdy and upbeat, he's perpetually sunburned, a testament to the long weekend walks he takes with his wife and dogs. Palais holds a PhD in geology from Arizona State University and considers himself knowledgeable about watersheds.

Palais joined Nestlé Waters in 1996, about the time the bottled water business was starting to boom. He was managing the company's water supplies in Southern California near Palm Springs when drought hit the region. Going into 2003, Palais watched as the spring flows diminished. It was a wake-up call. "We were recognizing the vulnerability of our supplies in Southern California to things like drought [and] earthquakes," he recalls. "We needed to be in a position where we had an insurance policy, a backup source." In 2003, Palais' bosses in Greenwich, Conn., ordered him to set up a new bottling plant in McCloud. He sold his place in Corona, Calif., and moved to Redding, 70 miles outside town. Palais' gray Chevy Silverado pickup became a common sight in McCloud as the water hunter went about educating himself on local politics and signing up allies.

On the face of it, McCloud seemed like the perfect spot to build a bottled water plant. For years, the five elected board members of the community services district had morosely contemplated the town's rickety infrastructure, 14.5% unemployment, and $100,000-plus deficit. McCloud sits in the southeastern corner of Siskiyou County, a ranching and agricultural area where local budgets are constantly stretched. In McCloud, things were so bleak that former mill workers who once took care of their families in middle-class comfort were now mowing lawns and showing up in the checkout line with food stamps.

Many old-timers longed for the glory days of "Mother McCloud," as the McCloud River Lumber Co. was known. They remember the logging behemoth as a ferociously paternalistic employer that supplied workers with freshly painted houses, groceries, a doctor, firewood, and a sumptuous Christmas party with a present for every child. When a faucet dripped or a light switch broke, employees called the Mother McCloud repairman. Get fired, though, and a truck rolled up to haul you and your family's belongings away.

The lumber industry was suffering, but McCloud resident Doris Dragseth knew the town possessed another valuable commodity: glacier-fed springs that gush crystal-clear, 41-degree water straight to the tap. So delicious is the water that Dragseth and her husband, Bill, still fill up old milk jugs and take a few weeks' supply to their son in nearby Orland. Some McCloud residents half-jokingly suggest they could market the town to Botox fanatics as a fountain of youth. The water, according to local lore, accounts for many McCloudites' freakishly young appearance.

TOO BROKE FOR A LAWYER

Throughout the late '90s, McCloud's district board members tried to lure a bottler to McCloud. Dragseth, who ran an auto parts store with her husband before retiring, remembers thinking: "We need the jobs, we need the money." Various schemes came and went. Letters of intent were signed. But the deals went nowhere. McCloud even considered going into the bottled water business for itself. But trying to battle for shelf space was out of its league.

So from the moment Dave Palais arrived in town, the district board was susceptible to his ministrations. The mill, under new owners, was closing. What's more, Dragseth, by then a board member, and her colleagues considered Nestlé to be a classy company that might restore some of Mother McCloud's largesse. To cement the relationship, Palais invited Dragseth, another board member, and the town manager to two plants near Palm Springs.