Kochland: The Secret History of Koch Industries and Corporate Power in America

by Christopher Leonard

Overview

NEW YORK TIMES BESTSELLER * NEW YORK TIMES NOTABLE BOOK OF 2019 * WINNER OF THE J ANTHONY LUKAS WORK-IN-PROGRESS AWARD * FINANCIAL TIMES’ BEST BOOKS OF 2019 * NPR FAVORITE BOOKS OF 2019 * FINALIST FOR THE FINACIAL TIMES/MCKINSEY BUSINESS BOOK OF 2019 * KIRKUS REVIEWS BEST BOOKS OF 2019 * SCHOOL LIBRARY JOURNAL BEST BOOKS OF 2019

“Superb…Among the best books ever written about an American corporation.” —Bryan Burrough, The New York Times Book Review

Just as Steve Coll told the story of globalization through ExxonMobil and Andrew Ross Sorkin told the story of Wall Street excess through Too Big to Fail, Christopher Leonard’s Kochland uses the extraordinary account of how one of the biggest private companies in the world grew to be that big to tell the story of modern corporate America.

The annual revenue of Koch Industries is bigger than that of Goldman Sachs, Facebook, and US Steel combined. Koch is everywhere: from the fertilizers that make our food to the chemicals that make our pipes to the synthetics that make our carpets and diapers to the Wall Street trading in all these commodities. But few people know much about Koch Industries and that’s because the billionaire Koch brothers have wanted it that way.

For five decades, CEO Charles Koch has kept Koch Industries quietly operating in deepest secrecy, with a view toward very, very long-term profits. He’s a genius businessman: patient with earnings, able to learn from his mistakes, determined that his employees develop a reverence for free-market ruthlessness, and a master disrupter. These strategies made him and his brother David together richer than Bill Gates.

But there’s another side to this story. If you want to understand how we killed the unions in this country, how we widened the income divide, stalled progress on climate change, and how our corporations bought the influence industry, all you have to do is read this book.

Seven years in the making, Kochland “is a dazzling feat of investigative reporting and epic narrative writing, a tour de force that takes the reader deep inside the rise of a vastly powerful family corporation that has come to influence American workers, markets, elections, and the very ideas debated in our public square. Leonard’s work is fair and meticulous, even as it reveals the Kochs as industrial Citizens Kane of our time” (Steve Coll, Pulitzer Prize–winning author of Private Empire).

Product Details

ISBN-13:	9781476775401
Publisher:	Simon & Schuster
Publication date:	08/13/2019
Sold by:	SIMON & SCHUSTER
Format:	eBook
Pages:	704
Sales rank:	231,055
File size:	3 MB

About the Author

Christopher Leonard is a business reporter whose work has appeared in The New York Times, The Wall Street Journal, Fortune, and Bloomberg Businessweek. He is the New York Times bestselling author of The Meat Racket and Kochland, which won the J. Anthony Lukas Work-in-Progress Award.

Table of Contents

Preface: The Fighter 1

Part 1 The Koch Method

Chapter 1 Under Surveillance 11

Chapter 2 The Age of Volatility Begins 34

Chapter 3 The War for Pine Bend 53

Chapter 4 The Age of Volatility Intensifies 80

Chapter 5 The War for Koch Industries 99

Chapter 6 Koch University 120

Chapter 7 The Enemies Circle 130

Chapter 8 The Secret Brotherhood of Process Owners 154

Chapter 9 Off the Rails 191

Chapter 10 The Failure 215

Part 2 The Black Box Economy

Chapter 11 Rise of the Texans 221

Chapter 12 Information Asymmetries 241

Chapter 13 Attack of the Killer Electrons! 266

Chapter 14 Trading the Real World 294

Chapter 15 Seizing Georgia-Pacific 307

Chapter 16 The Dawn of the Labor Management System 323

Chapter 17 The Crash 344

Part 3 Goliath

Chapter 18 Solidarity 367

Chapter 19 Warming 392

Chapter 20 Hotter 427

Chapter 21 The War for America's BTUs 462

Chapter 22 The Education of Chase Koch 486

Chapter 23 Make the IBU Great Again 513

Chapter 24 Burning 534

Chapter 25 Control 564

Acknowledgments 575

Appendix: Alphabetical Directory of Significant Characters in Kochland 581

Notes 593

Index 661

Editorial Reviews

★ 08/01/2019

Investigative business reporter Leonard (The Meat Racket) provides a far-reaching history from the late 1960s onward of the privately owned Koch Industries and its role in tearing away America's New Deal consensus. Depicting Charles Koch's control of the company as complete, Leonard says Koch, using a system called market-based management, has molded the company to mirror his libertarian philosophy. According to the author, after some acquisition missteps, brushes with government regulators, and a family schism, Koch Industries became successful by playing to its strengths of reacting to change quickly, taking a long-term view, and sourcing information from multiple channels. Leonard details the company's commodities trading, expansion efforts, and union busting. He shows how Koch's political power has intimidated elected officials, elected friendly ones, and influenced both tax and environmental policy to its advantage. VERDICT Based on six years of research and with a fast-paced writing style that interweaves multiple stories, this illuminating work on the exceedingly influential Koch and his company will be welcomed by all readers of business or politics. Leonard does for Koch what Andrew Sorkin's Too Big To Fail did for the 2008 financial crisis.—Lawrence Maxted, Gannon Univ. Lib., Erie, PA

Library Journal

Kochland is a corporate history, lucidly told. Telling this story as well as Kochland does is harder than it looks…Leonard doesn't have much by way of rich narrative material to work with. Memorable stories are usually buoyed by memorable characters, but with few exceptions the Koch employees who talked to Leonard have imbibed the company culture and sound remarkably alike…Even Charles Koch doesn't make much of an impression; he seems less charismatic…than methodical and deliberate—like the engineer he was trained to be…It's Leonard's depictions of Market-Based Management in action that are most illuminating here, and the light they give off is chilling…Charles Koch calls Market-Based Management "a way for business to create a harmony of interest with society." The question Kochland raises is whether this "harmony of interest" results in a place where anyone without a few billion to spare would actually want to live.

The New York Times - Jennifer Szalai

★ 06/17/2019

American capitalism at its most successful and domineering is at the center of this sweeping history of a much-vilified company. Business journalist Leonard (The Meat Racket) recounts the 50-year growth of Koch Industries, a privately held, infamously secretive conglomerate—with interests in oil refineries, pipelines, lumber, commodities trading, fertilizer, and greeting cards—under CEO Charles Koch, whose libertarian ideology and political donations make him a godfather of the Republican right. Leonard paints Koch as a brilliant businessman whose fanatically entrepreneurial company—employees fervidly embrace his “market-based management” philosophy—thrives on turning underperforming assets into moneymakers. He also probes a very seamy underbelly: an oil-theft scandal and illegal dumping of toxins (the company has since cleaned up its act, Leonard notes), a penchant for gaming government regulations while denouncing the regulatory state, and heavy-handed lobbying and political organizing to stymie climate change legislation. The company’s ruthlessness is spotlighted in his accounts of Koch’s sometimes violent battles with unions; Leonard profiles workers whose wages and security dwindled while computerized regimentation and staffing cuts made their jobs grueling and unsafe. Leonard’s superb investigations and even-handed, clear-eyed reportage stand out. Agent: Lauren Sharp, Aevitas Creative Management. (Aug.)

Publishers Weekly

Superb... Among the best books ever written about an American corporation... Not since Andrew Ross Sorkin’s landmark Too Big to Fail (2009) have I said this about a book, but Kochland warrants it: If you’re in business, this is something you need to read.”
— Bryan Burrough, The New York Times Book Review

“Kochland is a dazzling feat of investigative reporting and epic narrative writing, a tour de force that takes the reader deep inside the rise of a vastly powerful family corporation that has come to influence American workers, markets, elections, and the very ideas debated in our public square. Leonard’s work is fair and meticulous, even as it reveals the Kochs as industrial Citizens Kane of our time.”
— Steve Coll, Pulitzer Prize-winning author of Private Empire

“Leonard’s visionary, decade-spanning, and heart-rending investigation into the Koch Empire is indispensable not just for understanding the rise of corporate power in America, but for understanding America itself. Kochland will take its place alongside Chernow’s Titan and Coll’s Private Empire as one of the great accounts of American capitalism.”
— Jesse Eisinger, Pulitzer Prize winner and author of The Chickenshit Club

“A Robert Caro-like narrative of business and political power with a brilliant, ruthless, and fascinating monopolist at its center. Leonard devoted eight years to this gem of a book, seeking to understand the mysterious Charles Koch and the Goliath he has taken a half century to construct.”
— Ken Auletta, New York Times bestselling author of Googled

“Deeply and authoritatively reported... [Kochland] marshals a huge amount of information and uses it to help solve two enduring mysteries: how the Kochs got so rich, and how they used that fortune to buy off American action on climate change.”
— Jane Mayer, The New Yorker

“Impressive... A corporate history, lucidly told, about the enormous energy conglomerate that has inserted itself into nearly every aspect of daily life, raking in billions along the way.”
— The New York Times

“This is fast-paced business history. An episode about ammonia runoff at an oil refinery keeps you turning pages like a John Grisham thriller.”
— NPR.org

“With deep reporting and narrative flair, Leonard has rendered a revealing portrait of the Koch family as ruthless businessmen and savvy political operatives who quietly built an empire and defined the face of American capitalism and its hold on Washington over the last fifty years.”
— William Cohan, New York Times bestselling author of House of Cards

“Impressive... Kochland is the most definitive account yet of how one of America’s richest and most powerful families amassed its fortune.”
— The Washington Post

“If you want a crash course in the evolution of postmodern capitalism over the last five decades read Kochland.”
— New York Journal of Books

“An extraordinarily detailed, illuminating and, at times, terrifying account of the massive impact of a corporate industrial giant on American society... A tour de force of investigative journalism... [Kochland] makes a compelling case that, in contrast to the iconic ad for a carbonated beverage, things do not go better with Koch.”
— Pittsburgh Post-Gazette

"With balance and evenhandedness, Leonard traces the phenomenal rise of Koch Industries from an obscure Wichita oil company into a global behemoth."
— New York Times Book Review, Editor’s Choice

“A masterpiece of nonfiction writing... I can’t recommend this one highly enough... One of the most remarkable aspects of Kochland is Leonard's ability to convey arcane industry concepts simply enough for those of us with no background in the subject to grasp... Leonard not only helps his readers grasp the complex concepts but also makes his explanation entertaining.”
— BookBrowse

“At times the book reads like a thriller, with epic characters waging battles worthy of Game of Thrones."
— Lee Woodruff, New York Times bestselling co-author of In an Instant

“Deeply researched and deeply revealing... [Leonard] does a remarkable job of making a corporate history as compulsively readable as a thriller.”
— TruthDig.com

“Few studies on the Kochs, or any other US corporation, match Christopher Leonard’s Kochland.”
— International Policy Digest

“An indispensable guide to how Koch Industries developed and grew to a place where the profits from the companies it controls were converted into currency in the marketplace of ideas, and ultimately into political and policy decisions that impact every American... Kochland is an essential read for anyone curious about the economic and political underpinnings of a society in which the wealth is concentrated and public goods, from education to infrastructure, are left to erode.”
— Inside Higher Ed

“Sheds important fresh light on the issue at hand: Denial of the science of global warming.”
— Philadelphia Inquirer

"Should be in every business, economics, and political history collection....it holds wide-ranging implications for understanding the course of American and business history as a whole, weaving the Koch story into the broader fabric of U.S. affairs and social issues. The result is a powerful, winning examination that links Charles and David Koch to not just wealth acquisition or business evolution, but American economic and political developments as a whole."
— MIDWEST BOOK REVIEW

From the Publisher

Business reporter Christopher Leonard’s emphatic, decade-long investigative research has yielded an in-depth examination of the secretive privately held Wichita-based Koch Industries. Jacques Roy provides a masterful narration. Koch manufactures highly varied products and provides diverse services while focusing on its political interests. Some criticize the company for its work and associated pollution. The listener’s view of the Koch family, who have so diligently worked to maintain secrecy, will likely vary with their thoughts on capitalism and its merits, corporate ambition, and greed. Roy’s low-key professorial tone eases the listener through a highly complex market-based business portrait. It would be challenging to find a clearer discussion of how dark money may wield profound influence on American politics. W.A.G. © AudioFile 2020, Portland, Maine

MARCH 2020 - AudioFile

Business reporter Christopher Leonard’s emphatic, decade-long investigative research has yielded an in-depth examination of the secretive privately held Wichita-based Koch Industries. Jacques Roy provides a masterful narration. Koch manufactures highly varied products and provides diverse services while focusing on its political interests. Some criticize the company for its work and associated pollution. The listener’s view of the Koch family, who have so diligently worked to maintain secrecy, will likely vary with their thoughts on capitalism and its merits, corporate ambition, and greed. Roy’s low-key professorial tone eases the listener through a highly complex market-based business portrait. It would be challenging to find a clearer discussion of how dark money may wield profound influence on American politics. W.A.G. © AudioFile 2020, Portland, Maine

MARCH 2020 - AudioFile

★ 2019-05-27
A massively reported deep dive into the unparalleled corporate industrial giant Koch Industries.

In 1967, Charles Koch inherited from his recently deceased father the leadership of a medium-sized, nearly invisible industrial conglomerate based in Wichita, Kansas. Charles would build the conglomerate into an entity so sprawling, profitable, and politically powerful that it seems to defy all reason. "Koch's operations span the entire landscape of the American economy," writes business reporter Leonard (The Meat Racket: The Secret Takeover of America's Food Business, 2014). "The company's story is the story of America's energy system, of its blue-collar factory workers, of millionaire derivatives traders, corporate lobbyists, and private equity deal makers." Brother David shared ownership and participated in management of the company, which never sold stock to the public. Another brother challenged Charles by filing lawsuits but, over the decades, finally pulled back. The fourth brother never became involved in the operation of the business. As the author shows, the Koch brand does not appear on consumer products. Rather, the brothers became multibillionaires by controlling oil and gas production, paper products, derivatives trading in multiple commodities, engineering services, and much more. At first interested in influencing electoral politics to aid Koch Industries' profitability, Charles eventually expanded the corporate presence inside state legislatures and the U.S. Congress partly for ideological reasons. Labeling Charles' political philosophy is impossible, but there is definitely a kinship to libertarianism, with an emphasis on capitalist free markets untrammeled by government intervention. Charles opposed almost every policy of President Barack Obama and then battled various Donald Trump initiatives for entirely different reasons. Leonard is especially skilled at explicating the politics as well as at delineating how Koch Industries dominated industrial sectors, with natural gas extraction via fracking a timely recent example. This impressively researched and well-rendered book also serves as a biography of Charles Koch, with Leonard providing an evenhanded treatment of the tycoon. Leonard's work is on par with Steve Coll's Private Empire and even Ida Tarbell's enduring classic The History of the Standard Oil Company.

A landmark book.

Kirkus Reviews