For the first time in history, corporations are laying off Americans from well-paying jobs and replacing them with low-paid foreign workers. A recent study revealed that 14 million American jobs are now at risk of being outsourced overseas. Read more in this excerpt from Chapter 1 of Exporting America by world renowned journalist Lou Dobbs.
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WARNER BOOKS
ONE
Assault on Middle-Class Americans
The twentieth century has been characterized by three developments of great political importance: the growth of democracy, the growth of corporate power, and the growth of corporate propaganda as a means of protecting corporate power against democracy. —ALEX CAREY
The odds are that during the past recession, you or someone you know was affected by corporate layoffs and the loss of a job. It’s a painful experience, and one that can have a devastating effect on individuals and families. But in some cases, layoffs have affected entire towns, in effect crippling communities. And layoffs related to outsourcing have long-term effects on those communities, because companies pulling out take their taxes with them—that is, if they paid them at all. And the people in the town are also unable to pay taxes, because they’re no longer getting paid to work.
These corporate pullouts run the gamut from manufacturing to high tech. The examples in the next few pages are just a few of the scenarios that are playing out with alarming regularity in communities all across America.
In Syracuse, New York, Carrier, the maker of air-conditioning and heating units, is closing two of its most productive and profitable factories and laying off 1,200 workers. Most of those jobs are headed to Singapore and Malaysia. It’s too early for many of Carrier’s employees to retire—the average worker at the plant is only forty-nine years old. In a move to save the jobs, New York State and the plant’s union tried to dissuade Carrier from exporting the jobs to Asia by offering a $42 million incentive package. To no avail—the company is outsourcing these jobs.
With the closing of the Carrier plant, central New York State has now lost 10,000 jobs since 1990. Senator Hillary Clinton told me that she believes “Manufacturing is not a luxury. It’s not an old-fashioned economic activity. It truly is core to much of what we need to do to maintain a strong economy and, I would argue, a strong national defense.” Senator Clinton’s assessment is close to that of Republican congressman Duncan Hunter, chairman of the House Armed Services Committee. A conservative Republican and a liberal Democrat in agreement on economic issues is a sign that the times, and Washington’s policies, could be changing.
Syracuse may be better off than some cities in that it has an anchor industry: higher education. It’s home to Syracuse University, and the city has worked hard to diversify its economy in the wake of plant closings by General Motors, General Electric, and Allied Signal. However, even with the anchor of Syracuse University, wage growth in the city has fallen below the national average as manufacturing jobs have left.
What’s happening in Syracuse is no different from what is happening in many communities across America. From steel to appliances to automobiles, paying manufacturing jobs are being exported out of the country, leaving behind workers and communities struggling with how to recover.
The automobile industry is a prime example of a business in which ruthless pressure to cut costs has driven jobs abroad. And it affects jobs in many states. At Tower Automotive in Milwaukee, 500 employees used to make the frames for Dodge Ram pickup trucks. Now that work, and their jobs, are going to Mexico. The decision was made by DaimlerChrysler, which is squeezing its American suppliers by asking them to match the lower prices available from overseas manufacturers. All the automakers, not just Chrysler, claim they need these lower prices in order to keep making affordable cars and to keep market share.
Early this year, Ford closed its plant in Edison, New Jersey, after more than fifty-five years of producing cars and trucks there. A Ford spokesman said it would be too expensive to retool that plant so that it could produce different models. About 300 of the plant’s 900 workers were relegated to early retirement, while others were transferred to Ford plants elsewhere in the country. Most important, at least 400 jobs were eliminated. Ford is, however, investing heavily in Asia and has set up a new regional headquarters in Thailand.
General Motors, long the symbol of Detroit’s automotive might, has introduced a new Chevy, the Equinox. The Equinox is assembled in Canada with a Chinese-made engine. Now, the three most expensive parts of any automobile are the body, engine, and transmission. With the Equinox featuring a foreign-built engine, more than a third of the vehicle’s cost is being transferred—and paid out—to China and not to American suppliers or workers. An interesting statistic: Employment in the U.S. auto industry has dropped by 200,000 jobs over the past four years. During that same time, imports of Chinese auto parts have doubled.
What makes all these examples so frustrating for American workers is that while Detroit throttles back at home and invests in Asia, foreign automakers, including Honda, Nissan, and Toyota, are investing in this market. In fact, as American automakers cut back, these Japanese companies are providing all the production growth in the United States. And calling our American automakers the Big Three is now a myth. Only two companies, Ford and GM, are American-based, while Chrysler is owned by German manufacturer DaimlerChrysler. To put a fine point on it, Toyota is selling more cars in the United States than Chrysler. And Toyota is now the second leading global car company, after General Motors.
We’re not faring well in the auto business, and we’re not faring well in the appliance business. Galesburg, Illinois, is the birthplace of poet Carl Sandburg and for many years was home to a large Maytag factory. In fact, Galesburg was a Maytag company town, and Maytag provided 1,600 jobs to local workers.
But Maytag decided to close its Galesburg factory and move much of the work to a new refrigerator manufacturing plant in Reynosa, Mexico. None of the American jobs are slated to be transferred—all 1,600 are scheduled to be laid off. Employees who made $15 an hour are being replaced by Mexican workers who earn less than $1 an hour. Maytag justifies the closing by citing competition from cheaper Asian refrigerators, and the tighter wallets of cost-conscious consumers.
With a current jobless rate of 9 percent, Galesburg will soon face a possible unemployment rate of 20 percent, along with a very uncertain future. People there can’t turn to the government for help. After all, free trade agreements signed by the government promised workers at plants like this one a chance to export their products to new markets around the world. But the reality is, the only thing being exported from Galesburg is American jobs.
Clintwood, Virginia, has a population of 1,800. It’s not a big town, but 250 of its best jobs are in the process of being outsourced to India. Online travel service Travelocity is shutting down its call center here. Workers at Travelocity made a starting wage of $8 an hour, plus training and benefits. But Travelocity lost $55 million last year and was looking to cut costs fast. It decided it could save $10 million by moving its Clintwood call center to India. Travelocity told CNN that “We made a difficult decision to outsource following significant losses last year. Our costs were significantly higher than our major competitors, who had chosen long ago to outsource to the Philippines, India, and elsewhere.”
Travelocity is trying to give workers a soft landing by providing eleven months’ notice, along with possible interviews at Travelocity’s two remaining U.S. call centers. Clintwood, meanwhile, is going back to its roots, marketing one of the few things that can’t be outsourced: tourism. Combined with local crafts and a mountain music museum dedicated to a local artist, Grammy Award winner Ralph Stanley, the town is attracting attention to itself. As a final note, the whole Travelocity episode was the second of two body blows to Clintwood. Just before Travelocity set up shop there, Nexus Communications had shut down a similar call center operation in the town.
Copyright © 2004 by The Dobbs Group
