Exporting U.S. jobs: an engineered exodus of manufacturing and hi-tech jobs threatens to abolish the American middle class--the bulwark of a free society.
We were middle class," lamented former textile worker Jimmy Bennett in an interview with the Washington Post, before hastily correcting himself: "We still are." Jimmy and his wife Verleen, residents of Kannapolis, North Carolina Kannapolis is a city in Cabarrus County and Rowan County, North Carolina, northwest of Concord and northeast of Charlotte. The population was 36,910 at the 2000 census. It is the home of the Kannapolis Intimidators, the Class A affiliate of the Chicago White Sox. , were among the nearly 6,500 employees of the Pillowtex towel factory laid off in early August.
Just two years ago, reported the August 9th Washington Post, the Washington Post, The
Morning daily newspaper published in Washington, D.C., the dominant paper in the U.S. capital and one of the nation's leading newspapers. Established in 1877 as a Democratic Party organ, it changed orientation and ownership several times and faced Bennetts had bought a modest $100,000 home, "confident their combined wages ... would continue to support the comfortable lifestyle that had long eluded their parents." Like many of their former colleagues, the Bennetts, who both work part-time at near minimum wage, quickly sold many of their household amenities to get by on roughly half their previous take-home pay take-home pay
The amount of one's salary remaining after federal, state, and often city income taxes and various other deductions have been withheld. .
Thousands of other former Pillowtex workers "are fending off eviction notices, car repossessions and home foreclosures, and making difficult choices about which prescription drugs to skip and which utilities to turn off," reported the Post. "People are turning off cellphones, cutting cable TV, and pleading with creditors," added the August 5th Christian Science Christian Science, religion founded upon principles of divine healing and laws expressed in the acts and sayings of Jesus, as discovered and set forth by Mary Baker Eddy and practiced by the Church of Christ, Scientist. Monitor. "Already, 200 have had their water shut off."
The Monitor describes the Pillowtex closing as an event akin to a natural disaster. But it wasn't a destructive caprice ca·price
a. An impulsive change of mind.
b. An inclination to change one's mind impulsively.
c. of nature that shut down the plant. Rather, as the paper observes, the firm was over-whelmed by "a flood of imports from China." Resulting in the largest one-day layoff in the history of North Carolina This article discusses the history of a U.S. state. For information on the state today, see North Carolina. Province of North Carolina
North Carolina developed distinctly from South Carolina almost from the beginning. , the Pillowtex bankruptcy dramatically exemplifies the devastation being wrought throughout America's manufacturing economy as our trade deficit with Communist China grows.
As the Monitor reports, "Manufacturing businesses, from electronics to furniture and fishing lures, are closing their doors or moving production to China.... Three members of the president's cabinet on a cross-country jaunt to promote the Bush economic plan have gotten an earful ear·ful
1. An abundant or excessive amount of something heard, such as talk or music.
2. Gossip, especially of an intimate or scandalous nature.
3. A scolding or reprimand. from angry businesspeople trying to compete with Chinese imports made by workers getting 50 cents an hour."
Charles Bremer of the American Textile Manufacturers Institute points out that as textiles from Communist China and Vietnam flood the American market, "People are moving jobs faster than you can count." In 2008, all import quotas Import quotas are a form of protectionism. An import quota fixes the quantity of a particular good that foreign producers may bring into a country over a specific period, usually a year. The U.S. government imposes quotas to protect domestic industries from foreign competition. on Chinese textiles will be removed. "At that point," predicts Bremer, "the Chinese will completely dominate the market."
Ironically, at least some of the future textile imports from China will probably be produced on looms from Pillowtex's Kannapolis facility--but those looms will be in China, operated by Chinese workers. The August 7th Charlotte Observer reported that "looms and other machinery [from Pillowtex] likely will be removed from plants, packed and shipped to manufacturers in China, Pakistan, and India...."
Manufacturing in Decline
As the erosion of America's manufacturing base accelerates, communities across the nation are experiencing economic ruin similar to that of Kannapolis.
This summer, I0 plants operated by the Hooker Furniture Corporation were shut down. These factories were shuttered even though the company's profits had grown in recent years "largely by outsourcing to cheaper manufacturers abroad," reported ABC News
ABC News is a division of American television and radio network ABC, owned by The Walt Disney Company. Its current president is David Westin. on August 14th.
"Every time we've asked them to step up, they've done it," commented Hooker CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. Paul Toms of the employees who lost their jobs. "I feel like we've let these folks down, and l don't know Don't know (DK, DKed)
"Don't know the trade." A Street expression used whenever one party lacks knowledge of a trade or receives conflicting instructions from the other party. what I'd do different.... It's unlike anything I've seen in my 21 years in the industry. A lot of plants have closed, people have been sent home, and it really has come quicker than anybody expected. I think it's hard to say, three, four, five years from now, what will this industry, look like domestically."
As with the American textile industry, our furniture industry is being decimated in uneven competition with low-wage nations like Communist China. The Chinese "have millions of people that they're trying to have employed so it's hard to fault them," Toms opines Opines are low molecular weight compounds found in plant crown gall tumors produced by the parasitic bacterium Agrobacterium. Opine biosynthesis is catalyzed by specific enzymes encoded by genes contained in a small segment of DNA (known as the T-DNA, for 'transfer DNA') . "But I think that at some point, this country has to think about what's best for us.... You have industries and examples of predatory pricing Predatory pricing (also known as destroyer pricing) is the practice of a firm selling a product at very low price with the intent of driving competitors out of the market, or create a barrier to entry into the market for potential new competitors. . That's the risk we run not just in furniture, but in any industry that we're letting leave this country."
Andrew Brod is an economic analyst in Kernersville, North Carolina Kernersville is a town in Forsyth County, North Carolina, United States. The population was 17,126 at the 2000 census, and a local census in 2005 demonstrated that the city's population had grown to 20,052. , where Hooker closed a plato formerly employing hundreds. He told ABC News that many American companies, rather than making capital investments in the U.S., have decided to "funnel investments abroad, many to China itself...." "Some have contracted with Chinese producers, but others have entered into joint ventures to establish new factories [and] to refurbish existing factories," Brod notes.
The closing of the Kernersville Hooker plant is already having a local economic impact. "If I don't work, I can't go out and spend money to shop or buy what I need, so that's going to put somebody else in jeopardy," observed former Hooker employee Mildred Stiles Stiles can refer to: People
Our nation's manufacturing sector has been the gateway to the middle class for untold millions of Americans, resulting in unprecedented national prosperity. What will America look like if manufacturing jobs continue to be outsourced to low-wage foreign competitors? Surveying Kernersville's grim economic prospects, Brod declares: "In part, the answer to that question is, 'What sort of America do you see now?' It's here already."
Grim portents abound for other manufacturing-dependent communities and for our nation as a whole. An academic study compiled in 2001 for the U.S.-China Security Review Commission and the U.S. Trade Deficit Review Commission reports: "In the months since the enactment of Permanent Normal Trade Relations Permanent Normal Trade Relations (PNTR) status is a legal designation in the United States for free trade with a foreign nation. In the U.S. the name was changed from Most Favored Nation (MFN) to PNTR in 1998. (PNTR PNTR Permanent Normal Trade Relations ) legislation with China there has been an escalation of production shifts out of the U.S. and into China.... [B]etween October 1, 2000 and April 30, 2001 more than eighty corporations announced their intentions to shift production to China...."
Since 1992, "as many as 760,000 U.S. jobs have been lost due to the U.S.-China trade deficit," with a comparable number of jobs disappearing because of outsourcing to Mexico. "The employment effects of these production shifts go well beyond the individual workers whose jobs were lost," continues the report. "Each time another company shuts down operations and moves work to China, Mexico, or any other country, it has a ripple effect ripple effect Epidemiology See Signal event. on the wages of every other worker in that industry"--in other words, accelerating the "race to the bottom."
The August 25th Financial Times reported that Communist China is "rapidly catching up with the U.S. as the world's most popular location for foreign investment": Last year, China attracted a record $52.7 billion in foreign investment, "more than any other country." "China has been widely blamed in developed countries for flooding the industrialized in·dus·tri·al·ize
v. in·dus·tri·al·ized, in·dus·tri·al·iz·ing, in·dus·tri·al·iz·es
1. To develop industry in (a country or society, for example).
2. world with cheap goods," commented Alan Ruskin of the 4Cast economic consulting group. "But Western investment is largely making this rise in productive capacity possible."
Mercury Marine Mercury Marine, founded in 1939, is a division of Brunswick Corporation of Lake Forest, Illinois, in the United States. Company beginnings
The company began when engineer Carl Kiekhaefer purchased a small outboard motor company in Cedarburg, Wisconsin. , the manufacturer of small boat engines and the largest employer in Wisconsin's Fond du Lac Fond du Lac (fŏn` də lăk', –jə–), city (1990 pop. 37,757), seat of Fond du Lac co., E central Wis., in a resort region at the south end of Lake Winnebago; inc. 1852. County, has announced that it "will shift some production to China within the next three years," reported the August 8th Appleton, Wisconsin Appleton is a city in the U.S. state of Wisconsin, on the Fox River, 100 miles (161 km) north of Milwaukee. As of the 2005 census estimate, the city had a total population of 70,217. , Post-Crescent. Five days earlier, the Milwaukee Journal Sentinel The Milwaukee Journal Sentinel is a daily morning broadsheet printed in Milwaukee, Wisconsin, USA. It is the primary newspaper in Milwaukee, the largest newspaper in Wisconsin and is distributed widely throughout the state. reported: "A small group of Mercury Marine employees from China are coming to Fond du Lac to tour the plant ... but not to take work to China, [company communications manager Steve] Fleming said." But at some American companies, such visits by Chinese employees have foreshadowed outsourcing manufacturing jobs there.
The northwest Indiana Northwest Indiana, also known as The Calumet Region, or just The Region, is comprised of Lake, Porter, LaPorte, Newton, and Jasper counties in Indiana. This region neighbors Chicago, Illinois and Lake Michigan, and is also the Indiana component of the Chicago town of Valparaiso confronts the prospect of losing a local plant operated by Magnequench, an electronics firm acquired in 1995 by a consortium including Chinese industrial interests. If the plant is moved to China, 225 local residents will lose their jobs. Even more shocking is the fact that the Magnequench facility in Valparaiso "makes 80 percent of rare earth magnets rare earth magnets,
n.pl magnets made from materials such as samarium, cobalt, neodymium, and boron. These magnets generally produce relatively strong magnetic fields. used in smart bombs," according to according to
1. As stated or indicated by; on the authority of: according to historians.
2. In keeping with: according to instructions.
3. the Chesterton Tribune.
The erosion of the U.S. industrial base "has enormous national security implications," reported the August 2003 issue of National Defense magazine. "It has made the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. so dependent on foreign countries for critical components and systems that it may have lost its ability to control its supply chains. The United States is becoming dependent on countries such as China, India, Russia, France and Germany for critical weapons technology. It's conceivable that one of these governments could tell its local suppliers not to sell critical components to the United States because they do not agree with U.S. foreign policy."
Writing in the June 2002 issue of Harper's magazine Harper's Magazine
Monthly magazine published in New York, N.Y., U.S., one of the oldest and most prestigious literary and opinion journals in the U.S. Founded in 1850 as Harper's New Monthly Magazine by the printing and publishing firm of the Harper brothers, it was a leader , business analyst Barry Lynn Two prominent Americans use the name Barry Lynn professionally, generally without including their middle initial:
Simply put, "the U.S. industrial base is being taken apart, piece-by-piece, and relocated to other nations," conclude trade analysts Pat Choate Patrick Jeffrey "Pat" Choate is an economist and was the 1996 Reform Party Vice President candidate, the running-mate of Henry Ross Perot. He has a B.A. from University of Texas at Arlington and a Ph.D. from University of Oklahoma, both in Economics. and Edward Miller. "In the process, much of America's industrial and military production base is being sold to foreign interests, and more importantly a significant portion of it is being physically relocated into other nations, including our most likely strategic rival--China."
For more than a century and a half, America's manufacturing economy attracted hardworking people from around the world eager to become Americans. Manufacturing jobs offered these new arrivals entree into the middle class and helped them assimilate into our nation's civic culture. But as former Treasury Department official Paul Craig Roberts Paul Craig Roberts is an economist and a nationally syndicated columnist for Creators Syndicate. He served as an Assistant Secretary of the Treasury in the Reagan Administration earning fame as the "Father of Reaganomics". points out, "The loss of high productivity jobs takes away the ladders of upward mobility and wipes out our human capital."
As our manufacturing base is being stripped away, Americans may someday find it necessary to emigrate to find manufacturing jobs. Case in point: A machinist employed for several years at a major Wisconsin-based multinational firm--the father of a large family--described to The New American how he was told by his employer that within several years he may have to "relocate to China" if be wants to keep his job.
A "Political Thing"
John C. McCoy, owner of Omnitech Technical Associates in Bellingham, Washington, commented to The New American that "China is being set up as the center of global manufacturing. They have a huge supply of cheap labor, cheap power, and very modern production facilities. Many, perhaps even most, of the Chinese-made products being unloaded on our docks and reaching our store shelves are assembled in automated plants, and dropped into shipping boxes without ever being touched by human hands." Many of those ultra-modern Chinese plants have been built by Japanese firms, but others have been built in recent years by U.S.-based multinational corporations.
McCoy, an activist with a group called Save our American Manufacturing (SAM), points out that outsourcing to China has exploded because of a chain reaction. "Once tooling capacity is lost, manufacturing simply has to move," he told The New American. "People running companies in this country generally don't want to go offshore. But once the process got started, it snowballed, because the specialized tooling capacity started to shut down--and it takes a long time to re-tool, too long to remain competitive in this globalized economy."
Behind the Decline
McCoy describes our declining manufacturing base as "a political thing," rather than the result of market forces or irresponsible corporate greed. "Present American policy has lost touch with knowledge of how goods are produced," he contends. "America without the capacity to renew and invent products will perish. The most important key to our renewal, apart from the entrepreneurial spirit, is the ability to engineer, and make tooling. Under current trade policy these assets are quickly disappearing, being traded away. And once they're gone, we may never get them back."
The Communist Chinese regime enjoys an unnatural competitive advantage over American manufacturers because it essentially employs slave labor. That advantage is compounded by our own government's perverse insistence on subsidizing, via the Export-Import Bank Export-import Bank (Ex-IM Bank)
The U.S. federal government agency that extends trade credits to U.S. companies to facilitate the financing of U.S. exports. (Ex-Im), the relocation of U.S. corporations to China. The Ex-Im Bank See Export-import Bank. was created by the FDR administration in 1934 for the purpose of encouraging business investment in the Soviet Union. Through Ex-Im, corporate investments in China are subsidized, and any losses incurred are socialized so·cial·ize
v. so·cial·ized, so·cial·iz·ing, so·cial·iz·es
1. To place under government or group ownership or control.
2. To make fit for companionship with others; make sociable. (that is, picked up by U.S. taxpayers)--while the profits remain private and legitimate market competition is undermined.
Government-subsidized corporate relocation to China also accelerates the process described by McCoy, in which Beijing's manufacturing sector "tools-up" even as ours "'tools-down." As the May 1998 issue of Harvard Business Review Harvard Business Review is a general management magazine published since 1922 by Harvard Business School Publishing, owned by the Harvard Business School. A monthly research-based magazine written for business practitioners, it claims a high ranking business readership and reported, American companies seeking to do business in China "face many requirements to transfer technology or to export a certain percentage of their products made in China. Controls on foreign exchange keep them from moving funds freely out of the country."
"Every firm that sets up for production in China has to turn over its technology," Jerry Skoff, owner of Badger Metal Tech in Menominee Falls, Wisconsin, pointed out to The New American. "Intellectual property theft by the Chinese is very common. And any investment banker Investment Banker
A person representing a financial institution that is in the business of raising capital for corporations and municipalities.
An investment banker may not accept deposits or make commercial loans. familiar with the Chinese system will tell people preparing to set up over there that they should pad their expenses by at least 40 percent to allow for the graft, bribes, and other payoffs involved in doing business over there." Given the pandemic pandemic /pan·dem·ic/ (pan-dem´ik)
1. a widespread epidemic of a disease.
2. widely epidemic.
Epidemic over a wide geographic area.
n. corruption of the Chinese system, the federal government's role in socializing risks and losses for U.S.-based firms looms even larger.
Many U.S. companies were lured to China by the prospect of a vast, untapped consumer market. But rather than selling goods in China, American companies are exporting goods from there--and completing the circuit by sending jobs and plants back to China. Consequently, observed Richard Bernstein and Ross H. Munro in their 1997 book The Coming Conflict with China, "China has been getting American investment capital and reaping windfall trade surpluses at the same time. As a result, China is one of the leading foreign-exchange-reserve countries in the world--a bizarre situation for a poor and developing country."
Beijing benefits greatly from China's trade surplus because it can subsidize predatory trade practices--such as directing subsidies into various manufacturing fields as a way of underbidding potential American competitors.
In an interview with the Christian Science Monitor, Jay Bender, owner of Falcon Plastics in Brookings, South Dakota Brookings is a city in Brookings County, South Dakota, USA. Brookings is the fifth largest city in South Dakota, with a population of 18,504 at the 2000 census. It is the county seat of Brookings County,GR6 , described "how one of his customers, a manufacturer of fishing lures, has decided to move its production from the U.S. to China.... [The fishing lure manufacturer] asked him to bid on molds to make the plastic bait. He bid $25,000 per mold. 'That was a competitive price," he said." However, the potential customer found a Chinese source charging $3,000 for each mold. "I can't even buy raw materials for that," Bender observes. "There are two possibilities: Either they are subsidized by the government, or they gave away the molds to get the manufacturing business." To remain in business, Bender has had to lay off nearly one-third of his workforce.
"We're killing ourselves," laments Jerry Skoff. "Bombs are falling, but people aren't paying attention. We're being reduced from a manufacturing and hi-tech economy into a service economy--and if things continue the way they are, the service sector will eventually go the same direction."
Abolishing the Middle Class
At the end of the process Skoff describes is the eradication of the American middle class--derisively referred to as the "bourgeoisie" by Karl Marx. "We're basically liquidating our whole middle class, polarizing people on the two extremes, haves and have-nots," warned Roger Chastain, president of the Milliken & Co. textile firm, in an interview with the Durham Herald. "We'll be a third world country."
"It makes me wonder if there is some merit to the 'conspiracy theory'--the idea that all of this is part of a deliberate scheme to wipe out the middle class," Jerry Skoff mused to The New American. "The middle class is always a pain in the neck where government's concerned. It's where you find most of the people who complain about taxes, regulations, and other policies. If you wipe them out, you just have the ultra-rich and the poor--a perfect arrangement for a dictatorship."