Thursday, May 7, 2015

'Refrigerator Capital of the World' Left Out in the Cold by Free Trade

Khan writes: "The prosperity promised by free trade doesn't always come ashore for all, as Greenville, Michigan, learned."

TPP protest. (photo: Joe Raedle/Getty Images)
TPP protest. (photo: Joe Raedle/Getty Images)

'Refrigerator Capital of the World' Left Out in the Cold by Free Trade

By Naureen Khan, Al Jazeera

04 May 15

The prosperity promised by free trade doesn't always come ashore for all, as Greenville, Michigan, learned free trade, economists say, there is creation and destruction, winners and losers. In that equation, Jim and Patty Hoisington count themselves among those who lost.

Theirs is the kind of cautionary tale that opponents of the the massive 12-country Trans-Pacific Partnership point to as they warn against the United States' latest foray with free trade.

For decades, the Hoisingtons, who met on the factory floor after Jim asked a fellow colleague if Patty was “going with anyone,” built their lives around building appliances in this quintessential industrial town, the so-called "refrigerator capital of the world."

Their long-standing jobs with Electrolux, the multinational firm that took ownership of the plant in the 1980s, gave the couple a solid foothold into the middle class. Jim, now 56, made $16.38 an hour. Patty, now 68, made $15.71. It was enough to raise their children, pay the bills, buy a house and still put a little money away in savings at the end of the week for the nearly 30 years they worked there.

“I loved it — I was making good money and raising my kids,” Patty Hoisington said.  “And I loved the people. We were just like family.”

Many Greenville residents will still tell you that refrigerator manufacturing wasn't just the prevailing industry. It was a central part of the city's history and identity. The plant had begun churning out wooden ice boxes in the nineteenth century and later turned to electric refrigeration under various corporate owners. 

But in 2005, the globalization that had begun to chip away at the rest of the Midwest’s industrial core came to Greenville. Electrolux, like so many firms of the era, announced that it would be shuttering its Greenville plant and leaving for Juarez, Mexico, taking 3,000 jobs with it, a devastating blow in a town of 8,000 people.

“I cried all the way home,” Patty Hoisington said of the day the announcement was made. “We worked our butts off for that place and we got zilch.”

The company had been toying with the idea for years and may have eventually made the move anyway, but many believed that the North American Free Trade Agreement, enacted in 1994, made the proposition irresistible, with its provisions designed to incentivize foreign investment in Mexico’s still-developing economy and scant labor regulations.

In the following weeks and months, as hundreds of Greenville workers lost their jobs, the city came to be a visceral representation of the pain of a new type of global economy. Jim and Patty Hoisington's replacements in Mexico would be making $1.57 an hour, plus lunch and bus fare — a cost-saving maneuver that would mean millions of additional dollars for Electrolux. 

Now, as President Obama makes the hard sell for fast-track authority from Congress to ratify the Trans-Pacific Partnership, what happened to Greenville and families like the Hoisingtons in the last decade opens a window into why resistance is so fierce among labor unions and some members of the President’s own party. Past experience has shown that the tides of prosperity promised by trade agreements have not always washed ashore for all, even as a majority of economists argue that free trade deals are a net positive for the economy.

Most of the text of the Trans-Pacific Partnership, which impacts policy areas ranging from intellectual property rights to environmental protections to how corporations settle disputes with government, remains hidden from public view as negotiators work out the final details. President Obama insists that this time will be different.

“You need to tell me what's wrong with this trade agreement, not one that was passed 25 years ago,” he said in a recent speech. “We can't just oppose trade on reflex alone.“

Former Michigan Gov. Jennifer Granholm, a Democrat who led the charge in putting together a blockbuster incentive package in 2005 to lure Electrolux to stay, including 20 years of no taxes, labor concessions from the United Auto Workers and a new factory, later reflected on the episode in her book, “A Governor’s Story: The Fight for Jobs and America’s Economic Future.” She estimated that it took Electrolux management approximately 17 minutes to reject her offer.

“We are the fallout of these unenforced trade agreements,” she wrote. “The average guy is left without a job, maybe without a pension, and as a final insult he trains his foreign replacement before he hands in his ID badge.”

As for Jim and Patty Hoisington, they now live in a modest house near the end of a dusty road in neighboring Stanton, Michigan, where they just manage to get by, even after drawing pensions and having their health insurance paid for by Electrolux.

Like many former plant workers, both took community college classes after the plant shuttered through a federal worker re-training program created as a part of NAFTA but it did them little good in the midst of a raging recession.

Patty complains of the scarce hours she gets at a local gas station, where she earns minimum wage one day a week. Jim drives a school bus for handicapped children and runs a lawn care business on the side. He says he averages about $4 less an hour than he was making at Electrolux.

“I can’t even begin to put away money like I did with Electrolux in the 2000s,” he said. “The majority of the workers, I would say they’re making less.”

“I can’t buy myself a pair of shoes,” Patty lamented. “At least we’re getting our bills paid.”  

Jim, in particular, is strident in his distaste for trade agreements. While the pacts may help the bottom lines of corporations, he said the profits have never been passed down to the paychecks of the average worker.

“Every trade agreement I’ve seen so far has never had a good result for us. It’s all geared for corporations,” he said. “They make money off of it and we don’t.”

Ray Jensen, 59, who worked at the plant for 29 years and now owns a convenience store in town, too said the livelihood he scrapes together can’t compare to his former wages and benefits. “The good years of my life were there,” he said. “Have I adapted? Yes. Is it a better living? No.”

Jensen nevertheless said he believes trade agreements are important for the American economy but that today’s negotiators should learn from the mistakes made by NAFTA two decades ago.

“How the hell can you compete when you’re making $16 an hour, how can you compete with Mexico at $1 an hour? You can’t,” Jensen said. “I can’t really blame them for doing it, I can blame our government … The lesson could’ve been learned, hopefully.”

Robert E. Scott, an economist with the liberal Economic Policy Institute who opposes the Trans-Pacific Partnership, said the experiences of former Electrolux employees making lower wages is widespread among manufacturing workers displaced by trade. 

“The problem is downward pressure on wages and widespread job losses,” he said. “All these trade agreements and investment agreements have been responsible for that job loss and when workers are moved out of those industries, we’re not creating new industries for them to move into. Even when they do get a job, they earn 20 percent to 30 percent less than their old jobs.”

Montcalm County used to support 6,000 manufacturing jobs in 2004, according to data from the Bureau of Labor Statistics. Now the number is down to 2,400.  

Beth Brinkley, a longtime bartender at Amber Waves, a downtown Greenville pub that’s been open since 1989, has seen the ripple effects of that phenomenon play out before her eyes.

She observes that the majority of the new business activity in Greenville is centered on retail chains like a Super Wal-mart, the Meijer, and Applebee’s — places where former Electrolux workers took jobs for lower hourly wages, if they didn’t move out of state to look for other work. Residents subsequently have less money to spend at establishments like hers, which were once popular among the factory crowd.

“It’s definitely hurt this town, still to this day,” she said. “It killed the downtown, where people used to eat out at restaurants, drink, cash their checks.”

Others, however, insist that Greenville is slowly but surely making a comeback. Many have been buoyed by the news that China-based Dicastal North America Inc., the world’s largest aluminum wheel manufacturer, is opening an operation in Greenville, which will employ 300.

Kathy Jo VanderLaan, the former executive director of the Greenville Chamber of Commerce and now an economic development specialist for Montcalm County, said the Electrolux catastrophe forced Greenville to reckon with what cities and towns around the country are grappling with: the need to diversify. VanderLaan said that advanced manufacturing and the medical field are all strong areas of growth in the county.

“We as a community learned never to put all our eggs in one basket again,” she said.

Indeed, even in a place once eviscerated by the consequences of free trade, many residents in Greenville take a nuanced view. Barry Thornton, 41, the owner of the Winter Inn in downtown Greenville, offers the perspective of a small business owner, a decade after many of his customers and friends lost their jobs.

“A lot of the bar talk was mad at NAFTA, mad at free trade. But the bottom line is it’s just an unfortunate thing that happens. I don’t know that their jobs could’ve been saved,” he said. “As a friend to some people that lost their jobs, I wish it didn’t happen, but as a businessman I believe in free trade and in free markets.  As a business owner you got to do what you got to do to make money.”

© 2015 Reader Supported News

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