United Auto Workers President Ron Gettelfinger hit the nail on the head in explaining why Electrolux AB is closing its refrigerator plant in Greenville and moving it to low-wage Mexico.
Gettelfinger called it “a cold-blooded corporate decision.”
It sure was. But why should that come as such a shock? We know that capitalism isn’t exactly warm and fuzzy. It’s ultimately about maximizing profits for corporate owners.
Maybe Electrolux’s decision to eliminate 2,700 jobs in that small West Michigan town was a stunner because it finally opened people’s eyes to the stark realities of the global economy. Although I still wonder.
Within hours of the Swedish manufacturer’s decision to end operations in Greenville sometime next year, state Rep. Judy Emmons, R-Sheridan, who represents the area, fired off a blistering press release blaming the closing on Michigan’s “government bureaucracy” and its “tax structure,” which she claimed is “choking our economy.”
Oh, puleeze. Do the math. Electrolux is leaving Greenville, where its UAW-represented workers earn $15 an hour, for Juarez, Mexico, where the company’s new workers will earn $1.57 an hour.
“That’s the difference,” said Lou Glazer, president of Michigan Future Inc., an Ann Arbor-based think tank. “State and local taxes are irrelevant in this equation.”
Electrolux was offered tax breaks and other incentives valued at as much as $182.8 million to stay in Michigan. The incentive package even included the offer of a free building to replace the company’s 127-year-old Greenville factory. But the wage differential was too much to overcome.
I don’t mean to minimize the human toll the plant closing will exact on those Electrolux workers and the surrounding community. As Gov. Jennifer Granholm said, the decision to close the plant is “heart-wrenching.”
But Michigan’s future is not in manufacturing commodity-type products that can be made just as well in a developing country at a fraction of the labor cost. Who wants to work for $1.57 an hour?
“North America is not a good place to manufacture products that require low-cost labor, like refrigerators. And we don’t want it to be,” said John Cleveland, vice president of IRN Inc., an auto supplier consulting firm in Grand Rapids.
That doesn’t mean Michigan has no manufacturing future. Even companies making fairly low-tech products like engine parts and auto interior components can prosper and provide good jobs, Cleveland told me.
But surviving in the Darwinian manufacturing jungle requires that a company keep a laser-like focus on its products, continuously invest in research and development, and constantly innovate ways of staying ahead of the competition.
“It’s innovation, stupid, to some extent,” Cleveland said.
We’re not just losing blue-collar manufacturing jobs, though. Even highly skilled jobs in computers and auto engineering, for example, are going to China and India.
Larry Good, president of the Corporation for a Skilled Workforce, a nonprofit consulting firm in Ann Arbor, said workers at all levels must continually upgrade their education and skills to prepare for that day when their jobs change or are eliminated.
Workers should even expect their employers to someday go out of business, Good said.
As Andy Grove, the retired head of computer-chip maker Intel Corp., used to say: “Only the paranoid survive.”
“The best job security today is to be a learner at all ages of life,” Good said.
But there are some primarily older workers, or those with health problems, who will be cast aside in the increasingly breakneck destruction and creation of businesses.
Currently, our social safety net is aimed mostly on providing benefits to the short-term unemployed. But Glazer says the ferocity of the global economy should prompt Michigan to start thinking about how to provide longer-term benefits to better protect workers who lose their jobs to global trade.
“That’s not a conversation happening in Michigan right now,” he said.
But it’s one that should be started to address human needs in the cold-blooded world of global capitalism.
“It’s a much rougher game now,” Good said.
From mlive.com