Maytag Morass

By David Moberg, In These Times. Posted January 4, 2005.

Many Americans dream of getting rich. Aaron Kemp had more modest ambitions. "I wanted to work at a decent job and earn a decent wage, with decent benefits, so I can raise my kids, give them a decent education and maybe take them out to Pizza Hut on a Friday night. I don't need a Mercedes, just a ho-hum existence, and now," he says, with sadness and anger in his voice, "it seems hard to even do that."

Eight years ago, Kemp began working at the factory of Maytag Corporation, the largest employer in Galesburg, a western Illinois town of 34,000 and the birthplace of poet Carl Sandburg. In September, Maytag finally closed the plant, after sending a large part of the work that 1,600 people had recently been performing to a new Maytag factory in Reynosa, Mexico; another large part to Daewoo, a Korean multinational subcontractor that is expected to build a plant in Mexico; and a few dozen jobs to a plant in Iowa. Now Kemp, a 31-year-old union safety and education official with a muscular build and a small goatee, has a temporary job as a counselor to laid-off workers at two-thirds his old pay.

The local Machinists union fought the shutdown, taking their case to the streets, to the press, to politicians and to Maytag shareholders, even winning national attention when senator-elect Barack Obama mentioned their cause in his Democratic convention keynote speech. But the union could not stop the Maytag jobs from being added to the tally of 2.7 million manufacturing jobs lost since 2000. Those several million jobs were eliminated for many reasons – including declining demand, rising efficiency and increased imports – but a significant portion are the result of U.S. multinational corporations, like Maytag, moving production out of the country.

Although the U.S. Bureau of Labor Statistics concluded that during the first three months of this year only 4,633 workers lost jobs because of investment shifts overseas, a study for the U.S.-China Economic and Security Review Commission by Kate Bronfenbrenner of Cornell University and Stephanie Luce of the University of Massachusetts found that at least more than five times that number of jobs were lost in the same period. They also estimate that in 2004 more than 400,000 jobs will be shifted from the United States to other countries. That's nearly twice the rate in 2001, and it represents about one-fourth of all mass layoffs in 2004.

Despite the trend toward outsourcing white-collar jobs, Bronfenbrenner and Luce found that more than four-fifths of job shifts were still in manufacturing industries and more than one-third of the estimated 400,000 jobs shifted went to Mexico. But China is in second place, and rapidly rising in popularity. They also found that companies disproportionately target unionized jobs, which represent 39 percent of all jobs shifted out of the United States but only 8.2 percent of the private workforce. The Midwest has been hardest hit, most of all Illinois, which in the first three months of 2004 lost at least 7,555 jobs – almost all to Mexico.

Local Losses Cut Deep

The loss of 1,600 jobs with the Maytag closing is hard on Galesburg, where 5 percent of the town's workforce lost jobs, as well as the small surrounding towns. But the ripple effects – from lost jobs at nearby suppliers (including a workshop for the disabled that employed 100 people working on Maytag subassemblies) to indirect effects of declining consumption and reduced tax revenues – will raise the total job loss in the region to roughly 4,166, according to a Western Illinois University study.

That's only a part of the region's woes. In January, the new Australian owners of Butler Manufacturing, which makes steel buildings, will close their Galesburg plant – dumping both 270 manufacturing employees and the only unionized Butler facility. In the past few years, other area factories have closed or greatly cut back on their workforce, including a rubber hose manufacturer, a ceramics manufacturer, and several small industrial parts and equipment makers.

Some, but not all, of these other job losses involve shifts out of the country. They become part of the national problem posed by the growing trade deficit that may approach a record $600 billion this year. As more governments and financial market players have perceived this deficit – and the federal budget deficit – as unsustainable, the value of the dollar has fallen. The deficit increase partly reflects rising oil prices and a growing trade imbalance with China, whose currency, the yuan, is pegged to the dollar and, according to critics, undervalued. But the deficit is also a result of the shift in jobs manufacturing tradable goods.

David Moberg is a senior editor of In These Times.

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