Another One From The Mailbag
Posted by SCapozzola on October 3rd, 2007Dipping into our mail bag again, here’s a very interesting account of a plant closure in Wisconsin.
From: Ryan Evans, St. Croix Falls, Wisconsin
“I moved to rural Wisconsin from the Twin Cities metro area in 2006 and took a job at Shafer Electronics. The company was small and family run, employing around 50 people, and had been in that town for nearly 40 years. It was the biggest employer in that area, and a good portion of the employees not only lived in the immediate area, but had also been with the company since they started working out of high school. Many had been there for 25 or 30 years.
“We left for the long Thanksgiving weekend in 2006 with the feeling that all was well. Upon returning on that following Monday, we were told that the company could no longer make money due to inexpensive overseas labor, and we could not compete with them. The doors would be closing for good. Many people were to be laid off immediately or within the next couple of days.
“To many, this company was family. They had spent 20 or more years working alongside the same people. The hardest aspect to deal with remained the fact that the closing of the plant had a significant impact on an already economically depressed area. In this case, the business had been a staple of the community for decades. When they closed their doors, it left nothing more than a few antique stores and bars. Otherwise there were remnants of better days; an old creamery, empty store fronts, a shuttered gas station.
“The loss of industry in this area due to low-cost overseas labor is staggering. In many cases, these businesses are the pillars of a community, having supported workers and families often times for decades.
“Most of the people I still run into from the company remain unemployed or have been forced to take low paying jobs elsewhere to support themselves or their families. I see some at the local Wal-Mart or grocery stores working jobs that pay a third of what they were making, but as they are the only jobs open in the area, it has become necessary to make such sacrifices. It’s a vicious cycle that is taking apart the rural manufacturing communities one piece at a time in a slow-bleed manner.”
We’re grateful to Ryan for sharing his story. And we’re hoping our national leaders will respond to our three questions:
1. As President, how will you save American manufacturing jobs?
2. What specific policies will you support to strengthen the American manufacturing base, which is vital to our economic and national security?
3. What steps will you take to enforce our trade laws and hold cheating countries like China accountable?
Please keep sending your accounts to ManufactureThis (scapozzola@aamfg.org).
October 3rd, 2007 at 9:23 pm
[…] Manufacturing for me to write an article for them regarding rural manufacturing and globalization (click here to read it), people are taking notice of us - and that is […]
October 4th, 2007 at 10:34 am
Ryan is a good friend and a great writer. I feel his pain and that of his community and especially that business owner and family.
I graduated in 1988 when North Dakota was packing up and moving away. I know exactly what pain this can cause a family, a hard worker, and more importantly a family owned business.
There were many farmers that chose a bullet to their own head then to face life without their family farms entrusted to them by generations before.
However, what kept Schafer Electronic’s owner from cutting wages to those of the jobs they are forced to accept now in order to keep the price of the products manufactured here in American and at thier plant? Even a percentage of the wage cut would of probably kept the doors open.
While this solution hurts, it would of often been better then what they face right now. Why is LABOR such a problem here in America? The Union and it’s socialist lobby is the main source of our shame!
Was it our socialistic labor policy that is truly the cause of America not being able to compete in this wonderful global market?
Is the American business owner so taxed and regulated by Federal and State socialist that it truly is not worth the stress and anxiety of making payroll week in and week out?
My friends, cheap parts from other countries is simply to simplistic a reason to dissuade an entrepreneur, a family business owner or the American worker from finding thier American Dream!
I think America needs to chase the socialist squirrels out of our litigation, legistlation and our labor force! Then my friends we will be able to really find that American Dream in everyone’s backyard!
Mr. Chad T. Everson
www.grizzlygroundswell.com
Awaken
Stand Up
Step into Action
Change the Political Landscape in your backyard!
October 4th, 2007 at 5:56 pm
Chad, while I agree with you to an extent, there are other things at work here that need to be addressed beyond just the union issue. While you do know my stance on unions, they are not always the source of problems, especially out here in the rural manufacturing community.
With that said, I am on my third manufacturing company in as many years and none of those three were union workplaces. Here are the problems that we face out here:
The first company I worked for started out many years ago with a significant amount of contract engineering and manufacturing for medical device companies. Over the years they determined that they could turn better profits by shipping the manufacturing work overseas. By the time I had started working there, they had reduced themselves to having the engineering and prototyping work done here while all of the manufacturing was done by their new facility in Singapore. All of the production people found themselves without work simply because the work went away. Worse yet, the company looked great to investors and whatnot because they were making a ton of money due to inexpensive overseas labor. While the business was thriving, the American workers were not. I worked for the quality assurance and testing aspect of the prototyping area, my job was spared, but many were not. This was a bad loophole that they took advantage of, since they weren’t actually buying foreign parts since it was our company that had opened up a new plant in Singapore. We sold our products locally, but didn’t have to pay any tariffs or anything because technically it was our product.
The second company, Shafer Electronics, suffered from a different problem. While your suggestion of cutting wages may seem plausible, in reality it isn’t so easy. First off, if you cut wages to the point where the employees are no longer making a livable wage, they will be forced to leave. You might as well lay them off. Most employees of rural manufacturing companies choose those jobs because they offer the best shot of a livable wage without having to work multiple jobs. According to the USDA, rural manufacturing jobs typically provide the best wages in the areas. If you cut the wages, people are stuck with some hard choices. Leave and hope for better luck elsewhere? Take a second job to try and supplement the loss? Cut your lifestyle and try to make due with the lost wages? Even with that, however, there is still the problem of finding work. Shafer suffered from the fact that all of the customers dried up. No matter how much you cut wages, it is still cheaper to mass produces electronics overseas where labor is often pennies on the dollar compared to American workers. We had the people (and we weren’t necessarily at the top of the pay scale either) and the equipment, but no customers.
The third company, and my current employer, is suffering from yet another problem. Our customers need to reduce their costs because the prices of electronic products have been driven down so sharply. We engineering and manufacture capital equipment to the manufacturing industry; predominantly the semiconductor industry. As prices of things like computers and cell phones (and any other electronic product that uses semiconductors) drop due to the market being flooded by cheap and often times “disposable” products from China and elsewhere, the effects are felt throughout the manufacturing industry. The company that builds the semiconductors need to cut their costs because they can no longer sell their product for the same price, the companies that provide capital equipment to the semiconductor companies need to cut their costs due to the semiconductor company’s inability to spend money and so on and so forth. Since a company like mine can only cut the price of our products so far (right now many of our sales orders are being discounted 20-30%), we risk loosing business to other (mostly overseas) companies that may make an inferior product, but a cheaper product. To remain competitive, my company has recently decided to take your advice and cut wages in the form of a 20% reduction in hours. If that doesn’t help, we will start full layoffs.
So what is the answer? This is the quandary we are facing right now. Most people here cannot afford a 20% reduction in pay. But we can’t force them to pay us if there is no money left, so trying to pull a union tactic and threaten to walk off (strike) would simply result in the company going out of business and nobody having a job any longer. Those who can afford to stay are doing so. The rest of us are actively looking elsewhere. As for me, this will be three jobs in three years, and none of these losses were due to union or socialist tactics. It was due to the fact that overseas work is given much more of an advantage than American companies.
Many of our problems come from a lack of government protection here in America. I know this is contrary to my usual calls for less government, but sometimes it needs to be the government’s job to protect industry from its own people. Just ask Pheisty (and HR Manager) about expenses due to things like frivolous lawsuits and fraudulent workers comp claims. Things like that either bury companies or force them to sell their products for higher prices to essentially hedge themselves against this sort of thing. Companies suffer because the government gives the worker more power than the companies and people know how to use that to their advantage. Worse yet, most companies simply settle out of court and make people like that go away because if they go to court they risk having some liberal industry-hating judge and risk losing much, much more. Companies pay out the ass to protect themselves from their own people and the government allows it to happen. Would it be so hard to enact a small bit of legislation to protect companies from fraudulent lawsuits? They do it in Europe. Yet, when it comes up here you have people in congress that do asinine things to block it. Every industry from medical on down to the smallest widget company are plagued by ludicrous costs built in to protect them from people who seek to abuse them. Just look at the recent 3M fiasco and how much they had to pay to protect themselves from some money-grubbing lawyers who lied and tried to sue 3M for contaminating groundwater with toxic substances. Luckily it was dismissed, but 3M still had to pay for legal fees even though they won.
Anyway, the moral of the story is that along with looking for ways to keep work here in America, I also think that the government needs to do more to protect industry and help cut the costs that American companies have to build into the products.
October 4th, 2007 at 6:25 pm
AAM is committed to working with management and labor on strengthening manufacturing. The fact is, it will take a team to save manufacturing, not finger pointing. We have regulations in the U.S. to ensure that our children have clean water to drink and clean air to breath. Our question is, why don’t we insist that our trading partners do the same? Furthermore, many unions have shown flexibility to keep jobs in the U.S., accepting cuts in benefits and pay, but that is not a “high road” strategy to economic growth—it is merely a temporary fix that leaves the larger structural problems in place. There are a lot of challenges to tackle: unfair trade practices, currency manipulation, health care costs, energy availability and pricing, and our tax system. We won’t solve any of them by pointing fingers—but we will make progress if we work together.
October 4th, 2007 at 11:28 pm
Finger pointing? I think you misinterpreted my hitting the nail right on the head! Socialism is at the heart of this issue. Unions are a major part of that rot from within that we are facing.
Ryan even goes into the need to rid our litigation and legistlation from frivolous lawsuits and unduly fetters that such socialist legistlation put on our companies here in America.
The root evil of all that is essentially socialism. Sure lowering raises is just a temporary fix without innovation and finding new markets in the global economy. Too often, we try to sell to the same market for years and years without expanding our horizons and creating new markets.
The time of the industrial revolution is over. We need to be more innovative, creative and more daring in order to make it and not throw ourselves over the cliff.
I applaud those business men and women for trying to find solutions. The are trying to keep us employed and vibrant in a new global market.
How is our labor equipping itself to survive in this global market? I suggest a death to Unions as a start for the betterment of American manufacturing.
We have to find our own solutions to the market in regards of labor as well. The age of working for a company all your life and retiring with a gold watch are long forgotten. Ryan is right in the fact that you really have to look out for yourself in the current labor market. Just as business has to do the very things that we probably do not like, but are needed to survive and create jobs.
I would like to see a focus on those who create the jobs as opposed to who is loosing the jobs. What is working in America right now?
The sky is not falling no matter what the DNC would have you believe. Yet, it seems that is all that this website is focused upon.
Ryan, I really disagree that our Government should step in and protect business in the global market. I suggest that our government get the hell out and free business to do what it does best!
Mr. Chad T. Everson
www.grizzlygroundswell.com
Awaken
Stand Up
Step into Action
Change the Political Landscape in your backyard!