As Factory Job Losses Rise, So Do Risks to Bush

The gales of globalization are blowing hard across America’s Factory Belt, but Cathy Schuldt does not plan to go quietly into the postindustrial era.

Schuldt, owner of Butler Wire & Metal Products Inc. in this Milwaukee suburb, laid off 19 of her plant’s 49 employees after her customers began buying welded-wire baskets from Chinese suppliers who could deliver finished products for less than she was paying for raw materials.

She had plenty of company: The exodus from America’s factories is responsible for all but 29,000 of the nearly 2.6 million U.S. jobs lost since President Bush took office. And that could have political ramifications as people like Schuldt share their pain in the voting booth.

Schuldt and her friends say they feel betrayed, abandoned and disenfranchised by the nation’s economic elite and its defenders in Washington.

“George Bush had better get off his butt and start doing something. He still doesn’t understand that the jobs that have left have left forever,” said Schuldt, who is struggling to preserve the company her father founded 37 years ago. “Most of us have been conservative Republicans all our lives. I’ve never voted for a Democrat. But if I had someone I could vote for on the Democratic side that saw the picture, I definitely would.”

Schuldt and other small manufacturers in Wisconsin have formed an organization called Save American Manufacturing Now, which is evaluating candidates for office based on their positions on trade issues. SAMNow recently endorsed the reelection bid of Sen. Russell D. Feingold, a liberal Democrat, and is considering endorsements in other congressional races, and possibly the presidential campaign.

Since 1979, when manufacturing employment peaked at 19.6 million, 1 in 4 factory jobs has disappeared. It took more than two decades to lose the first 2.5 million. The second 2.5 million have gone away since Bush took office in January 2001.

The main reasons: The sluggish economy reduced demand and forced companies to cut costs aggressively. Surging productivity enabled employers to produce more goods with fewer people. Outsourcing of production to China and other countries is responsible for as much as a third of the job loss, economists say. Other factors include rising production costs associated with regulation, litigation, health coverage and pension benefits

For the most part, the causes reflect long-term trends that began well before Bush arrived in Washington. But as his father learned a decade ago, voters tend to direct their economic anger at whomever is occupying the White House when the economy hits the skids.

As the 2004 campaign season begins, Bush’s policies for dealing with the loss of so many jobs are under sharp scrutiny. The hemorrhaging has slowed in recent months amid a general economic rebound, and some analysts express hope it will be staunched as the recovery gains strength.

But even the optimists tend to agree this recovery is different. So far, it is occurring without a net gain in factory employment, and economists say it is likely that many of the lost jobs will not be restored. That’s because most of the losses are attributable to permanent structural shifts instead of the cyclical layoffs typical of past recessions.

“They’re not all going to come back,” National Assn. of Manufacturers President Jerry Jasinowski said. Displaced factory workers “will have to move on,” he said, into growing sectors of the economy, such as home building and health care.

Pete Merriman moved on earlier than most. After being laid off several times as an industrial electrician, he staked his claim in the service economy shortly after Bush assumed office in 2001. For the last three years, he’s been delivering pizza for a living.

“It’s hurt [Bush] in my view, that’s for sure,” said Merriman, who said he is making decent money toting thick-crust pizzas around Green Bay but would rather be wiring paper-making machinery again.The rate of decline during Bush’s tenure dwarfs the experience of his father, George H. W. Bush, who was turned out of office in 1992 after presiding over the first “jobless recovery.” Over the four years of the elder Bush’s presidency, America lost factory jobs at a rate of about 26,000 a month. Since his son settled in the White House, the monthly job loss has averaged nearly 80,000.

“Unless perceptions change, this could be a big problem for the president,” said G. Donald Ferree Jr. of the University of Wisconsin Survey Center.

The White House is paying attention. While still counting on tax cuts to revive the economy, administration officials have promised to crack down on trading abuses by China and other low-wage countries and are cajoling the Chinese to adjust their undervalued currency.

As a share of the U.S. workforce, manufacturing has been declining since World War II. Some economists attribute the shrinkage to the inevitable march of history. As the U.S. economy matures, they say, there is inevitably a transition from factory jobs to service sector work.

But the accelerated pace is causing growing concern. Good-paying factory work has been disappearing much faster than the economy can create equivalent jobs in other areas, analysts say.

The factory exodus threatens to create economic, social and political upheaval as millions of displaced production workers experience extended bouts of unemployment and the prospect of replacement jobs offering significantly lower pay, reduced benefits and diminished social standing.

“When all is said and done, these jobs were going to go away anyway,” said Mark Zandi, chief economist at Economy.com, a West Chester, Pa., economic forecasting firm. “Under more normal circumstances, if the world economy and financial markets worked properly, it might have happened over a period of a decade. But it’s all being compacted in a period of a couple of years, at a time when the rest of the U.S. economy is struggling, and we just can’t overcome it.”

California, by virtue of its sheer size, has the nation’s largest casualty count: Its factories have shed 298,000 jobs, a 16% decline. Some of the biggest cuts have occurred in politically pivotal states that could tip the outcome of the 2004 election: Ohio, Pennsylvania, Michigan, Washington, Florida, Tennessee.

In Wisconsin, where Bush trailed Gore by a mere 5,708 votes in 2000, the president and his aides have been making frequent stops in recent weeks. The state has lost 73,000 factory jobs since Bush took office.

“A lot of Wisconsin manufacturers hurt,” the president acknowledged during an appearance in Milwaukee three weeks ago. “It’s tough sledding, tough times, and I understand that.”

The list of companies that have closed plants, moved production or initiated big layoffs include pillars of Wisconsin industry: small-engine builders Briggs & Stratton Corp. and Tecumseh Products Co., paper producers Stora Enso and P. H. Glatfelter Co., cookware maker Mirro Co., rock crusher Metso Minerals, hardware giant Master Lock Co., and dozens of foundries, metal fabricators, automotive suppliers and electrical equipment manufacturers.

One company that has stood apart is Harley-Davidson, the icon of American motorcycle machismo whose Milwaukee-area factories have become a required backdrop for visiting politicians, including Bush and members of his Cabinet. The company has kept its five assembly lines operating, maintained wages and benefits, and resisted the trend toward moving production overseas.

But that may be about to change. The company has informed the union representing its 1,600 Milwaukee-area production workers that unless some way is found to reduce the cost of building transmissions, it will consider moving the work elsewhere. About 200 jobs could be affected.

“There’s a cloud hanging over this area, and it’s not smog. It’s the threat of job loss,” said Andy Voelzke, a machinist at Harley’s Pilgrim Road transmission plant in Menomonee Falls. “Now they’re trying to take a chunk out of us. As we’ve seen with other factories, once they open the door to that, it doesn’t stop.”

When it happens, the consequences can be dire.

Three weeks ago, a month shy of his 60th birthday, Russell Luepnitz lost his job as a tool-and-die-maker at Caysun Co. in Manitowoc. His wife, Susan, who has Parkinson’s disease, has gone back to work full time to help make ends meet, but Luepnitz said it’s only a matter of time before the well runs dry.

“I’ve got a ground-zero plan,” he said. “If I don’t get anything in six months, my unemployment runs out. We’ll have to sell our house and get an apartment. As my wife’s health keeps backing off, she won’t be able to keep working. We’ll have to keep cutting back and cutting back, moving down the food chain so we can survive.”

The sour mood can spread well beyond the factory floor.

In Menomonee Falls, at Pop’s Custard, which serves up Jumbo Bacon & Cheese Double Butter Burgers for $2.79 and three scoops of Chubby Hubby ice cream for $2.65, sales have fallen 20% over the last two years. Owner Sharon Whitman attributes half of that to new competition and the other half to the job slump.

“People are watching their money,” said Whitman, whose custard-making machines shake the floor like overworked cement mixers. “You can go to McDonald’s and get a double cheeseburger for a buck. I don’t blame ‘em.”

The job losses have created fissures within the factory fraternity. The National Assn. of Manufacturers, whose roster includes multinational firms that have moved production overseas, opposes protectionist measures and is generally supportive of current Bush administration initiatives.

But some smaller factory owners and workers blame U.S. trade policies for much of the shrinkage, particularly approval of the North American Free Trade Agreement a decade ago and China’s recent acceptance into the World Trade Organization. They are backing congressional proposals to slap tariffs on Chinese goods and rescind permanent normal trade relations with Beijing.

Wisconsinites do not appear to blame Bush for all of the Factory Belt’s misfortunes.

“It’s something he inherited,” said Gary Huss, president of Hudapack Metal Treating Inc. in Elkhorn. “A strong economy or a weak economy is a good five years in the making.”

Yet even if Bush doesn’t deserve the blame for starting the slide, some fault him for not doing more to stop it.

“The economy did not slump because of the dot-com bubble bursting. Manufacturing didn’t go down because of 9/11. The economy isn’t down because of the war in Iraq,” said Mike Retzer, controller of R. H. Strohwig Tool & Die Co. in Richfield, which has laid off 40 of its 175 employees since 2000.

“We didn’t lose orders because of any of that. When we lost orders it was not because the project was canceled, but because they were taking that work to China.”