Exported Jobs Drive Home Grim Lesson in Economics : Business: 375 Watsonville Green Giant workers will be laid off Friday as firm expands operations in Mexico.

Most of the people who package frozen broccoli and cauliflower here at Green Giant’s western U.S. processing facility didn’t graduate from high school. Yet they are receiving a sophisticated, firsthand education in contemporary economics. Every theme in the book-- restructuring, globalization, free trade, retraining --seems to have been etched upon their lives.

And it hurts.

On Friday, Green Giant will lay off 375 of its 550 Watsonville workers. The cuts are part of what a British conglomerate named Grand Metropolitan PLC, which owns Green Giant’s corporate parent, Pillsbury Inc., describes as a plan to competitively reshape Pillsbury.

Many of the Green Giant jobs, which pay about $7.50 an hour plus health benefits, will go to the expansion of a Green Giant plant in an agricultural region of Mexico, where workers earn the Mexican minimum wage of about $4 a day.

It’s a familiar story. In nearly 2,000 U.S.-owned plants in Mexico, most of them in overcrowded border towns, about 500,000 Mexicans now assemble furniture, electronics, toys and cars--work that a decade ago was mostly done in the United States. The U.S. workers who lost these kinds of manufacturing jobs were often forced into lower-paying service-sector work.

The exporting of jobs by American companies desperate to slash labor costs may increase once the Bush Administration completes its plan for a free-trade agreement with Mexico. The agreement would make it even cheaper for firms to move to Mexico by eventually eliminating the tariffs that are charged when Mexican-produced products are shipped back to American factories.

Against this background, there is considerable bitterness among Green Giant employees as the last day of work approaches in this small Central California town off California 1 just north of the famed Salinas Valley, even though workers have known since last May that their jobs would be gone.

“There’s something terribly wrong when an English company comes and acquires an American company and shortly after that they announce they’re going to displace American workers by relocating production to another country and enjoy the riches of America,” said Sergio Lopez, secretary-treasurer of Teamsters Union Local 912, which represents the employees.

One final lesson in the workers’ education remains to be determined: In a recession, can the lives of low-skilled, unemployed people be salvaged by a comprehensive retraining program?

Often, employers walk away from this question, leaving the workers’ future to government employment specialists. Here, however, Pillsbury--acknowledging the human impact of what it calls a “difficult business decision”--is contributing several hundred thousand dollars and hiring a Maryland-based retraining consultant. These efforts will be combined with $1.3 million in federal funds to produce what one state employment expert describes as a “national showcase project” to retrain and place 80% of the laid-off workers in other types of employment.

The odds of success, however, are not good.

Watsonville’s economy was already strapped by the devastating Northern California earthquake of 1989, which has left many businesses still boarded up. Then came the national economic contraction of 1990. And then, last month, came a crop-killing freeze that caused thousands of layoffs in harvesting and processing in many of California’s agricultural areas.

Making matters worse, the average Green Giant worker is a weak candidate in today’s job market: a 45-year-old Latina immigrant, lacking a high school diploma, often illiterate in English or Spanish.

Only by clinging to Green Giant, which pays relatively high wages and has an exceptionally stable work force, have many of these people been able to walk the economic tightrope into lower-middle-class life.

Take Lauro and Yolanda Navarro.

The Navarros, like most Green Giant workers, came from the country to which their jobs are now headed. Each of their families immigrated to Watsonville from Mexico in the early 1970s. Lauro, 36, and Yolanda, 34, arrived as teen-agers and immediately began working rather than attending high school. They met in an English-as-a-second-language course. Yolanda had been at Green Giant since age 14, when she’d lied about her age.

They married in 1974. After the first of their five children was born, Lauro joined his wife at Green Giant. Four years ago they were finally able to buy a one-bedroom, $54,000 house with a $500-a-month mortgage payment.

The thought of disruption, of losing any of this, terrifies them.

The Navarros say they are glad to have the luxury of a retraining program. Lauro thinks he’ll train to go into construction. Yolanda wants to study to become a beautician. But they know that to survive they may have to leave Watsonville or take lower-paying jobs, or both.

“Our lives are here, like any other immigrant,” Yolanda said one day last week, sitting in a metal folding chair at a table inside the union hall of Local 912, where several women were folding leaflets to announce a meeting of a worker-assistance committee. “We’re not the people who send money home” to remaining relatives. “We don’t want to go on welfare. We never asked anything from the government.”

Local 912, which represents about 5,000 workers, most of them in food-processing industries, has lost about 2,000 members in the last decade as the result of companies closing or moving to Mexico for cheap labor, secretary-treasurer Lopez said. Green Giant was among these. It built its Mexican plant in Irapuato in central Mexico in 1983. That, plus automation, allowed the company to substantially cut employment at the Watsonville plant.

In 1988, Grand Metropolitan purchased Pillsbury, and in early 1990, a few months after the earthquake, the layoffs were announced.

The Mexican plant will expand, along with another in Ohio, to move production closer to Green Giant’s customers, 80% of whom live east of the Mississippi River.

Terry Thompson, Pillsbury’s vice president for public relations, denied union accusations that the Green Giant layoffs were an effort to slash labor costs. Rather, they represent an attempt by Green Giant to “better serve its customer base by cutting transportation and distributions costs,” he said.

The cuts are part of a $140-million Pillsbury program to lower costs and improve the quality of its bakery, vegetable and pizza subsidiaries. The program will eliminate 1,300 jobs while creating 800 new ones, he said.

In a long-odds effort to change Pillsbury’s mind, Local 912 tried to fight back. It produced and began marketing a documentary about unsanitary conditions at some vegetable plants in Irapuato, an allegation Pillsbury said wrongfully tainted the Green Giant plant. It held a week of demonstrations in Watsonville. It sent representatives to congressional hearings, arguing that opening international borders to jobs was worse than opening them to drugs. It sued the U.S. Customs Service for not requiring bigger “Product of Mexico” notices on frozen vegetable packages. It negotiated a generous severance package with Pillsbury that will give $3,000 to $4,000 to the average worker.

Pillsbury, conscious of the potential for negative publicity, attempted to soften the blow. It gave layoff notices six months before the 60 days required by federal law. It said it would contribute an estimated $500,000 to the retraining effort, the rest of which is being financed by federal “economic dislocation” funds. “They have been hard-working and loyal employees. . . . We understand our responsibility to help,” said Mike Schaeffer, Pillsbury vice president of operations.

The company hired a private consultant to oversee the retraining, an unusual step for a company to take. Individual counseling, testing, evaluation and schooling will be paid for. New, growing careers like auto mechanics, clerical work and electronic technology will be pushed. A job center, offering child care, transportation, basic adult education, vocational counseling and career workshops, will be maintained at the plant for at least the next year.

“We expect 90% of the people to participate in the program and 80% to find work at 75% to 80% of what their wage was at Green Giant,” said Mike Hickey, the Maryland consultant in charge of retraining. That translates to a starting wage of $5.60 to $6 an hour. “We’re going to push those goals very hard.”

The workers will hold one last demonstration at the plant, on Jan. 18, the day the layoffs take effect. They will dress in black.

“There’s going to be a lot of people crying,” Lauro Navarro said.

The cry will be for the government to regulate the ability of companies to move production to foreign countries. The cry does not figure to be heeded. Politically, it is dismissed as “protectionism.” Momentum is going in the opposite direction, toward removing what trade barriers still exist. American business has convinced the majority of Congress that the pain suffered by people like the Navarros is a necessary short-term sacrifice in the long-term struggle to make American corporations more competitive and, ultimately, create new jobs.

The most vocal opponents of this line of thought are leaders of organized labor, who have grown used to hearing employers threaten to move a plant to Mexico as a bargaining chip in labor disputes.

“I’m just kind of amazed by the lack of analysis that’s being done about this,” said one of the demonstrators, Jeff Farmer, labor coordinator for the Minnesota state labor federation. “There should be a jobs impact analysis done on this whole issue. If you just open the borders wide open between an industrial country like the U.S. and a country like Mexico--where wages are so much lower, where you don’t have the same kind of worker protection or environmental regulation--it could really open the floodgates. It’s almost like the greatest deregulation that’s ever taken place. I’ve seen just so small an amount of debate about who’s going to pay the cost.”