Free Trade Pact to Hurt U.S. Workers
By moving to Mexico and abandoning 875 workers in the small town of Cortland, N.Y., the Smith Corona Corp. is no more “anti-American” than most other U.S.-based corporations moving abroad in search of cheap labor.
But it is hard to argue that the rush of so many of our companies to low-wage countries is helping America or the majority of its workers.
Profits of the already profitable Smith Corona should jump when it cuts labor costs by an astonishing 83% by deserting this country and replacing its Cortland plant with one in Mexico.
Other U.S. firms moving jobs abroad make their actions seem less heartless by stressing losses they claim they are suffering by operating in this First World country. And that trend will intensify if Congress approves President Bush’s free trade pact with Mexico and Canada, which it should not--and almost certainly will not--unless the pact is overhauled.
Unlike some other runaway firms, Smith Corona profits are good--up 13% over last year.
Other profitable companies use our neighbor to the south as a threat: Workers here are told to accept miserable wages and job conditions, and avoid unions like the plague, or off their jobs will go to Mexico, or maybe China.
That happened recently at the Monroe Manufacturing Corp. in Monroe, La., during an organizing campaign by the Amalgamated Clothing Workers of America. Edward Hakim, president of Monroe, made his point with cruel bluntness to the Wall Street Journal:
“Look, it’s better to be a Third World class of work force than no work force at all. I’m creating jobs. Minimum wage is the salvation of a lot of people down here.”
Monroe’s plastic baby bottles and other items are now being labeled, “Made for Babies by Proud Americans.” Hakim says his company is “doing great.” Sales soared 50% between 1990 and 1991.
Despite Hakim’s threats, the union was voted in by a narrow majority of the 584 mostly black “proud Americans” who earn about the hourly minimum wage, with no health insurance and few fringe benefits. Even more depressing is that, like all other low-wage U.S. workers without high school educations, inflation has reduced the real income of Hakim’s workers about 20% in the last decade.
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Because of federal anti-union labor laws, Hakim figures that he can legally stave off a union contract for years, and by then the workers’ interest in a union will wane.
Unlike Hakim, Smith Corona isn’t threatening to move, it’s doing it. The company will pay off the $15-million moving cost in just one year with low Mexican wages instead of the $18 an hour it pays in wages, fringe benefits and other labor costs in Cortland.
The current corporate rush abroad for cheap labor won’t help Bush get his free trade agreement since it would at least initially speed the exodus of jobs to Mexico by making it more profitable than ever for U.S. firms to escape American workers.
Nearly 500,000 jobs have been shifted to Mexico by General Motors, General Electic and about 2,000 other U.S. companies in recent years, even without the encouragement of the proposed agreement.
We haven’t come close to making up that job loss yet by getting new business from there. Possibly, in the very long run, the number of U.S. corporate defections to Mexico might diminish as Mexican wages approach our own.
But that happy day cannot be realistically expected to help even the children of our youngest workers, or even their grandchildren.
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It is generally agreed that our lowest-paid workers will be hit hardest by the proposed trade agreement. Advocates of the pact say we can retrain those people, but we must provide jobs for them in private industry or, as a last resort, through the government. But not only low-paid, low-skill jobs are moving away. General Motors says one of its most efficient plants in the world is in Ramos Arizpe, Mexico.
Smith Corona has been bragging for the 40 years it has been in Cortland about its “commitment” to the small town. But those company promises were like marriage commitments of such much-married women as Zsa Zsa Gabor and Elizabeth Taylor.
The latest divorce from America by Smith Corona is its last because the company plans no more relationships with U.S. workers, other than with executives and their staff in New Canaan, Conn., the corporate headquarters.
The firm opened factories in Singapore and Indonesia, where nearly 2,000 workers make portable electric and automatic typewriters and word processors.
And guess who is among the most scornful of Smith Corona’s decision to escape American workers? Brother International Corp., the Japanese typewriter and electronic company that is Smith Corona’s archrival.
Brother accuses the American-based company of “wrapping itself in the American flag” by seeking tariff protection from foreign competition. Brother has opened a plant in Bartlett, Tenn. It employs 800 workers and promises to stay there and expand its operations.
Remember, Smith Corona claims a major reason for leaving the U.S. is that it is a “victim” of foreign competitors such as Brother.
Maybe Smith Corona executives are really thinking about the foreign competition they created by importing products from their own plants in Singapore and Indonesia.
Whatever argument Smith Corona comes up with, tiny Cortland and its workers are being badly damaged economically.
The real long-range tragedy, though, would be if even more American corporate executives accept the philosophy of Monroe’s Hakim that it’s better for the U.S. to have “a Third World class of work force than not to have a work force at all.”
