S. Carolina Weighs Costs of Free Trade

Some say this is where trade began in upstate South Carolina, the place where Cherokees started coming in the early 1700s to swap furs for European rum, guns and clothing.

Some here are ready for it to stop.

As Democrats prepare to pick a presidential favorite in Tuesday’s primary and Republicans plan for contests later in the year, U.S. trade policy is on trial in South Carolina.

In four of the biggest cities, highway billboards financed by textile companies spread the word. “Lost your job to free trade and offshoring yet?” they ask. “Vote.”

In Greenwood County, where plant closings pushed the unemployment rate as high as 11% last year, Peggy Pace spray-painted her own appeal on a sheet of plywood: “Looking for a job in 2004.”

“I would have never thought that, at 52, I wouldn’t be working,” said Pace, who was laid off in 2002 when Kemet Corp. closed its plant here and shifted capacitor production to China. “I’m going to vote for somebody that’s willing to boost up the economy and keep things over here instead of moving everything out of the country.”

Yet even in a state some activists regard as ground zero in the trade debate, the evidence is ambiguous and opinions are mixed. While the lowering of trade barriers has contributed to massive job losses in textiles, apparel, furniture and other vulnerable industries, global commerce has also brought visible benefits to South Carolina.

Charleston has become the East Coast’s second-busiest container port, and some of the state’s biggest employers are foreign-owned, including BMW, Michelin and Honda. In Greenwood County, scores of laid-off mill workers have been hired as “associates” at a sprawling industrial complex operated by Fuji Photo Film Co. of Japan.

“It’s amazing how much of the industry around the state is attributable to globalization,” said College of Charleston economist Frank Hefner. “We may not be the New South like Charlotte or Atlanta, but we certainly are a different South than we used to be years ago.”

Following the Iowa caucuses, in which NAFTA-basher Rep. Dick Gephardt (D-Mo.) fared poorly and Democrats ranked trade a relatively low concern, some analysts decided the issue lacked political appeal. Voters were clearly worried about the economy, they said, but many of them seemed not to link job loss with trade growth.

Some trade activists dispute that analysis, and they are looking to South Carolina for vindication. They see next week’s primary as a referendum on the costs and benefits of the North American Free Trade Agreement and globalization, and an opportunity to prove to the nation that trade will resonate in this year’s elections.

“We’re trying to prevent what happened in Iowa. They didn’t connect the dots to trade,” said Jim Schollaert, outreach director for the American Manufacturing Trade Action Coalition. “Everybody’s for jobs. We want to get the idea drummed in that it’s trade policy, stupid.”

Already, activists say, worker anxiety here has forced Democratic candidates Sen. John F. Kerry, Howard Dean, Sen. John Edwards and retired Gen. Wesley K. Clark to harden their positions on trade. The issue could prove pivotal in the race for the U.S. Senate seat being vacated by Democrat Ernest F. Hollings. Some observers suggest it could even cause problems for President Bush in a state that has voted Republican in every presidential matchup since 1976, and where Bush trounced Al Gore by 57% to 41% in 2000.

“This is the third year in a row we’ve had job losses. That hasn’t happened since the Great Depression,” said former state Democratic Party Chairman Dick Harpootlian. “Whoever wins the primary will have the same trade position as whoever loses. It’s a consistent position among Democrats. They’re going to take George Bush on.”

South Carolina has been hammered by job losses: 100,100 since mid-2000, a 5% decline. The damage has been particularly severe in manufacturing: 70,300 factory jobs gone, down 21%.

Over the 12 months ending in November, South Carolina recorded the biggest percentage job loss of any state. Columbia, the state capital, took the biggest hit of any metropolitan area in the country.

South Carolina is one of 11 states still classified as being in a recession by Economy.com, a research firm. Industrial production is falling; household balance sheets are unraveling. Bankruptcies and mortgage foreclosures are at all-time highs.

The loss is concentrated in the textile industry. Although mill employment has been shrinking for decades, the losses have accelerated sharply in recent years: 66 textile plants have shut down since 1997, 12 of them in 2003. The industry employs 51,600 people in South Carolina, only half of its 1990 headcount.

Economists say other factors, such as factory automation, have contributed to the employment decline. But many South Carolinians appear to have concluded that trade is the culprit.

A November survey by the Feldman Group, a Democratic polling firm, found that 67% of likely South Carolina primary voters favored trade restrictions to prevent further losses, and 34% said a candidate’s position on preventing jobs from going overseas would be the most important factor influencing their vote. Only 14% put Iraq at the top of the list.

“I really think it’s the defining issue in South Carolina,” said Roger Chastain, president of Mount Vernon Mills, a Greenville-based textile firm that laid off 1,045 workers last year and is encouraging its 5,200 remaining employees to evaluate candidates on the basis of trade policy.

Still, globalization has an upside. South Carolina companies export about $10 billion worth of goods annually to more than 180 countries, and government officials estimate that international trade supports more than 150,000 jobs.

“There’s no doubt that some industries like textiles and furniture have been hurt by imports,” said Rep. James DeMint (R-S.C.), a pro-trade lawmaker who is running for Hollings’ Senate seat. “But there’s also no question that the overwhelming majority of successful and growing manufacturers in South Carolina are companies that depend on trade.”

Greenwood County is a microcosm of the state’s economic transformation. The historic town of Ninety Six was established as a frontier trading post in 1730. Some historians attribute its quirky name to an incorrect estimate of the distance Cherokee Indians had to travel to bring their furs to town.

The arrival of railroads in the 1800s helped turn Greenwood County into a thriving textile center. In the early 1900s, the business became synonymous with James Cuthbert Self, a banker who founded Greenwood Mills. At its peak in the early 1990s, the family-owned company operated 16 textile plants employing about 6,000 people. It was one of the nation’s leading producers of denim and khaki.

Then came the North American Free Trade Agreement in 1994 and China’s acceptance into the global trading community in 2000. Low-wage countries squeezed local textile companies, and one by one Greenwood Mills began shutting down plants and laying off workers. Today, it operates two mills and employs about 700 people.

“This breaks my heart,” said J.C. “Jay” Self III, great-grandson of the company’s founder. Self said he often ran into former Greenwood Mills employees, many who were in their 50s and 60s, working for minimal wages as handymen or retail clerks. He recently encountered one working at the county landfill.

“I’ve seen some of them working in the local Kmart. I’ve seen a lot of them who took their last paycheck here and bought a lawnmower, and they tow it around in their pickup truck cutting grass, doing yard work,” he said. “It’s that 50-year-old to 65-year-old employee who’s really been hurt.”

Some former mill workers fared better. Fuji Photo Film has been expanding its North American headquarters here. Today some 1,500 workers produce 35mm film, disposable cameras, photo paper, printing plates and medical imaging products in seven highly automated plants just outside the county seat of Greenwood.

John Brown, a former Greenwood Mills worker who joined Fuji eight years ago, said county residents were initially wary of the big Japanese company, which opened its first plant here in 1988 to establish a foothold against U.S. rival Kodak. But those suspicions have largely dissipated, he said.

“People are getting used to it,” said Brown, 34. “I don’t think they look at it as foreign anymore. Now Fuji is just another name.”

But companies like Fuji are rare. Peter Arnoti, president of the Greenwood County Economic Alliance, has been trying to boost employment in the area, but about the best he has been able to do lately is limit the damage from plant closings. The county is trying to diversify by pursuing biotechnology and other knowledge-intensive industries.

“This is not a good time to be in this business, I’ll tell you that,” Arnoti said. “You try to turn rocks over and find something. But everywhere you check, they say the next plant we’re going to build will be in the Far East.”

Boykin Curry, a retired real estate broker, said U.S. trade policy had dealt Greenwood County a bad hand. But he believes it is probably in the best interest of the nation as a whole, and the county will have to adapt.

“In Greenwood, we should be going after high-tech jobs, biotech jobs,” said Curry, 88. “That’s slow growth. That won’t take care of these textile people who don’t have a job. But it will help keep some of the young people here.”

Job losses figured in Thursday’s Democratic presidential debate in Greenville. Opinion is divided on whether it will cause serious problems for Bush in a deeply conservative state where religion, culture and national security also rank high.

“We’ve gotten nary a glance from the White House, because [South Carolina] has been considered safe Bush territory,” said Cass Johnson, president of the American Textile Manufacturers Institute. “If it’s not considered safe, the White House is going to be forced to address some of these issues.”

If one in seven voters who supported Bush in 2000 voted for his opponent in November, it would be enough to tip the state into the Democratic column. Some workers say they are considering doing just that.

“My wife and I have already said we probably won’t vote for Bush this time because of some of these policies,” said Morris Dorn, who supervises waste recycling at Greenwood Mills’ yarn plant here.

“We thought President Bush was the best thing that had happened to the country in a long time, mainly because he was a Christian. But Christians make mistakes too, don’t they?”