Factory growth is no job machine
Giant machines are tearing down the old bleachery, another reminder to Chuck Smith that this old mill town doesn’t make much anymore.
Just about everyone he knows was employed at one point making, folding or bleaching towels, until the mills started to close down in the 1990s and 2000s and family members lost their jobs. Like most of this town’s residents, Smith can name all the old mills in a slow Georgia drawl.
“There was the Thomaston mill that was here, and the Dundee mill, and the Highland mill, but they tore that one down just like they did this one,” he said, watching a bulldozer push piles of metal around what used to be a factory for bleaching towels. “These mills used to employ all the people in this city.”
Recently, the town had a reason to be optimistic. Retail behemoth Wal-Mart announced that it would spend an additional $50 billion buying U.S.-made goods over the next 10 years. It cited 1888 Mills, which runs the last mill left in Griffin, as one company that would benefit from this pledge.
Wal-Mart will sell 1888’s Made Here towels, manufactured in Georgia, in 600 stores this spring and in another 600 later this year, which enables 1888 to add manufacturing jobs.
The retailer’s effort will help businesses and “give them the nudge they need” to bring manufacturing back to the United States, Wal-Mart Chief Executive Bill Simon said in announcing the initiative. It’s part of a much-heralded trend of “onshoring,” in which companies including Apple, Lenovo, Otis Elevator and General Electric have said that the growing cost of logistics and labor overseas has motivated them to move some manufacturing back to the U.S.
But if Griffin is any example, Wal-Mart’s much-lauded pledge isn’t likely to do much to turn around a decades-long manufacturing decline here or in the rest of the country.
That’s because manufacturing has changed dramatically since it left American shores, replacing workers with machines and reducing the number of jobs that people could get right out of high school. And as much as companies pledge that they’re moving manufacturing back to the United States, they’re mostly moving just small parts of their larger global operations, to be closer to U.S. markets.
“People talk about manufacturing being a big source of job growth. It’s going to grow, but it’s not going to be a big source of total employment,” said Tom Runiewicz, principal for the Industry Practices Group at IHS Global Insight. “It’s just a drop in the bucket.”
1888 Mills, for instance, will add just 35 jobs because of the initiative -- better than nothing, but a pittance in a town of 23,000. The company will still make 90% of its goods in overseas factories.
“We don’t envision the entire industry going back to the United States -- low-cost Asian manufacturing will still be the base for volume,” said Jonathan Simon, CEO of 1888 Mills. “But for just-in-time service, U.S. manufacturing does make sense.”
Some 400 miles away, in North Carolina, computer giant Lenovo is doing the same thing. In October the company announced plans to open a manufacturing plant in North Carolina to make specialty personal computers for the U.S. market. The initiative will create 115 jobs, 15 of which are engineering positions. But the company also is expanding research centers in Japan and China.
“It’s a relatively small-volume facility. It’s not going to produce millions of units,” said Mark Stanton, Lenovo’s director of supply chain communications.
The U.S. lost 6.3 million manufacturing jobs between January 1990 and the industry’s low point in January 2010, a 36% decline, according to the Bureau of Labor Statistics. Since that low point, the industry has added nearly 500,000 jobs -- an impressive number, but one that barely begins to offset the millions of losses.
“There’s a lot of unemployed people here,” said Eugene Colquitt, 47, who was wandering the streets of Griffin, looking for work helping people on their yards or homes. He was employed at the mills at one point and says that not much has replaced the manufacturing jobs in town. “There’s McDonald’s and Wal-Mart, but they’re not really hiring,” he said.
A walk through the spacious 1888 factory in Griffin shows why job gains have been slow, despite some onshoring. Machines spin threads of cotton into yarn, a process once done by hand; they weave the yarn into thick rolls of fabric, cut the fabric into towels and sew the hems. Where a whole factory was once needed to bleach and color the towels, a Rube Goldberg-like machine does that work with minimal labor; another machine dries the towels.
“It’s all automated,” Douglas Tingle, founder of 1888 Mills, said during a tour of the factory. “Some of this is the latest technology advancements.”
That automation is part of the reason that although labor costs are higher in the United States than in other countries, it can make sense to make towels and other products here. But there are other reasons as well. If 1888 needs to make changes to towels, it can get the finished product to Wal-Mart more quickly from Griffin than it could from China. With the rising price of oil increasing shipping costs, there could also be some cost savings for locally manufactured products.
“One of the things you might see is production coming back here, but not with as many jobs as used to be the case,” said Jared Bernstein, a senior fellow for the Center on Budget and Policy Priorities and former chief economist for Vice President Joe Biden.
Whether the jobs returning are good ones depends on whom you ask.
Karen Pias sits at a sewing machine in a cavernous 1888 room repairing towels that machines haven’t hemmed correctly. She’s a 19-year veteran of the mill and says she likes the job, the company and her peers.
“For what I do all day, I get paid good,” Pias said.
But Chuck Johnson, 48, had to quit his job at 1888 because his lungs couldn’t handle the dust and particles given off by the manufacturing. He’s now unemployed, waiting for his disability application to go through.
“I had to keep the machines running, sweep the floor, keep the dust off machines, walk from one warehouse to another,” said Smith, chewing on peanuts on the front stoop of a house near an old mill. “But my lungs couldn’t handle it no more because of the dust.”
One characteristic of those new manufacturing jobs is that they are rarely unionized. Companies tend to locate their operations in Southern right-to-work states and in more rural areas where people are “maybe a little more appreciative of the job,” said Harry Moser, founder of the Reshoring Initiative, which helps companies looking at bringing manufacturing back to the United States.
In the South, land is cheap, taxes are lower, and “there’s this image of the rural farm boy who grew up fixing the tractor and the plow; he or she has a better work ethic than someone in a big-city environment in the Northeast,” Moser said.
The jobs at 1888 Mills and Lenovo are not unionized, nor are those at Otis Elevator, which is moving jobs to Florence, S.C., from Nogales, Mexico.
Even the jobs that are unionized typically have lower salaries and fewer benefits than manufacturing jobs in the industry’s heyday. General Electric, for instance, is moving some jobs from China to Kentucky. But the union representing GE workers there “has chosen to take significant concessions in wages and benefits over the years,” said Chris Townsend, political action director of the United Electrical, Radio and Machine Workers of America, a union that represents some GE workers but not those in Kentucky.
“Corporate leadership has decided to launch a PR effort to convince people that jobs are coming back,” Townsend said. “But we’re still talking about a few thousand people where there used to be tens of thousands.”
The trends worry people such as William Spriggs, chief economist for the AFL-CIO. If the nation is merely adding low-wage, nonunion manufacturing jobs, he said, it will have a hard time retaining a middle class.
“If we don’t get back to high-wage jobs for a sector as big as manufacturing, there isn’t an easy path for the recovery,” he said.
Still, to many people in places such as Griffin, any job is a good one. Once 1888 Mills advertised a few new positions in the local paper, people from town began showing up at the office. Applications stacked up in the front lobby.
Freda Johnson, 55, was one of the applicants. She worked in a Griffin mill for 12 years, until it closed, and then found a job driving a forklift. She’s hoping to get hired at the mill but is keeping her expectations measured.
Jobs in Griffin have been disappearing, rather than growing, for the most part.
“It’s really dead here, because there’s not many places to work,” she said. “If you do get a job here, it doesn’t last long.”
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