Archive for the ‘Foreign Investment’ Category

Foreign Investment and America First

Thursday, August 10th, 2017

Donald Trump has built an image as a champion of workers by fomenting fear of immigrants. Get rid of the foreign-born, he vows, and native workers will prosper.

What’s odd is that this misguided notion is coupled with an embrace of foreign corporations. The administration’s America First economic policy relies to a substantial degree on promoting investment from abroad.

Many of Trump’s supposed job creation achievements have involved Asian companies. Soon after the election Trump claimed that Japan’s SoftBank had promised to invest $50 billion in the United States and create 50,000 jobs. Soon thereafter, Trump and Chinese mogul Jack Ma vowed that the latter’s Alibaba e-commerce empire would create 1 million U.S. jobs. In June, Samsung said it would open an appliance plant in South Carolina.

More recently, Japanese automakers Toyota and Mazda said they would jointly build a $1.6 billion U.S. assembly plant with 4,000 jobs. With the blessing of the White House, Taiwan’s Foxconn announced plans for a $10 billion flat-screen plant in Wisconsin (probably in the Congressional district of Speaker Paul Ryan) that would purportedly employ up to 13,000 people. Foxconn is reported to be considering another plant in Michigan.

While these announcements are presented as a boon to American workers, there are reasons to be cautious. Companies such as Foxconn have made big promises in the U.S. before and failed to deliver. It and SoftBank and Alibaba may be simply currying favor with Trump and will be unable to make good on their extravagant job-creation projections. Their main aim may be to discourage some of Trump’s more aggressive protectionist tendencies.

And even if Foxconn’s projects do materialize this time, there are questions about the quality of the jobs it may create. Foxconn has a long reputation for abusive labor practices in China, where it has been a leading contractor for Apple.

Concerns about the U.S. labor practices of foreign companies are not just a matter of conjecture. In fact, while Foxconn’s plans have been all over the news, less coverage was given to what happened at the Nissan assembly plant in Canton, Mississippi: an organizing drive by the United Auto Workers was soundly defeated, with the union blaming the outcome on an aggressive management campaign of scare tactics, intimidation and misinformation.

What happened in Canton is nothing new. For the past three decades, Asian and European automakers have been opening U.S. assembly plants, focusing on states with low union density and a political climate hostile to labor organizing. Taking advantage of their non-union status, they have made excessive use of contingent labor and weakened the ability of workers to act collectively to improve their conditions.

Trump, of course, launched no tweet storms against Nissan and expressed no support for the workers in Canton. On the contrary, for a supposedly populist president, Trump has promoted a series of anti-worker policies. These include moves to shift the National Labor Relations Board in a pro-employer direction, reverse the overtime pay reforms adopted by the Obama Labor Department and weaken workplace safety and health rules.

In Trump’s worldview, workers are supposed to express solidarity not with each other but rather with their employers and their President. That’s a strange sort of populism.

Pitting Jobs Against the Environment Again

Thursday, August 3rd, 2017

Jobs versus the environment: The notion that the interests of workers were inherently anti-ecological was widely held in the 1980s. Much of the world now accepts that employment and environmental protection can go hand in hand, but the Trump Administration is trying hard to turn back the clock. Dismantling safeguards is presented as the key to job creation.

That same misguided approach can be seen in the terms of the deal that Wisconsin’s Gov. Scott Walker is offering the Taiwanese electronics firm Foxconn in exchange for a commitment to build a $10 billion flat-screen plant that will supposedly create up to 13,000 jobs.

The plan — which Walker announced at the White House along with Trump, Vice President Pence and  Speaker Paul Ryan, whose district is expected to be the site of the facility — is generating a great deal of controversy in Wisconsin over the $3 billion subsidy package the governor wants to offer the company.

Yet those special tax breaks are not the only incentive being dangled in front of Foxconn. The draft bill being considered by the state legislature would also free the company from having to file an environmental impact statement and exempt it from a variety of state environmental rules. It would also ease regulations for utilities that build facilities inside the special zone that would be created for Foxconn.

Environmental groups in the Badger State are sounding the alarm, but there is no indication that their concerns are having much of an impact on Walker, who has said that critics of the Foxconn deal can go “suck lemons.”

The special regulatory breaks Wisconsin has cooked up would be troubling in any project, but they are especially worrisome in this deal, given the company involved. It’s widely known that Foxconn has a lousy record on labor rights in Asia, but it also has a troubled history when it comes to the environment.

In 2011 a coalition of Chinese environmental groups published a report listing Foxconn as one of several Apple contractors whose operations were causing serious environmental damage. Two years later, the watchdogs released a film with footage they said showed Foxconn releasing water with high levels of heavy metals into a river feeding Shanghai’s Huangpu River.

Foxconn was also said to be lax when it came to workplace safety. An explosion at its iPad plant in Chengdu that killed three workers and injured 15 others was attributed to the accumulation of combustible dust.

As with its record of abusive labor practices, Foxconn has claimed that it has cleaned up its act on environmental matters. Maybe so, but any plant of the size that the company is promising will have an enormous impact on water and air quality in Wisconsin. Rather than weakening environmental safeguards, the state should be tightening them for this project.

Walker, who has a terrible track record on environmental issues, may be treating the Foxconn deal as an experiment in deregulation. Letting Walker — and by extension Trump, Pence and Ryan — use the Foxconn deal to bring back the bad old days of jobs-versus-the-environment would do no one any good.

Manufacturing McJobs at Nissan and Elsewhere

Thursday, May 12th, 2016

Bring back manufacturing jobs: For years this has been put forth as the silver bullet that would reverse the decline in U.S. living standards and put the economy back on a fast track. The only problem is that today’s production positions are not our grandparents’ factory jobs. In fact, they are often as substandard as the much reviled McJobs of the service sector.

The latest evidence of this comes in a report by the UC Berkeley Center for Labor Research and Education, which has issued a series of studies on how the growth of poorly paid jobs in retailing and fast food have burdened government with ever-rising social safety net costs. Now the Center shows how the same problem arises from the deterioration of job quality in manufacturing.  The study estimates that one-third of the families of frontline production workers have to resort to one or more safety net program and that the federal government and the states have been spending about $10 billion a year on their benefits.

What makes these hidden taxpayer costs all the more galling is that manufacturing companies enjoy special benefits in the federal tax code and receive lavish state and local economic development subsidies, the rationale for which is that the financial assistance supposedly helps create high-quality jobs.

The Center’s analysis deals in aggregates and thus does not single out individual companies, but it is not difficult to think of specific firms that contribute to the vicious cycle. A suitable poster child, it seems to me, is Nissan. It is one of those foreign carmakers credited with investing in U.S. manufacturing, though like the other transplants it did so in a pernicious way.

First, it tried to avoid being unionized by locating its facilities in states such as Mississippi and Tennessee that are known to be unfriendly to organized labor. After the United Auto Workers nonetheless launched an organizing drive, the company has done everything possible to thwart the union.

Second, while boasting that its hourly wage rates for permanent, full-time workers are close to those of the Big Three domestic automakers, Nissan has denied those pay levels to large chunks of its workforce. Roughly half of those working at the company’s plant in Canton, Mississippi are temps or leased workers with much lower pay and little in the way of benefits.

It is significant that in the Center’s report, Mississippi — which has also attracted manufacturing investments from other foreign firms such as Toyota and Yokohama Rubber — has the highest rate of participation (59 percent) in safety net programs by families of production workers. The Magnolia State may have experienced a manufacturing revival, but many of those new jobs are so poorly paid that they are creating a burden for taxpayers.

At the same time, Mississippi is among the more generous states in dishing out the subsidies to those foreign investors. My colleague Kasia Tarczynska and I discovered that the value of the incentive package given to Nissan in 2000 will turn out to cost $1.3 billion — far more than was originally reported. Toyota got a $354 million deal in 2007, and Yokohama Rubber got a $130 million one in 2013.

There’s a lot of talk these days about bad trade deals and resulting job losses. We also need to worry about what happens when we gain employment from international investment but the jobs turn out to be lousy ones.

The Price of a U.S. Manufacturing Revival

Thursday, February 23rd, 2012

A few decades ago, U.S. factory jobs began moving offshore to countries that lured corporations with the prospect of weak or non-existent unions, minimal regulation, lavish tax breaks and other profit-fattening benefits. Workers in those runaway shops enjoyed little in the way of a social safety net, thus making them all the more dependent on whatever dismal employment opportunities foreign firms had to offer. Much of the U.S. manufacturing sector was left for dead.

Now, we are told, U.S. manufacturing is undergoing a resurrection. “Manufacturing is coming back,” President Obama told a group of blue-collar workers at a recent public event. “Companies are bringing jobs back.” Obama earlier used the State of the Union address to tout the recovery of the U.S. auto industry in the wake of the bailout he championed. One of the bailed-out firms, Chrysler, aired a Super Bowl commercial called “It’s Halftime in America” in which Clint Eastwood hailed the country’s industrial recovery.

It’s true that manufacturing employment has been on the rise after many years on the decline. But is this something calling for unqualified celebration?

Boosters of the industrial resurgence would have us believe it is a reflection of improved U.S. productivity, entrepreneurial zeal or, as Obama put it in the State of the Union, “American ingenuity.” In the case of Chrysler, that should be Italian ingenuity, given that the bailout put the company under the control of Fiat.

But it can just as easily be argued that domestic manufacturing is advancing because the United States has taken on more of the characteristics of the countries that hosted those runaway shops. Deunionization, deregulation, corporate tax preferences, excessive business subsidies and a shriveled safety net are more pronounced than ever before in the U.S. economy. If any of the Republican Presidential candidates get in office, those trends will only accelerate.

Even the Obama Administration is on the bandwagon to a certain extent. Its Office of Information and Regulatory Affairs has obstructed a slew of new environmental and workplace safety regulations. Now the President has legitimized years of conservative rhetoric claiming that companies are overtaxed by introducing a corporate tax reform plan that would reduce statutory rates in general and create an even lower rate for manufacturers. The plan has some good intentions—such as ending special giveaways to Big Oil and other loopholes while encouraging corporations to bring jobs back home—but it ignores years of evidence from groups such as Citizens for Tax Justice showing that big business will exploit any softening of the tax code to bring its actual payments down to the absolute lowest levels.

The perils of joining the manufacturing revival chorus can be seen by looking at heavy equipment producer Caterpillar. The company has been getting a lot of attention lately for expanding its domestic employment through moves such as the planned construction of a $200 million plant in Athens, Georgia that is projected to employ about 1,400.

This needs to be put in some context. According to data in Cat’s 10-K filings, the company’s workforce outside the United States soared from around 13,000 in the early 1990s to more than 71,000 last year, growing to some 57 percent of the firm’s total employment. The number of foreign workers in 2011 was greater than the company’s total head count in 2003.

Cat’s love affair with places such as China blossomed as the company was trying to escape its U.S. unions, which it had unsuccessfully tried to destroy. Cat’s hard-line approach to collective bargaining soured relations with its workers, resulting in a series of strikes and other confrontations, including a dispute in the 1990s that lasted for more than six years.

It appears that unions have no role in Cat’s limited back-to-the-USA plan. The company’s new domestic facilities tend to be located in “right to work” states. After recently trying to impose huge pay cuts at a factory in Ontario (photo), Cat first locked out the workers, then shut down the plant and is now reported to be shifting the work to a facility in Muncie, Indiana, the latest state to adopt a “right-to-work” law to hamstring unions.

By locating the Athens plant in a labor-unfriendly state such as Georgia, Cat is expected to be able to pay wages far below those in its unionized plants. It is also worth noting that Cat agreed to build the plant in Georgia only after it received $75 million in tax breaks and other financial assistance, one of the largest subsidy packages the state has ever offered.

The message of all this seems to be that the U.S. can enjoy a renewal of manufacturing if we are only willing to put up with a few minor inconveniences such as union-busting and big tax giveaways to corporations. That’s apparently what is really meant by American ingenuity.

A Not-So-Slow Boat to China

Thursday, August 25th, 2011

While U.S. political figures are wringing their hands about lackluster job creation, transnational corporations are desperately trying to hide their dirty secret: they are expanding their payrolls — just not in the United States.

The Washington Post recently published a front-page story about the fact that fewer and fewer companies are providing a geographic breakdown of their workforce in their annual financial statements, making it more difficult to track their hiring patterns.

They can get away with this because the Securities and Exchange Commission does not require this key bit of information in the mountain of data that publicly traded companies must include in filings such as their 10-K annual reports. Many companies that had chosen to report the breakdown voluntarily in the past are now deciding that the numbers are too sensitive to publish.

As the Post points out, quite a few of the non-reporters are companies that have been lobbying heavily for a special tax break on profits that they have been holding abroad for tax dodging purposes. A corporate front group called WinAmerica is arguing that a repatriation tax holiday would lead to an employment boon in the United States, even though a similar move in 2005 had no such effect.

What the Post article did not mention is that, while companies don’t have to disclose how many of their workers are based overseas, they do have to report how much of their non-financial “long-lived” assets are located abroad. This requirement stems from segment reporting rules established by the Financial Accounting Standards Board. The information is usually buried in the notes to the company’s financial statement.

Assets are a reasonable proxy for headcount in assessing the extent to which large U.S. corporations are placing more of their bets on foreign countries such as China and India rather than the US of A.

For a quick case study of asset exporting, I took a look at the financial statements of the publicly traded companies included on the list of supporters on the WinAmerica website. I examined the domestic/foreign split for assets in 2010 and compared it to that of a decade earlier.

Take the five big tech companies on the list: Apple, Cisco, Google, Microsoft and Oracle. From 2005 to 2010 their combined foreign assets grew by 329 percent, a rate more than one-fifth faster than the increase in their domestic assets. The most remarkable increase in foreign assets occurred at Google—a more than tenfold jump to $2.3 billion. Apple’s overseas properties increased fourfold to $710 million.

At some companies the portion of total long-lived assets held abroad is soaring. At Oracle, for instance, the figure last year reached 39 percent, up from 21 percent five years earlier.

High foreign assets levels are not limited to this group of tech giants. Pfizer has 43 percent of its assets outside the United States, Hewlett-Packard 45 percent and IBM has just over half. Even more remarkable is the case of General Electric: its foreign assets total $48.6 billion — nearly three times the $17.6 billion held at home.

GE is one of the dwindling numbers of large companies that provide a geographic breakdown of their workforce. Last year 54 percent of the company’s headcount was foreign-based — up from 42 percent a decade ago. During the ten-year period, GE added 62,000 employees abroad and only 2,000 at home.

Both in terms of their investment practices and their hiring patterns, companies such as GE have to a great extent given up on the United States even as they continue to cook up new schemes for tax breaks that will supposedly spur domestic hiring.

The trend has been long in the making. As early as the 1980s, GE made it clear it viewed itself as a global company not tethered to the U.S. In fact, the CEO at the time, Jack Welch, liked to say that, ideally, factories would be built on barges that could easily be moved from one country to another in quest of the lowest wages and weakest regulation. These days companies like GE don’t even consider docking their barges in the United States.

 

Billionaires, Blowhards and Bribery

Friday, March 11th, 2011

Billionaire Sheldon Adelson

The bond between David Koch and Scott Walker is not the only relationship between a reactionary billionaire and a rightwing politician contaminating the U.S. political scene. Attention also needs to be paid to what’s going on between Sheldon Adelson and Newt Gingrich.

Adelson — the fifth wealthiest person in the United States, with a net worth estimated by Forbes at $23 billion — has made a major bet on Gingrich. Since 2006 he has contributed $7 million to Gingrich’s fundraising entity American Solutions for Winning the Future. Through this 527 vehicle (and a regular political action committee with the same name), Gingrich is raking in loads of cash as he teases the country about whether he plans to run for President while mouthing off with a variety of reckless policy pronouncements.

The American Solutions website has a section labeled Corruption. In January a post there announced a new feature called Corrupt Report that was supposed to monitor news of misbehavior “regardless of political party.” Somehow the site has failed to cover the recent disclosure by Adelson’s company, Las Vegas Sands, that it is being investigated by both the Securities and Exchange Commission and the U.S. Justice Department for possible violations of the Foreign Corrupt Practices Act. The Nevada Gaming Control Board is also said to be looking into the matter.

The investigations presumably involved Adelson’s four casinos in Asia — three in China-controlled Macao and one in Singapore — where Las Vegas Sands has branched out from its U.S. gambling operations.

It will be interesting to see how a gambling-related bribery scandal affects the political prospects of Gingrich, who already has the burden of reconciling his “family values” rhetoric with the fact that he has been twice divorced.

Adelson’s support for Gingrich is far from his only foray into conservative politics. Like a number of other billionaires, he seems to have built his reactionary views on a foundation of anti-union animus. This began in the late 1990s, after Adelson purchased the Sands hotel and casino in Las Vegas — the former hangout of Frank Sinatra and the Rat Pack — and tore it down to make way for the gargantuan Venetian gambling emporium.

The Sands had been a unionized operation, but Adelson refused to recognize the Culinary Workers at the Venetian. When union supporters picketed in front of the casino, he tried to have them arrested, setting off a legal battle that lasted for a decade. More recently, Adelson was an outspoken foe of the Employee Free Choice Act, and today the Las Vegas Sands brags in its 10-K filing that none of the workers at its casinos are covered by collective bargaining agreements.

In 2007 Adelson founded  Freedom’s Watch, an advocacy group that tried to build support for the Bush Administration’s surge strategy in Iraq, beat the drum on what it called the “Iranian Threat” and which in 2008 was being touted as the right’s answer to MoveOn.org — a claim that somehow missed the distinction between a group funded by large numbers of small contributions and one bankrolled mostly by a single multi-billionaire. Despite that money, Freedom’s Watch was a short-lived flop.

Adelson also became active in Israel, where he started a conservative newspaper and became a leading backer of rightwing politicians, especially Prime Minister Benjamin Netanyahu. He has also been an apologist for the repressive Chinese government, which allowed him to build his lucrative casinos in Macao.

At times Adelson has been called the Right’s answer to George Soros. The difference is that Adelson’s political views serve his financial self-interest, especially when it comes to paying taxes. According to a 2008 profile of the gambling magnate in The New Yorker, Adelson once said to an associate: “Why is it fair that I should be paying a higher percentage of taxes than anyone else?”

It’s amazing that Adelson, whose only higher education came from a stint at the tuition-free City College of New York, can forget that progressive taxation (or what’s left of it) is what pays for the public institutions and infrastructure that help people like him succeed.

Even more dismaying than billionaires’ deluding themselves into thinking that they are completely self-made is the fact that they can now use large amounts of their undertaxed wealth to promote policies that make life ever more harsh for the rest of us.

Mubarak’s Foreign Corporate Backers

Thursday, February 3rd, 2011

Pro-Mubarak thugs charged into Tahrir Square on horses and camels in an effort to save the embattled Egyptian dictator. It was not long ago that the regime was being propped up by a different breed of supporter: foreign investors arriving on corporate jets with billions of dollars in capital.

Long overdue attention is being paid to the foreign arms contractors that have equipped the Egyptian military with weapons funded by U.S. aid programs. Also deserving of close scrutiny are the major U.S. and European corporations that have invested heavily in Egypt, thereby shoring up the regime. Here are some of the main culprits.

BP. Formerly known as British Petroleum, BP has a long history in the Middle East in general and Egypt in particular. The company’s website makes no bones about its huge involvement in Egypt during the Mubarak regime: “BP Egypt has been a significant part of the Egyptian oil and gas industry for more than 44 years. During this time, we’ve been responsible for almost half of Egypt’s entire oil production and we are the single largest foreign investor in the country…Over the years we’ve established strong relationships with the Egyptian Government and the Ministry of Petroleum.” In July 2010 BP agreed to sell some of its Egyptian assets to Apache Corporation as part of a divestment effort to raise funds to pay for the cleanup of its massive oil spill in the Gulf of Mexico.

Nestlé. Just a week before protests broke out in Cairo, this Swiss food giant announced that it would invest some $170 million to expand its existing factories and distribution centers in Egypt, adding 500 new jobs to its 3,000-person workforce. After the announcement, the country’s Ministry of Investment put out a press release quoting Nestlé’s CEO as saying that the move was based on studies “that had proven Egypt to be a promising market with security, stability and high profitability in the long term.”

Procter & Gamble. In June 2010 P&G laid the cornerstone on a huge new diaper manufacturing plant outside Cairo. The $176 million facility would nearly double the value of P&G’s operations in Egypt, which currently involve the production of products such as detergents, soaps and other personal care products.

Electrolux. The Swedish appliance company announced last October that it would spend about $475 million to buy a controlling interest in Egypt’s Olympic Group, the largest producer of household appliances in the Middle East and North Africa.

Saint-Gobain. In July 2010 the large French construction materials firm opened a $100 million glass production plant in Ain El Sokhna on Egypt’s Red Sea coast.

PepsiCo. In December 2009, International Dairy and Juice Limited, a joint venture between PepsiCo and Almarai, announced that it had acquired Egypt’s International Company for Agro-Industrial Projects (Beyti).

Deals such as these – some of which are now on hold – helped to make Egypt the second largest recipient of foreign direct investment among African nations (behind Angola). In 2008 the U.S.-based National Outsourcing Association named Egypt its “Outsourcing Destination of the Year.”

The appeal of Egypt for foreign investors is not just better access to a market of 80 million consumers. As in China, a repressive political environment has weakened the power of labor and kept down wages to the advantage of major employers, both foreign and domestic.

Egyptian workers have been attempting to build a movement that would help raise their standard of living. A series of labor protests helped pave the way for the current uprising. The group that is credited with sparking the revolt, the April 6 Movement, takes its name from the effort to support workers who launched an aborted general strike in 2008. Hundreds of workers took to the streets of Cairo last May to call for an increase in the country’s pitiful minimum wage while also calling for an end to Mubarak’s rule. And amid the current revolt, Egyptian workers formed a new independent labor federation.

Large corporations try to have it both ways. They promote the view that the expansion of “free” markets goes hand-in-hand with the growth of free societies, yet they do not hesitate to do business in the most repressive societies. And they are quick to take advantage of repression’s side effects, above all weak unions.

However the uprising in Egypt turns out, it has served to highlight the hypocrisy not only of the U.S. government but also that of big business when it comes to selective support for democracy. And like the Obama Administration, major corporations will have to scramble to avoid ending up on the wrong side of history.

U.S. Workers Face Chinese Employers

Thursday, January 20th, 2011

Much of the discussion of Hu Jintao’s visit to the United States is focused on China’s treatment of its dissidents and its workers, but another issue is becoming increasingly important: the treatment of U.S. workers by the Chinese companies that are rapidly expanding their presence in the United States.

Hu’s decision to include a stop in Chicago is not meant primarily as an homage to President Obama’s hometown. He wants to spotlight a Chinese-owned company called Wanxiang America, which from its suburban Chicago headquarters has built an auto parts and renewable energy conglomerate that has become the largest example of direct foreign investment in the U.S. from the People’s Republic.

Until recently, China accounted for a negligible portion of overseas money flowing into the American economy. But in the past two years there has been an enormous influx. The Washington Post cites a consulting company estimate that the Chinese stake has jumped to $12 billion since the beginning of 2009.

There’s every indication that number will continue to rise rapidly. The Chinese government is encouraging the trend to help protect its access to American markets, and the job-hungry U.S. seems to no longer have any of the objections that thwarted the efforts of Chinese companies to buy the oil company Unocal and the appliance firm Maytag a half dozen years ago.

Many U.S. observers are celebrating the arrival of Chinese capital, but this is actually a very dismaying state of affairs. The fact that companies from a country in which many workers are paid near-starvation wages find it economical to produce here says a lot about the dismal state of labor in the United States. The anti-union hostility of American employers has forced down pay rates in this country to the point that the U.S. is now considered a low-wage haven, at least among the countries of the developed world.

There’s no indication that investors coming from a dictatorship of the proletariat will do anything to reverse the decline of U.S. workers’ power. If anything, they will follow the pattern of companies from heavily unionized countries in Europe and Asia that eagerly embrace the culture of union-busting once they arrive on these shores.

Chinese investment in U.S. industry has already shown signs of anti-union animus. Not long after China International Trust and Investment Corp. (CITC) took over bankrupt Phoenix Steel in Delaware back in 1988 with the support of the United Steelworkers, the new operation, named CitiSteel, refused to recognize and bargain with the union, which had represented the Phoenix workforce for decades.

And when appliance-maker Haier Group became the first large Chinese company to build a factory from scratch in the United States, it chose South Carolina, one of the states most hostile to labor unions. In subsequent years, Chinese firms have continued to concentrate on right-to-work states. For example, Tianjin Pipe is planning to build a $1 billion production facility in Texas.

Today’s U.S. affiliates of Chinese companies are not entirely non-union. Wanxiang America has taken over unionized auto parts operations being shed by major U.S. companies, but many United Autoworkers members depart during the buyouts and other workforce reductions that accompany the change in ownership. The UAW has also survived GM’s sale of Nexteer Automotive to China’s Pacific Century Motors—a deal that went through after union members approved a contract that cut wage rates.

The ability of these companies to maintain good relations with their unions will depend in part on whether they engage in the kind of restructuring ploys favored by U.S. employers. It was not an encouraging sign when Neapco Components, an affiliate of Wanxiang America, announced last year that it was shutting down its manufacturing plant in Pottstown, Pennsylvania and transferring the operation to Nebraska, where state officials arranged for the company to get $1 million in federal stimulus funds to underwrite the move.

The larger labor relations challenge is the inevitable clash between Chinese and U.S. workplace cultures. Even in non-union companies, U.S. workers are used to a certain level of respect for individual rights. Many Chinese firms retain the remnants of a repressive collectivism. The Haier plant in South Carolina, for instance, is festooned with motivational banners exhorting workers to “make the impossible possible without an excuse.” The original Chinese managers there caused resentment by chastising individual workers for slip-ups in front of the entire workforce.

It remains to be seen how U.S. workers take to the pseudo-Maoism of contemporary Chinese business, but there’s no question that the rise of Chinese investment is another strong argument for the revival of an aggressive U.S. labor movement.

The Real Cost of Obama’s Trip to India

Friday, November 5th, 2010

The rightwing media machine is up in arms about a dubious report that the cost of President Obama’s trip to India will turn out to be more than $200 million a day, for a 2,000-person entourage. The White House calls the cost figure wildly inflated.

The manufactured controversy about cost is taking attention away from what should be the main story: who is accompanying the President on the trip and what do they hope to get out of it. A big part of Obama’s entourage will be scores of top U.S. corporate executives, who are seeking Obama’s help in initiating or finalizing big deals with the Indian government and Indian corporations. Numerous other U.S. companies are not sending executives on Obama’s trip but are still hoping the visit will advance their interests in India.

Among the deals that have been reported are: the sale of ten military transport planes worth some $5 billion by Boeing and the sale of $800 million in fighter jet engines to the Indian military and $500 million in heavy duty gas turbines to India’s Reliance Energy, both by General Electric. Other dealmakers are said to include Eaton Corp., John Deere, Caterpillar and Harley-Davidson.

In other words, a President endlessly denounced by the Right as a socialist, is serving as a shill for some of the country’s largest corporations. This is far from the first time an American president has acted as salesman-in-chief for American products, and the White House makes no apologies for the trip, claiming that it will result in the creation of thousands of jobs.

The problem is that it is far from clear that landing big deals for U.S.-based corporations will result in many jobs for U.S. workers. The list of companies with executives going to India with President Obama (or that stand to benefit from the trip) include some of the most notorious practitioners of offshore outsourcing.

Take the two heaviest hitters on the trip. Boeing has made a science of shifting work from its traditional manufacturing operations around Seattle to factories around the world. It has clashed repeatedly with its unionized workers over the issue. And when it’s not sending jobs abroad, it moves them to domestic non-union plants, such as its big new operation in South Carolina.

General Electric is another unabashed offshorer. In the early 1990s about one-quarter of the company’s employees were outside the United States; at the end of last year, 56 percent of them were. What’s especially frustrating is that GE is offshoring jobs in emerging fields such as renewable energy, thus depriving many American workers of a shot at the jobs of the future.

Eaton, a diversified manufacturer of industrial products, now has 27 facilities in China with some 10,000 workers as well as four research and development centers in the country. In April, John Deere opened a manufacturing plant and parts distribution center in Russia. It already had factories in low-wage countries such as Brazil, China, Ecuador, India and Mexico. Caterpillar has eight plants in China, eight in Mexico, three in India and many more in other countries. It recently opened a logistics center in China to support what a company press release called its “growing manufacturing footprint” in that country.

Harley-Davidson is an icon of U.S. manufacturing, but it just announced plans to open a new plant in India to assemble U.S.-made motorcycle kits. It is unclear whether this will increase or decrease jobs at the company’s American plants, which have been exporting fully assembled motorcycles to the Indian market.

It’s true that these companies have to do a certain amount of production in countries such as China and India to sell to local customers, yet it is also undeniable that these firms and others seeking benefits from Obama’s trip have been reducing manufacturing operations in the United States that previously supplied goods for both domestic and foreign markets.

There is no guarantee that the jobs Obama hopes to generate with his sales trip to India will end up going to Americans. The companies whose wares he is promoting are in many cases American only in terms of where their headquarters are located. They are all too willing to destroy the livelihood of U.S. workers in their global pursuit of cheaper labor and fatter profits.

That kind of behavior costs this country much more than what the President’s delegation could ever spend on its trip to India.

Tracking Corporate Traitors

Friday, October 8th, 2010

Not too many years ago, America was up in arms about offshore outsourcing. The news media were filled with reports of the wholesale migration of both white collar and industrial jobs to low-wage havens in Asia. The mood of panic was reflected in articles such as the March 2004 Time magazine cover story Is Your Job Going Abroad?

For most people these days, the outsourcing controversy has largely been forgotten or recalled only in the context of the new NBC sitcom situated in an Indian call center.  But for the folks at the AFL-CIO, offshoring is neither a laughing matter nor a thing of the past. The labor federation and its community affiliate Working America have just released both a report and a database showing that the corporate practice of shifting jobs from the United States to cheaper foreign locales is still a burning issue for American workers and the American economy.

The report cites evidence that the use of offshoring is expanding in corporate America, though many companies have learned to be more discreet about it. The true extent of the job migration is difficult to determine, the report notes, because federal statistical agencies such as the Bureau of Labor Statistics and the Bureau of Economic Analysis are not set up to measure this kind of phenomenon accurately.

For those less inclined toward policy briefs and more concerned about conditions in their community, the AFL and Working America also released a new version of their Job Tracker database. It allows one to plug in a Zip code and see a Google map with pushpins indicating workplaces that have experienced job flight, as indicated by WARN Act filings, Trade Adjustment Assistance certification and other data sources. Job Tracker also shows which workplaces have been hit with health and safety violations (from the OSHA database), labor law violations (from the NLRB database) and employment discrimination violations (from the database of the Office of Federal Contract Compliance Programs).

This is a great resource for researching bad employers, whether or not they are moving jobs offshore. The site also has a feature allowing a user to recommend a company that should be featured on Job Tracker. It would be great to see it expanded even more to cover other forms of regulatory violations as well as key data such as government contracts and subsidies.

The Job Tracker is handy for finding out how employers in specific locations export jobs, but it is also helpful to see aggregate figures for corporate behemoths. The AFL/Working America report mentions the case of IBM, whose U.S. workforce dropped from more than 40 percent of the company’s worldwide total in 2005 to just over a quarter in 2009.

IBM is far from unique. Based on figures from its 10-K SEC filings, the U.S. share of General Electric’s workforce dropped from 51 percent at the end of 2005 to 44 percent at the end of 2009. During the same period, the U.S. share at Caterpillar fell from 52 percent to 46 percent. Even at Wal-Mart, celebrated for creating American jobs (such as they are), the U.S. share declined from 72 percent to 67 percent. For many corporations it is not possible to measure the trend, given that they choose not to give a geographic breakdown of employment in their 10-K or annual report.

The tendency of large U.S.-based corporations to invest and create low-wage jobs abroad is not a new story. But the decision by such companies to expand employment overseas at the expense of U.S. jobs during a period of severe recession at home amounts to a form of economic treason. In this way, the Job Tracker is not just a database but also a corporate crime detector.