Globalization and the decline of the industrial unions

[Marvin Gandall <marvgandall@xxxxxxxxxx>]

An article in today's New York Times (excerpts below) provides another
illustration of how the global supply chain has made US capital more nimble
and weakened the American working class. This is not just an American story,
but true of all of the wealthier OECD countries where industrial unionism
originated.

The traditional response of labour to the relocation of production was to
organize the unorganized in low-wage areas sought out by capital, and
national organizations and labour federations developed within this
context - a national one, where there was a high level of linguistic and
cultural homogeneity. But rapid technological advances in communications and
transportation have given Western and Japanese capitalism a new lease on
life, making it easier to transfer production outside national boundries and
much harder for unions with the necessary resources to follow to organize
the unorganized and unite in common organizations with workers speaking the
same language and sharing the same culture.

The article tries to put a brave face on the picture for American workers,
by declaring: "Globalization: It's Not Just Wages", and suggesting that that
workers in Clyde, Ohio, are also benefiting from Whirlpool's worldwide
operations. But, as the account of Whirlpool's Ohio plant indicates, such
cases are still typically about wages, except in the declining number of
instances where the same skills are unavailable abroad. Unemployment is
slowed only where American, Japanese, and West European workers are willing
to accept job,wage and benefit cuts to offset the higher shipping costs of
supplying their developed home markets from far-flung branch plants.

MG
---------------------------------------
Globalization: It's Not Just Wages
By LOUIS UCHITELLE
New York Times
June 17, 2005

BENTON HARBOR, Mich. - Who is the biggest exporter of German-made washing
machines
to the United States? Not Miele or Bosch-Siemens, or any other German
manufacturer. It is the American appliance maker, Whirlpool, the company
proudly reports.

Never mind the higher labor cost - $32 an hour, including benefits, versus
$23 in the United States. The necessary technology existed in Germany when
Whirlpool decided to sell front-loading washers to Americans. So did a
trained work force and a Whirlpool factory already making a European version
of the front loader.

"We were able to expand the capacity in Germany at a very incremental
investment," said Jeff M. Fettig, Whirlpool's chairman and chief executive.
"It was the fastest way to the American market."

Globalization is often viewed as a rootless process of constantly moving
jobs to low-wage countries. But the issue is more complex, as illustrated by
Whirlpool's worldwide operations. What attracts Mr. Fettig and other chief
executives is a relatively new form of globalization that emphasizes
first-rate centers of production and design in various countries - including
the United States.

Whirlpool's global network, a work in progress, includes microwave ovens
engineered in Sweden and made in China for American consumers; stoves
designed in America and made in Tulsa, Okla., for American consumers;
refrigerators assembled in Brazil and exported to Europe; and top-loading
washers made at a sprawling factory in Clyde, Ohio, for American consumers,
although some are sold in Mexico.

"The really sophisticated multinationals," said Diana Farrell, director of
the Global Institute at McKinsey & Company, the management consulting firm,
"are taking advantage of the different locations in their global networks
without worrying about whether they also sell in the countries where they
produce."

The advantage of Whirlpool's approach to globalization is that it allows the
company to put the earnings of overseas affiliates to their best use
anywhere in the world, Ms. Farrell argues. The larger consequence, she adds,
is that parent companies "invest in new technologies and business
opportunities that will eventually create new jobs at home and abroad."

At the moment, the job growth and the expansion are mainly abroad. As its
turns out, more than 40 percent of the nation's imports are from the
overseas subsidiaries of American companies, contributing to the lopsided
trade deficit, but also making companies more competitive. Whirlpool is a
typical example: its employment in the United States has not risen in years
while it has tripled abroad.

The "global production footprints," as Ms. Farrell calls them, draw on a
growing network of first-rate suppliers in Mexico, China and elsewhere that
allow manufacturers to go beyond mere assembly overseas into complex
production. And the investment, once made, becomes an anchor; a sunk cost,
as economists put it.

[...]

Maytag, in a statement, said that it, too, has now resorted to globalization
to get back into the game. The newest model "is made in South Korea through
a technology and manufacturing partnership with Samsung," Maytag said.

Whirlpool's executives take issue with analysts who declare that low foreign
wages, particularly in China and elsewhere in Asia, combined with generous
subsidies from those countries, will keep the global production networks
mobile. Company executives say the manpower required to make its appliances
is declining, diluting the drawing power of lower wages. One hour of labor,
for example, goes into each of the 20,000 top-loaders coming off the line
daily at Clyde, down from 2.5 hours five years ago.

"We may pay $23 an hour in Clyde, including benefits, versus $3 in Mexico
versus $1 in China," Mr. Fettig said. "But for one hour of labor, the
difference won't begin to cover the shipping costs, let alone the investment
it would take to build a new factory in Mexico or a new factory in China."

The Clyde factory, which employs 2,000 people, is billed as a jewel in
Whirlpool's production network - an efficient, partly automated operation
whose experienced workers possess a "tribal knowledge" of their product that
pays off in quality and cost saving. But if the Clyde factory did not
already exist, Mr. Fettig would not put it there. "I'd probably put it in
Mexico," he said.

Whirlpool's total of 23,000 employees in this country has not changed in a
decade, while the overseas work force has tripled, to 45,000. Yet, American
consumers, not foreigners, account for two-thirds of Whirlpool's annual
revenue, which was $13.2 billion last year, up from $10.3 billion in 2000.

Full:http://www.nytimes.com/2005/06/17/business/worldbusiness/17whirlpool.html?th&emc=th