Posted on 05/18/2003 4:20:12 AM PDT by sarcasm
DES MOINES, Iowa--Jobs are leaving the rural Midwest in increasing numbers and economists say, unlike the plant layoffs in previous recessions, factory closings might mean they are gone for good.
Rural factories across the nation cut 4.6 percent of their payrolls last year and about 140 plants closed, according to the Bureau of Labor Statistics. Nearly 500,000 jobs were lost in February and March alone.
Operating capacity at the nation's factories is the lowest since June 1983, according to a recent Federal Reserve report.
Mark Drabenstott, an economist with the Federal Reserve Bank of Kansas City, said factory closings represent 45 percent of layoffs last year at rural factories.
One factor might be globalization--the cheap labor and land that drew many companies to the rural Midwest can be found even cheaper in some other countries, Drabenstott said in a recent newsletter.
One recent example might be the closing of a Maytag Corp. refrigerator factory in Galesburg. The plant will close by the end of next year, leaving 1,600 workers without jobs.
Much of the work will be transferred to an existing plant in Iowa and a plant to be built in Reynosa, Mexico, which will employ 500 people. The average worker at Galesburg makes $15.14 an hour, while workers at Reynosa plants make as little as 58 cents an hour.
Maytag produces $4.7 billion worth of washers, dryers, refrigerators, ovens and floor cleaners annually. Its brands include Amana, Hoover and Maytag.
The Iowa-based company says it has been forced to adapt to a global market that has driven down prices.
''I'm a strong advocate of creating American jobs,'' said Maytag CEO Ralph Hake. ''I'd much rather manufacture our products in the U.S., but we must make good business decisions.''
''Spurring business innovations and more high-growth business starts is an awfully important piece of the economic development puzzle these days,'' Drabbenstott said. ''The key is how do we think about a rural future in which we go beyond the basic industrial plants and think about more knowledge-based industries and move up the technology ladder.''
Thjank You NAFTA
"While we prefer to have an American run the company," said Schlimmer, "we must maximize shareholder returns. CEO Ralph Hake costs us $1.8 million a year in direct compensation. We believe our search in Mexico might allow us to find comparable leadership for $63,000."
As to factories relocating to Mexico. That is a direct result of Nafta and what else did we expect. Oh yes Maytag appliances will be cheaper as a result but there will eventually be a fall in sales as well as the loss of their quality reputation. It is an execellent very short term strategy of milking all the good will built over the years to eventually destroy the company while the CEO who is an employee of the company lines his/her own pockets. The board of directors with their fiduciary duty to the stockholders will ignore that duty and go along with the CEO until the company is on the rocks. Thus the owners of the stock will be left holding valueless paper.
There shouldn't be any loss of quality. Appliances aren't horribly complicated, even a trained monkey could assemble a washer or dryer from a crayon schematic. Take a look inside yours sometime, you will be shocked at what's NOT hiding inside that huge, metal cabinet. As the majority of it is empty space.
If they experience a loss in sales, it will be because people can't afford to modernize their appliances as frequently, or when they do so choose cheaper brands because they went from making $14.00 an hour at the Maytag plant to $7.00 an hour stocking shelves at Big Lots.
Perhaps if they get together and build their new washer/dryer plant in china?
Yea, and now he thinks the solution to our problems is to develop a big slush fund, funded by increased taxes on Internet sales and cigarettes and alcohol, then establishing a committee to decide which businesses standing there with their hands out will receive the funds. I guess it makes sense for successful businesses to fund risky businesses. That will make us more prosperous, sure it will.
Maybe they are. The globalists said we Americans needed to compete with the third world ----they always claimed that as a goal. In third world countries about 10% of the population does extremely well, the rest either can't find work or their work goes to profit the elites but not themselves.
Oh my..
America is on a downward spiral of standard of living. It is inevitable. More unemployed American workers chasing fewer jobs and competing against slave wages worldwide mean we are going to descend to wage levels of third-world countries.
It won't matter how cheaply we can buy a house, car or household goods. We simply won't earn enough to make the payments. That is exactly the fate of the 58-cent-an-hour Mexican worker. We will share that fate.
Competing against the labor costs in countries where people pee in the streets, live in cardboard boxes and have no government regulation of labor or safety means WE are probably headed toward similar poverty.
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