By Phil Mattera, Dirt Diggers Digest
Critics of the $787 billion Recovery Act complain it is not doing
enough to revive the economy, but they rarely ask why the companies
that are receiving stimulus contracts and grants are not hiring more
people. Now one of those recipients is facing a growing controversy
over its employment practices in a case that helps explain why jobs
remain in short supply.
Appliance maker Whirlpool is under fire
from organized labor for its decision to shut down a 1,100-worker
refrigerator plant in Evansville, Indiana and shift the work to a
company factory in Mexico. The announcement
was actually made last August, but it did not get national attention
until recently, when union activists realized that Whirlpool had been given a $19.3 million grant
by the U.S. Department of Energy to develop “smart appliances.” The
funding was part of the Recovery Act’s $4.5 billion pot of money to
encourage the development of the smart transmission grid.
The grant was not directed to the Evansville plant, but unions are
nonetheless indignant that a company engaged in exporting jobs to a
foreign low-wage location is receiving federal aid. The company made
things worse for itself by warning
workers not to participate in a planned protest demonstration featuring
AFL-CIO President Richard Trumka. The union at the plant, IUE-CWA Local
808, has filed an unfair labor practice charge over the warning.
This situation shows the difficulty of using stimulus funds or other
incentives to generate employment at a time when so many large
corporations no longer have an interest in producing things in the
United States.
Consider Whirlpool. For decades its production activities were
almost entirely located in the USA. In the 1980s that began to change
as the company started to focus more on overseas markets. It bought
large shares in the Canadian company Inglis, Mexico’s Vitromatic and
then the European appliance business of the Dutch company Philips. In
1990 Forbes wrote that Whirlpool was “going global — with a vengeance.”
If Whirlpool’s foreign expansion was meant only to meet demand in
foreign markets, that would be one thing. But the company began a
process of reducing its manufacturing in the United States and other
developed countries while increasing it in foreign low-wage havens. One
of its favorite havens was Mexico. In the late 1980s the company closed
numerous U.S. plants and shifted production to Mexican maquiladora
plants. In 1996 the plant in Evansville lost about 265 jobs when some
refrigerator production was moved to Mexico. In 2003 Whirlpool shifted
some production from its facility in Fort Smith, Arkansas to a new
plant south of the border.
The latter move came a decade after a bitter dispute between the
company and the workers in Fort Smith represented by the Allied
Industrial Workers union. In 1989 Whirlpool unilaterally imposed
concessions on members of AIW’s Local 370, prompting the union to
launch a national boycott of the company. In 1991 the head of the local
confronted Whirlpool executives and directors at the company’s annual
meeting, calling on them to abandon their “narrow-minded, shortsighted,
union-busting behavior.” The dispute was not settled until 1993.
In 2006 the Evansville and Fort Smith plants lost a total of about
1,200 jobs to Mexico. Or, in the antiseptic terms of Whirlpool’s press release: “The company also is adjusting its workforce levels at several of its
North American manufacturing facilities to optimize production levels
and take advantage of its expanded manufacturing footprint.”
In other words, the current shutdown plan in Evansville is just the
latest in a series of “adjustments” by which Whirlpool is ridding
itself of decently paid U.S. workers and replacing them with much
cheaper labor abroad. The 1,100 losing their jobs are the remnant of a
Whirlpool workforce in Evansville that back in the early 1970s totaled nearly 10,000. Companywide, 26 of Whirlpool’s 37 production facilities are now located outside the United States.
It did not seem to occur to Whirlpool that there was anything
unseemly about accepting federal stimulus funds at a time when it was
closing a domestic plant. In fact, something similar happened seven
years ago. In 2003, during a period when the downsizing of the
Evansville plant was already under way, the company accepted a $1.3
million grant from the U.S. Department of Energy — via the Indiana
Department of Commerce — to help develop a new manufacturing process
for energy-efficient refrigerators produced in Evansville (source:
Associated Press, February 8, 2003 via Nexis).
Until the federal government is prepared to do something serious
about offshoring, it should at least refrain from giving financial
assistance to firms that engage in the practice, even if the aid is
going to a different part of the company — and even if it is for a
laudable purpose such as promoting energy efficiency. The federal
government now has a (non-public) contractor misconduct database
to help it avoid giving procurement awards to bad actors. Perhaps there
should also be a list of job-exporting companies which would be
ineligible for federal aid until they reaffirm their commitment to
domestic production.