Thread: La-Z-Boy And Whirlpool Moving To Mexico

La-Z-Boy And Whirlpool Moving To Mexico

It Ain't Lookin' Good Folks
By Neal Ross
4-7-8

More bad news on the economic front, two companies, La-Z-Boy and Whirlpool are giving out termination notices and moving their operations to Mexico. Hundreds of workers in the Dayton and Cleveland areas will soon be out of jobs when the new facilities in Mexico open in January.

La-Z-Boy's CEO stated that, "Speed to market for custom orders is a tenet of our brand promise to the consumer and the strength of our U.S. facilities enables us to deliver on that promise. With its proximity to the U.S. and the lower cost structure inherent in a Mexican-based operation, we made the decision to transition our domestic cutting and sewing operations while streamlining the assembly aspect of production in the United States."
La-Z-Boy also stated, "Our new Mexican facility will be able to rapidly supply our domestic plants with cut-and-sewn fabrics and leather for custom orders and will complement the existing cut-and sew program from China, which supplies our U.S. manufacturing operations with kits for our high-volume SKUs."
Just business as usual in the good ole US of A, right? I guess if you call stabbing the people of this country in the back for profit business as usual, yeah it is.

Our government and the Chairman of the Federal Reserve Board refuse to admit that this country is, and has been for quite some time, in a recession. It could be worse, we could be in a depression. I wonder, how many people understand the difference?

According to the dictionary a recession is a slowdown of economic growth or output. A depression on the other hand is a recession coupled with an increase in unemployment.

Our government is fond of using statistics to prove that unemployment hasn't drastically risen, which would indicate a depression. However, they fail to mention that far too many Americans have lost their jobs, good paying jobs with benefits and a decent salary, only to be forced to accept a job with cheaper wages and less benefits. So, while the statistics may make it seem like things aren't that bad, the truth is that many people in this country are struggling to make ends meet. I find it interesting that when George W. Bush took office we were at the end of a recession, and now that he is ready to leave office we are once again in a recession.

Getting back to my opening comments, that Whirlpool and La-Z-Boy have decided to close down part of their operation here and move it to Mexico, they are not alone when it comes to moving jobs out of the United States, displacing American workers for cheap foreign labor.

David Zielengziger wrote an article back in 2003 entitled US Companies Moving More Jobs Overseas. In it he wrote about how many US corporations are sending more and more high tech jobs to places like India and China, but they are keeping it a secret, except to those who lose their jobs because of it, for fear of backlash from the public.

In his article he stated that Morgan Stanley estimated the number of U.S. jobs outsourced to India would double to 150,000 and that as many as two million white collar jobs such as programmers, software engineers would move to countries where the wages were cheaper by the year 2014.

CNN ran an article on January 19, 2004 about the very same subject. According to their article there was a labor group which called themselves the Washington Alliance of Technology Workers who published a power point presentation on their website entitled Thinking About India. Senior Vice President Brian Valentine cited all the advantages of moving business to India, saying a company could get "two heads for the price of one."
http://money.cnn.com/2004/01/19/news/ec ... /index.htm

Microsoft CEO Bill Gates has been making repeated calls for an increase in the cap for H1B visas to allow for the importation of workers from overseas. Gates claims that there just aren't enough qualified workers to fill the positions. He fails to mention that most of these workers are paid less than what their American counterparts would be and that why should anyone take the time to get a degree in a career when the prospect of losing your job to an imported worker, or have it outsourced is always on the horizon?

Many of these companies are reluctant to talk about outsourcing for fear of the public outcry. Jack Trout, a member of Trout & Partners, a marketing strategy company made the statement that "Nobody has come up with a way to spin it in a positive way." Gee, I wonder why? Maybe because other than boosting corporate profits, there is no way to spin it positively for the American worker.

According to the AFL/CIO, the problem of jobs lost by American workers is huge. According to statistics presented on their webpage, since 2001 two and a half million manufacturing jobs and more than 850,000 professional service and information sector jobs have been lost.

The following statistics are straight from there webpage, which can be found

http://www.aflcio.org/issues/jobseconom ... oblems.cfm
How Many Jobs Have We Lost?

More than 3 million manufacturing jobs have disappeared since 1998, and the Economic Policy Institute estimates 59 percent or 1.78 million of these jobs have been lost due to the explosion in the U.S. manufacturing trade deficit over the period.

Goldman Sachs estimates 400,000Â*600,000 professional services and information sector jobs moved overseas in the past few years, accounting for about half of the total net job loss in the sector over the period. A Deloitte Research survey found one-third of all major financial institutions are already sending work offshore, with 75 percent reporting they would do so within the next 24 months. A U.C. Berkeley study found 25,000 to 30,000 new outsourcing-related jobs advertised in India by U.S. firms in just one month in 2003.
One service sector hard hit by job losses is information technology, especially software. The pro-outsourcing consulting firm Global Insight estimates we lost 104,000 information technology jobs to offshore outsourcing between 2000 and 2003, more than a quarter of the 372,000 jobs lost in the sector overall during the period. The Economic Policy Institute found employment in U.S. software-producing industries fell by 128,000 jobs from 2000 to early 2004, while about 100,000 new jobs producing software for export to the U.S. were created in India over the same period of time.

States are outsourcing public sector jobs as well, though most state governments do not know exactly how many. At least forty states contract out administration of electronic benefit cards for the food stamps program offshore. In one audit, the state of Washington found 36 out of 41 agencies were contracting out work overseas. A recent study by INPUT Research projects outsourcing of state and local government technology contracts will grow from $10 billion last year to $23 billion in 2008.
From November 2002 to January 2004, the U.S. Department of Labor certified 246,398 workers who lost their jobs due to trade for Trade Adjustment Assistance (TAA). This is in addition to the estimated1,112,775 workers who were certified for TAA between 1994 and the end of 2002. These figures are very under-inclusive: they only count workers who know about the TAA program, apply for it, and qualify under the program's strict eligibility requirements. The numbers do not include most service sector workers or workers who have lost their jobs due to shifts in production to China neither group is eligible for TAA. Nor do they include workers erroneously denied TAA certification by the Labor Department.
The Economic Policy Institute estimates that between 1993 and 2000, our lopsided trade policies, reflected in the explosive increase in the U.S. trade deficit, cost Americans a net 3 million jobs and job opportunities. The growth in the NAFTA trade deficit alone is associated with nearly 900,000 lost jobs and job opportunities through 2002.

How Many Jobs Will Be Lost?

Forrester Research Inc. predicts U.S. employers will move 3.4 million white-collar jobs and $136 billion in wages overseas by 2015. The outplacement firm Challenger, Gray and Christmas estimates the number of service-sector jobs moving overseas each year will hit 588,000 by 2005. A University of California at Berkeley report finds 14 million jobs are at risk of being sent offshore, and predicts job losses will exceed the Forrester study's projections.

Gartner Inc., a high-tech forecasting firm, estimates 10 percent of computer services and software jobs will be moved overseas by the end of this year, while a study by Meta group projects 40 percent of corporate tech operations will move offshore by 2008.
A survey by Deloitte Research found the world's 100 largest financial services firms expect to shift $356 billion worth of operations and about two million jobs to low-wage countries over the next five years. Another Deloitte survey of 42 global telecom operators projects 275,000 jobs in the sector will be sent off-shore by 2008.

Alan Tonelson of the U.S. Business and Industrial Council said that these companies that offshore their labor are "are paying Chinese wages and selling at U.S. prices," He went on to say that, "They're not creating better living standards for America."

Forrester Research is a research company with the following mission statement,

"Forrester Research, Inc. (Nasdaq: FORR) is an independent technology and market research company that provides pragmatic and forward-thinking advice to global leaders in business and technology. For more than 24 years, Forrester has been making leaders successful every day through its proprietary research, consulting, events, and peer-to-peer executive programs."

In November of 2002 they produced a list of projected jobs that would be moved overseas by the year 2015. Among those listed, 288,000 managerial jobs, 472,000 jobs in the computer industry, 184,000 architectural jobs, and a staggering 1.6 million office jobs.

Around the same time the Paaras Group which states "Our mission is to help our clients excel. We are partners in their success. Our primary goal is to add significant value to their business by facilitating implementation of innovative and cost-effective solutions. Typically, we seek to add value equivalent of at least 10-20 times our professional fees." produced a chart that compared the savings for companies between salaries paid to U.S. workers than those paid to workers in India.

For instance a software programmer in the U.S. earned $66,000 per year, compared to $10,000 per year in India. In the U.S. a mechanical engineer would be paid $55,000, while their counterpart in India a mere $5,900, an IT Manager in the U.S. $$55,000 and in India only $8,500.

These figures do not bode well for American workers. You might be wondering what President Bush has to say about all these jobs being sent overseas? In his annual economic report for the year 2004, President Bush stated, "One facet of increased services trade is the increased use of offshore outsourcing in which a company relocates labor-intensive service industry functions to another country... The principal novelty of outsourcing services is the means by which foreign purchases are delivered... The basic economic forces behind the transactions are the same, however. When a good or service is produced more easily abroad, it makes more sense to import it than to make or provide it domestically." - February, 2004 Economic Report of the President, page 229.

Following the report, N. Gregory Mankis, Chairman of the President's Council of Economic Advisors, made the following comments, "I think outsourcing is a growing phenomenon, but it's something that we should realize is probably a plus for the economy in the long run... More things are tradeable than were tradeable in the past and that's a good thing... Outsourcing is sort of the latest manifestation of the gains from trade..."

The gains from trade. Who is gaining, not the American worker when they lose their job to someone in India, China or some other country that pays substantially lower wages than their American counterpart.

These corporations could care less about the workers they displace. They make grandiose claims that they are retraining these displaced workers, but what skills are they learning, and what will their jobs be like compared to the ones they lose?

I was a displaced worker, going from a job making $18 an hour with good benefits, to a job making $12 an hour. So I have an idea of what these displaced workers are going through. As my utility bills continue to increase, my wages go up in much smaller increments, making keeping up harder and harder to do.

All of this so our companies can show a profit, so that their stock value goes up. The whole while the CEO's of these companies are raking in huge salaries. In his book Take This Job and Ship It, Senator Bryon Dorgan said that if the minimum wage had kept pace with the salaries of these CEO's it would now be $26 an hour. Think about that.

The fact of the matter is that our economy is in the tank. With the housing foreclosure crisis, and out jobs being sent overseas in record numbers, this country is heading for disaster.

The whole while our government has its head so far up its collective behind that they don't see the truth of it. America used to be a manufacturing giant. Now we import more than we produce. As the wages earned by Americans goes down, so does the taxable income for our government to draw from and spend as they so eagerly do. You would think that even the dumbest of them would realize this, but obviously that is asking too much of them. They still give these corporations tax breaks on their overseas operations.

Things are only going to get worse, if they ever do turn around for the better. I can see it getting very ugly, very quickly in this country. I just hope people are prepared for what is coming at them like a freight train.

Neal Ross
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