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Text of Speech by UAW President Ron Gettelfinger on 'Global Trading Practices and the Impact on American Industry'


April 2007
 Filed under: AUTOMOTIVE INDUSTRY TRENDS Car News | AUTOMOTIVE INDUSTRY TRENDS Headlines
Thursday, April 12, 2007 -- The following is a speech on "Global Trading Practices and the Impact on American Industry” by UAW President Ron Gettelfinger. It was given on April 10, 2007 at Michigan State University's School of Labor and Industrial Relations in East Lansing, Mich.
Thank you for the kind introduction Dean Baba and to all of you for the warm welcome.

It is a pleasure to be here with Dean Baba, Director Curry and all of you. I am especially pleased that Board of Trustees members Faylene Owen, George Perles and Colleen McNamara are in attendance as well. And, I would like to express my appreciation to Bill Cooke for the invitation to be here today. The UAW appreciates this opportunity and we hope that the bridge Bill has begun to construct between the UAW and the School of Labor & Industrial Relations at MSU will become a strong and lasting one.

It is an honor to be in Lansing which is part of our UAW Region 1C under the responsibility of our very capable Director, Duane Zuckschwerdt. We appreciate his leadership and the support we receive from our staff and local unions in this region as well as from our other three Michigan regions.

It is also my pleasure to bring to all of you the greetings from the men and women of the UAW as well as from our union’s International Executive Board. I am pleased that Vice Presidents General Holiefield, Cal Rapson and retired Vice President Dick Shoemaker as well as so many of our local union leadership are in attendance. I also appreciate the fact that retired General Motors Vice President Guy Briggs is in attendance.

It is important to recognize and understand the role of labor not only in the workplace, but in all of society. And, MSU’s School of Labor and Industrial Relations is helping to do that.

The UAW thinks it is imperative to have open dialogue and public debate on issues of importance and it is through forums such as this that makes those opportunities available.

So let’s get to the matter at hand: our perspective on the important issue of global trade and U.S. manufacturing.

I can think of no more compelling example of the impact of global trade practices on U.S. manufacturing than that of Swedish-owned Electrolux, once the largest employer in Greenville, Mich. The Greenville community and the UAW welcomed the investment and commitment to U.S. production by this European-based corporation.

Indeed, for years, Electrolux appeared to have a stronger commitment to the U.S. economy than did traditional American appliance manufacturers who long ago made a conscious decision to source products by searching the globe for low-wage, union-free workforces.

Twenty seven hundred workers built refrigerators at the Greenville plant – 2,500 were UAW members.

It was a profitable plant with good productivity and high quality. Workers’ pay averaged around $15 an hour, or approximately $30,000 per year – hardly excessive.

Yet, the plant shut its doors last year because the company said they weren’t making enough profit.

The UAW offered to reopen the contract and was willing to make contract changes that would save Electrolux $31.6 million a year. Governor Granholm offered incentives and tax credits worth $120 million over 20 years.

And, the city of Greenville came forward with a proposal for new land and a new building, worth $30 million.

Electrolux didn’t respond to any of the offers. They simply said no. They wanted more.

Today, the company is building those refrigerators in Juarez, Mexico, just across the border from El Paso, Texas.

The company says that wages in Mexico are 10 times less expensive than the $13 to $15 hourly wage earned in Michigan.

An economist at Calvin College in Grand Rapids estimated that another 3,000 Greenville-area workers would also lose their jobs due to the multiplier effect of Electrolux closing.

Greenville has a population of 8,000.

To bring home the ripple effect of these plant closings, we can recall the testimony of David Doolittle, a member of UAW Local 137’s bargaining committee to a Senate Democratic Policy Committee in March of 2004.

At the end of his testimony, he talked about his daughter in college and two more kids who will be going in the next couple of years. He said he did not know where he would find another good-paying job.

David Doolittle described his worry about his future and his children’s future this way: “It’s like a stomach ache that won’t go away.”

The story of Electrolux sums up the horrific impact that global trade practices have on America’s industrial workers and their communities. And, it also exposes the broken promises of NAFTA, the North American Free Trade Agreement, which went into effect in 1994. Those who supported NAFTA in Congress – both Republicans and Democrats – said the agreement would create jobs in the United States and would raise the living standard for Mexico’s workers.

But, that has not happened.

The Economic Policy Institute estimates that NAFTA alone has resulted in a loss of over one million U.S. jobs.

And, since NAFTA, real wages in Mexico have been falling. And, to escape their country’s poverty, workers from Mexico continue to come North looking for jobs to support their families.

Numerous economic studies have demonstrated that real Mexican wages – wages adjusted for inflation and the peso devaluation – are just half of what they were two decades ago.

The extreme poverty rate for the Mexican people, which was unacceptably high before NAFTA, is now astronomical.

NAFTA, in other words, has had an adverse effect on both Mexican and U.S. workers.

But, for some global companies, the wages in Mexico are not low enough. Many multinational producers are shutting their plants in Mexico and moving them to other countries in Central America as in the case of apparel, or, China and Southeast Asia which is especially true in electronics.

This has expanded the pool of Mexican workers desperate for viable employment opportunities. Thousands of workers have flooded into the expanding auto parts sector in Mexico, putting further downward pressure on wages and living standards in this important industry.

But, even this is not enough for some auto supplier companies. Professor Harley Shaiken of the University of California at Berkeley tells of meeting two young women who worked at an automotive parts plant.

Their plant was relatively new with up-to-date technology and equipment. Productivity and quality were high. Labor-management relations were good.

One morning the workers were brought together and were told they had priced themselves out of the market, and their jobs were moving to China.

This plant was in Tijuana and these women and the workers there were making $1 an hour.

As Professor Shaiken noted, globalization is creating a new reality for workers: instead of high productivity prosperity, the race to the bottom is creating high productivity poverty.

The question becomes: Is globalization an irresistible force of nature beyond our power to shape and control?

It is not. It is the result of conscious choices by government and corporate policymakers around the world.

And, in our view, U.S. policymakers have made a number of wrong choices: NAFTA, CAFTA, the U.S.- China PNTR agreement, and now, the proposed South Korea Free Trade Agreement.

Fundamental worker rights violations in Korea are not adequately addressed in the proposed FTA with Korea. The UAW is calling on Congress to oppose this one-sided deal negotiated by the administration.

Hundreds of Korean union leaders and members are arrested and jailed each year for exercising basic labor rights such as demonstrating and striking.

The International Labor Organization (ILO) has found that Korea violates the internationally recognized right to freedom of association. Further, Korean employers take advantage of temporary workers, contract workers and other forms of non-traditional labor to prevent workers from forming unions.

In fact, Korea’s labor laws were recently amended to expand the use of non-traditional workers, which already make up more than half of the workforce in many industrial firms.

What all of these trade pacts share in common is that they do not contain enforcement mechanisms to ensure workers’ rights and other measurers, such as environmental protections.

In some countries, such as China, it’s difficult to even determine the average wage – but it’s been estimated at anywhere from 24 cents to a little more than a dollar an hour.

And it is illegal for Chinese workers to form an independent union. When workers in China do band together to protest unpaid wages or other abuses, they are routinely arrested and jailed.

Today, Yao Fuxin is in prison for the crime of leading a protest over unpaid wages and benefits at his closed workplace, a Ferroalloy factory. He was sentenced to seven years in 2002 and another worker, Xiao Yunliang, who also led the protest, was released last year after being imprisoned for four years.

Despite pleas from his family and from other groups, including the UAW, for an early release due to his extremely poor and declining health, the Chinese government refuses to release Yao Fuxin. Yao Fuxin is not alone. There are more labor activists imprisoned in China than in any other country.

Yet, the U.S. trade agreement with China has no teeth when it comes to workers rights in China.

Of course, China is not the only country that violates workers’ rights. Countries, like Nicaragua and Honduras, that are signatories to CAFTA, the Central American Free Trade Agreement, have also been found to use child labor, particularly in the clothing and textile industries.

CAFTA, like NAFTA, has not lived up to the promise that it would lift up Central America’s workers. At a garment factory in Guatemala that makes clothing for an American retailer, nine workers took the first steps to organize a union after being forced to work overtime without pay and being locked in the factory until late at night.

The workers protested the dirty drinking water and no soap and water in the bathrooms.

These nine workers presented a petition to set up a labor committee, according to Guatemala’s labor law.

The next day, all nine were fired.

The bottom line is that American workers, despite being among the most productive and efficient in the world, cannot compete against such abuses.

No country should have a trade advantage over another country because it uses child labor or forced labor.

No country should have a trade advantage over another country because it forces workers to work 14 hours a day, six days a week.

No country should have a trade advantage over another country because its workers have little, if any, safety protection on the job.

And, no country should have a trade advantage over another because its’ companies are free to pollute the environment.

As long as trade agreements are silent on these type of issues they are not fair – to workers in other countries and to workers in the U.S. This is why organized labor advocates fair trade, not free trade.

Now, there is also another grave concern about these global trade agreements. And, as a country, we have to ask ourselves: How can anyone reasonably claim that U.S. trade policy is working when it has produced year-after-year of record trade deficits?

The U.S. trade deficit for 2006 was a staggering $763.4 billion. That’s a deficit of more than $2 billion a day. Topping the list in 2006 for the largest trade deficit with the U.S. was China with a whopping $232.5 billion deficit.

That’s a growth of $31 billion from the previous year. The U.S. trade deficit with our NAFTA partners – Canada and Mexico – was $137 billion last year.

And, these record-breaking U.S. trade deficits have contributed to our country’s cumulative debt which makes us more vulnerable to financial crises.

It seems that U.S. trade negotiators regularly agree to trade provisions that benefit American financial institutions, but these provisions come at the expense of American workers and farmers. Clearly, something is wrong with U.S. trade agreements that produce year-after-year of record breaking trade deficits.

Along with the climbing trade deficits, the impact of these global trade practices has been dramatic on U.S. manufacturing. Since 2002, the U.S. has lost 3 million manufacturing jobs.

These jobs -- that most likely will never come back -- were most often off-shored to low wage countries. From 2002 to 2004, the U.S. lost 440,000 manufacturing jobs due to soaring U.S. trade deficits with China alone.

In the last six months of 2006, we had an average loss of 18,800 manufacturing jobs per month.

And, between 2001 and 2005, 40,000 manufacturing plants have closed. During those years, we lost more than 153,000 auto supplier jobs, 58,500 furniture workers and 159,000 in the printing industry, to name only a few.

These job losses can be devastating for workers and their families as we saw in Greenville and overwhelming for communities and states.

The loss of the tax base can mean cutbacks in public services and less local and state money for education.

But, these closed factories also pose a serious threat to both our nation’s economic and national security.

In the last several decades, we’ve seen the rapid exodus of industries leaving the United States… from clothing and shoes to computers, cameras and… refrigerators.

We are losing our capability to supply our military with ammunition, uniforms and other essential equipment quickly and efficiently. Steel and auto jobs are being outsourced.

We are losing not only the skill; but the technology. And, we are losing future investments in technology and research. Manufacturing matters – not just because it’s a source of good-paying, family-supporting jobs; but because those jobs create a ladder to the middle class.

And, because manufacturing jobs create other support jobs, they provide a stable tax base that contributes to stronger communities. Some have argued that the only way to keep manufacturing jobs in the United States is to slash the wages of American workers to near poverty levels.

They say we must cut benefits and forget about secure pensions. In other words, take the low road.

The UAW rejects that strategy because no matter how low you go, some other country will go lower – not only in wages, but in safety conditions, human rights and environmental standards.

Again, if companies are relocating their production facilities from Mexico to China and elsewhere so they can more profitably compete in the global economy, how can we reasonably expect to preserve decent paying jobs in the U.S.?

Rather than glorify this economic phenomena, as some economists do, we ought to pursue economic policies that raise global living standards instead of undermining them. As Governor Jennifer Granholm has eloquently stated, we need to level the playing field “up”, not down.

There are also those who say that manufacturing jobs don’t matter because the high tech jobs, not assembly lines, are the wave of the future.

But, it’s not just industrial jobs that are being impacted by global trade policies and are vulnerable to outsourcing. Professional and service jobs, in particular those in the information sector, are being outsourced in growing numbers.

Forrester Research predicts that U.S. employers will move 3.4 million white-collar jobs overseas by 2015.

A survey by Deloitte Research found the world’s 100 largest financial services firms expect to outsource two million jobs to low-wage countries over the next five years.

Employees in the U.S., like x-ray technicians and engineers, are watching their jobs off-shored to India where the work is performed for much lower pay.

There is another global practice that has affected both our trade deficits directly and the loss of manufacturing jobs indirectly: unfair currency manipulation by Japan and China.

It is estimated that these currencies are undervalued by as much as 40 percent.

This currency intervention translates into a price advantage of thousands of dollars for these countries.

China has been able to use its undervalued currency to dramatically expand auto parts exports and to begin preparations for vehicle exports to the U.S.

The UAW and all of organized labor believes it is time for Congress and the administration to pursue policies that establish a level playing field for America’s workers – blue collar and white collar. This includes policies that:

• Require other countries to honor internationally recognized human and worker rights in trade agreements;

• Put an end to unfair currency manipulation by other countries;

• Require other countries to dismantle their tariff and non-tariff barriers that, for example, effectively keep their auto markets closed to U.S. built products;

• Implement a manufacturing policy for the U.S. that ensures support for the factories, machinery, technology and skill level for the manufacturing of essential products.

Global trade policies should strengthen international protections for workers rights – not create a race to the bottom for the lowest wages.

And, our government’s policies should strengthen U.S. manufacturing, not stand idly by as corporations shut down factories. These are the policies that would lead to high productivity prosperity and end the high productivity poverty that Professor Shaiken describes.

With a level playing field, global trade can and will benefit workers in all countries.

And, with a level playing field, American workers can compete and win in our global economy.

Thank you.

--ENDS--

www.uaw.org

Source: International Union, UAW

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