Speak Your Piece: The Prodigal Factory

With some manufacturing returning from off shore, rural communities may be eager to lure new factories home. But think carefully before you kill the fatted calf.

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Reindustrializing the U.S. has been something of a fad to rationalize the return of prodigal firms from overseas.

Prodigal is the correct word here. These firms unceremoniously abandoned U.S. communities and workers by moving operations out of the country. They wreaked widespread economic havoc during the last quarter of the twentieth century.

Globalization turned out badly for the majority as U.S. wages, benefits, and job opportunities stagnated. Meanwhile, corporate profits and executive rewards boomed as the overall economy became more technologically oriented.

Reindustrialization, or trying to bring back manufacturing with incentives, might be good. But don’t jump in without a lot of thought – especially if you live in a rural area.

First, urban companies and shareholders have an advantage because of reduced transportation costs and domestic wages that have been forced down.

Second, communities could benefit, if they don’t fork out too much in tax incentives (legalized bribes) to attract new industries.

Third, factories don’t need as many laborers as they did in the past. The workers who do find jobs through reindustrialization will need more specialized skills – that’s the reason behind all of the discussion lately about improving workforce quality.

Too many industrial firms treat their workers badly in a time of surplus labor. But this isn’t likely to be part of the conversation as communities rebuild their economies with old-fashioned tools like tax incentives for manufacturers.

My friend—I will call him Jack—works harder than most. He is in his 40s and lives in a smaller Midwestern town. Learning is a passion, and he is good at it.

Like many in his generation, the doors of opportunity have not opened easily. When Jack was stymied in his efforts to follow his preferred career path, he went to his state unemployment office to investigate other possibilities. Factory work was available.

Photo by Shawn Poynter
A former flak-jacket factory in Jefferson City, Tennessee, has been transformed into a boot-making business.

In resume writing for a factory job, the main advice was to play down his education, especially the master's degree. Sadly, an undergraduate degree was also a liability.

Jack's stories resonate like a modern-day Dickens novel. In three years, he had three jobs where he found the workplace “hostile, abusive, low wage, [with an] attitude [that] favored short-term over long-term employment, a swinging door where employees would be leaving and new ones were coming in….”

Jack noted “the abusive supervisor who had to be in charge” was common. “I had a supervisor who would penalize an employee who couldn’t stay and work overtime.” In fact, in one place, Jack had given notice to human resources and his supervisor that he was leaving to take another job. The supervisor, who denied that Jack had shared the notice, wanted him to work overtime the weekend after the notice was effective. Jack did not want the overtime and was terminated before his designated last day.
 

Jack said one supervisor would “change the work schedule in the middle of the week, just without warning. Supervisors and management in some cases had very little interest in the welfare or the life outside of the factory. Even the employee’s health [was of] little interest or concern.”

An experience with an on-the job injury illustrates Jack’s point.

“I started working in a shipping-receiving position, and three weeks into the position—I was still on a probationary period—I was injured.” A pry bar he was using slipped and hit him. The wound required five stitches.

“The doctor said I needed stitches, and the supervisor did not want the stitches because it would be a reportable injury and it would tarnish his supervising abilities.”

“The next day I was terminated because I tarnished the safety record of the company. This is a common trend. I’ve seen it happen in other places of employment. Of course being on a probationary period, I was let go. There wasn’t much I could do….

“Accidents do happen, but according to factories they don’t. And those who have accidents are punished, or released.”

Temporary employment is hard on workers. “Temp agencies do most of the hiring,” Jack said. “… Near the end of probationary period, I was given a new supervisor and additional job responsibilities. Then I was told that they were not going to hire me on permanently because of the additional training needed.”

He was given the option of being fired or continuing as a temp in the new position. He left, rather than accept the diminished wages of an extended probationary period.

“Temp” is often a code for short-term, revolving-door factory employment where firms take advantage of laws to avoid paying higher salaries and benefits. It may have a downside for the firms, however. One factory where Jack worked lost a major contract because of the high employee turnover.

Urban-studies scholar Joel Kotkin points out that the nation needs manufacturing to balance the “ephemeral economy” of technology and information. This is where reindustrialization comes in.

“We stand at the verge of a historical opportunity to assure U.S. preeminence by melding our resource/industrial economy with a tech-related economy,” Kotkin writes on newgeography.com. “In the process, we can choose widespread and distributed prosperity or accept a society with a few pockets of wealth—largely in expensive urban centers—surrounded by a downwardly mobile country.”

The U.S. has yet to master this evolving new economy. Reindustrialization is a complex challenge and potential opportunity for individuals, their communities, their states, and our nation. The goal of more equitable wealth distribution is important—and elusive. More likely a rhetorical device that glosses over the messy reality of long-entrenched uneven development made far worse by the most recent corporate abandonment of rural and urban workers and their communities.

Reindustrialization will help some places. The jury is still out on its effects on rural areas, but history suggests geographic gaps will continue to widen. Meanwhile, the question about what’s in it for workers remains. Our labor force has been battered and flummoxed by diminished protections, reduced wages, and a still-squishy economy with limited chances for advancement.

Jack’s struggles provide anecdotal evidence that respect for labor and laborers is lacking, even in smaller city America. Labor laws have been eroded and do not provide adequate worker protections, despite claims otherwise.

The good news is that Jack is now settled into a more secure factory position. Perhaps it is a hopeful, if anecdotal sign.

But in an economy where wealth and income are so out of kilter, reindustrialization runs the risk of being another false hope, a faddish prescription that works for the “have mores,” but not for the “have lesses” who suffer from geographic discrimination in cities and rural areas.   

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Selling the State: Book Examines Development Policy

Daily Yonder correspondent Timothy Collins has authored a book, Selling the State, that traces the evolution of Kentucky’s industrial and economic development policy over much of the last half of the twentieth century.

According to the book, “Kentucky’s governors worked hard to forge a perception of political and economic unity across regions and social classes using job creation and progress as levers for development. Considerable revenue for economic development and other state projects came through regressive sales taxes on workers, while corporations and other businesses reaped the benefits of sales tax breaks and other incentives. Yet, the policies also were somewhat successful, especially in helping to lower poverty rates.”

In the foreword, Bill Bishop, a co-founder and former co-editor of the Daily Yonder, notes that “Selling the State tells how choices made over a century sustained a culture that was, in a sense, economically inert. It was a choice the state made—rather a series of choices. Kentucky wasn’t alone in its economic path. The consequences of those decisions—traced in the book’s charts—have been profound.”

The free e-book is available on the Illinois Institute for Rural Affairs website.

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Timothy Collins is assistant director for research, policy, outreach, and sustainability at the Illinois Institute for Rural Affairs at Western Illinois University in Macomb. Opinions expressed here are his and his alone.

 

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