Source: Esther Kaplan, Virginia Quarterly Review, Summer 2014
…One morning in November 2010, a Philips executive no one recognized drove up and walked into the plant, accompanied by a security guard wearing sunglasses and a sidearm. He summoned all the employees back to the shipping department and abruptly announced that the plant would be shut down. Though the workers didn’t know it at the time, most of their jobs would be offshored….
…These are catastrophic job losses. Yet no regulatory body ever asks the firms responsible to explain why they offshored the jobs—even when those firms, like Philips, receive substantial taxpayer subsidies.
It was left to two scholars, Kate Bronfenbrenner, of Cornell University’s School of Industrial and Labor Relations, and Stephanie Luce, of the University of Massachusetts at Amherst, to look behind the numbers. In a 2004 study, they found that offshoring, that old story from the 1970s and ’80s, was still sharply on the rise. They used detailed first-quarter data to estimate that 406,000 jobs would be offshored in 2004 (a number roughly triple the widely recognized undercount from BLS), compared with 204,000 three years earlier. More of these jobs, they found, moved to Mexico than to any other country. Other details are salient. “Once a place sells to somebody else that’s not union, you might as well shut the damn doors,” Bo McCurry said to me one afternoon, and Bronfenbrenner’s data shows he’s probably right. Though only 8 percent of private-sector workplaces are unionized in the United States, 29 percent of production shifts involved unionized facilities, implying that offshoring may be, at least in part, a union-avoidance strategy. Even more interestingly, the overwhelming majority of the facilities being offshored were owned by large, profitable multinationals—not, as one might imagine, by firms struggling to compete. And many of the closures took place soon after the plants had been acquired.
“Corporations often do things to impress their shareholders,” Bronfenbrenner said. “Everybody is offshoring and outsourcing, even though it isn’t necessarily a good financial decision. It may actually cost more, but to investors it looks like sound management. It’s just keeping up with the Joneses, where the Joneses are every other manufacturing company in the world.”
A 2012 study by Michael E. Porter and Jan W. Rivkin of Harvard Business School, based on interviews with 1,767 executives involved in location decisions over the previous year, confirms Bronfenbrenner’s view. Porter and Rivkin found that “rigorous processes for location choices” are “far from universal” and that such decision-making processes “have lagged behind those for virtually all other major investment decisions.” They found that companies often underestimate the hidden costs of offshoring, overlook the advantages of a US location and “fall prey to biases that work against the U.S.”
Combined, this research hints at a radical idea: that offshoring has simply become a reflex. And if that’s true, all the lean manufacturing and just-in-time production and automation and retraining and two-tier pay scales in the world won’t be enough to save American production jobs.
So much in the Sparta story defies the familiar political scripts: Norris, the union-avoidance expert, along with Bailey and Sullivan, of the Chamber of Commerce, joining hands with the IBEW to help save a union plant; small businessmen in Tea Party country championing community ownership. It became clear from my conversations that Philips’s actions had deeply offended people’s sense of decency, from the laid-off workers to what Donna McCurry calls “the big wheels in town,” and that this sense of corporate indecency is what had brought such politically disparate people together. ….