Richard McCormack examines the growing turmoil in America’s economy
The post below is an opinion piece written by award-winning journalist Richard McCormack, the founder and publisher of Manufacturing & Technology News. McCormack also served as the editor of the 2013 book on revitalizing manufacturing, ReMaking America. You can follow him on Twitter at @RichardAMc.
There is trouble brewing in the American economy.
A wave of layoffs and plant closings — caused by declining exports, low prices for oil and gas, and the continuing affliction of offshore outsourcing of production — is occurring throughout industry, with little notice among policymakers.
Despite the growth of almost 2 million jobs in the U.S. economy from January through October of this year, manufacturing employment has been stagnant, falling by 1,000 jobs over that period to 12.32 million.
Exports of goods have fallen by $76 billion in 2015 compared to 2014. Since the Commerce Department calculates that $1 billion in exports results in the creation of 5,796 jobs, the plunge in exports this year represents a loss of 440,496 manufacturing jobs. The trade deficit in goods is still staggering, at $570 billion from January through September of this year. That’s up from $555.5 billion for the same period in 2014.
Yet the real story of American manufacturing in 2015 is illustrated starkly in an obscure database kept by the U.S. Department of Labor: the filings made by displaced workers under the Trade Adjustment Assistance (TAA) federal entitlement program.
In recent months, there has been a surge of new filings for workers losing their jobs from imports and outsourcing of production to foreign countries.
In just the first 10 days of November, for instance, workers from 32 American companies sought extended unemployment benefits, job-search, and training assistance from the TAA program, which was extended by Congress this summer as one of the carrots needed to pass Trade Promotion Authority (Fast Track) legislation.
Companies involved in TAA petitions over those 10 days are among the most respected in American industry: 3M, Alcoa, Parker Hannifin, Pentair, Pfizer, Avery Dennison, Becton Dickinson, CSX and Motorola.
The TAA program is once again growing, which is not a good thing. Since the start of 2015, 922 petitions have been filed on behalf of tens of thousands of workers losing their jobs to imports or outsourcing. That is up from 765 petitions filed for the same period of 2014.
When President Obama signed the six-year extension of TAA, it reverted the program back to covering not only displaced manufacturing workers, but also service-sector workers who were excluded from the program from January 1, 2014, through the bill's signing on June 29, 2015. The Labor Department "will automatically reconsider negative determinations (denials) of petitions" filed by service-sector workers between these dates, says the agency on its TAA website. Over that period, the Labor Department denied 409 petitions from service workers losing their jobs to foreign competition. It is now reconsidering providing those workers with retroactive TAA unemployment and training benefits.
The list of American companies firing their American employees in the face of import competition or due to offshoring is impressive: Hewlett Packard, Microsoft, Honeywell, Fluor, Siemens, LexisNexis, Metlife, JP Morgan Chase, Citibank, Accenture, Staples, Reebok, Humana, Pitney Bowes, Eastman Kodak, Intel, Tysons Food, Sony, and IBM are just some of them.
To get a sense of what is happening in industry, here is a look at a few of the most recent TAA petitions filed on behalf of displaced workers:
- Caterpillar Precision Seals will close its Franklin, N.C., plant at the end of this year and lay off 164 workers making oil seals. The company's production "was outsourced to Grenoble, France and CPS, Korea," states the TAA petition, submitted by Darlene Green, a Human Resources Rep at the company.
- AK Steel Corp.'s Ashland, Ky., plant is scheduled to lay off most of its 650 employees in December — at least temporarily — due to "overcapacity in the global steel market and a continued onslaught of unfairly traded imports," according to company Executive Vice President of Manufacturing Kirk W. Reich in a letter to USW leaders at the plant.
- On Site Tolls of Rockwell, Texas, is laying off 35 workers in its oil and gas equipment division due to "decreases in demand and cost, plus overstocked oil both nationally and abroad that has caused decreased profitability for most / all oil and gas industries," according to Ricky Riley, finishing tool supervisor at the firm.
- E.C. Manufacturing based in Shawnee, Kan., laid off 351 workers making electrical components because it has been "unable to compete with similar products being imported," according to Ann-Marie Bevel of the Kansas Department of Commerce.
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WestRock of Newberg, Ore., has laid off 220 workers making newsprint, containerboard, Kraft, and bag paper because "the paper industry faces significant global competition from Canada and China and other foreign manufacturers," writes company Vice President Gregory Pallesen in the TAA petition. "The U.S. export market for the products manufactured at the WestRock Newberg, Ore., mill has decreased significantly due to unfair foreign competitors from Canada and China and other foreign manufacturers."
Image courtesy tdlucas5000
- TerraSource Global of Cuyahoga Falls, Ohio, is laying off 53 employees because "production is being shifted to our China manufacturing facility to be closer to our buyers in Asia and Russia," writes Rachel Balca, HR specialist at the company.
- Allegany Technologies is laying off an undisclosed number of people at its Albany, Ore., specialty alloy metals plant because "production has been shifted to a foreign country and there has been an increase in imports," according to Sherry Wolcott of the Oregon State government.
- Stant Inc., based in Romeo, Mich., is laying off 200 workers making fuel filler pipe assemblies because their jobs "are being transferred to the Mexico manufacturing plant." The Romeo location "will close indefinitely with employee separation dates of October 31, 2015," states the TAA petition.
- SKF USA Inc., based in Hobart, Okla., is laying off 194 workers making radial, oil and assembly seals for the auto and industrial markets. "Production has been / is being shifted to Mexico," states the TAA petition.
- The Missouri state government submitted a petition on behalf of 2,600 Monsanto workers losing their jobs due to "adverse market conditions for the agriculture-based company. Overseas competition which produces a generic brand of roundup herbicide and some laboratory work that was done by local researchers is now being done by overseas laboratory workers."
- General Cable of Franklin, Mass., says 121 workers are losing their jobs "due to the increase of imported cable available in the global market."
- Carter Fuel Systems in Logansport, Ind., is laying off 111 employees because "imports of fuel pumps from foreign company [will] replace loss of production," says company Human Resources Manager Terry Foster.
- Indiana Marujun, a maker of automotive parts for Honda, is laying off 700 workers at its Winchester, Ind., plant because "production of many parts are being sent to Japan," according to David Koesters, the company's Human Resources Manager.
- Mitsubishi North America is seeking Trade Adjustment Assistance for 1,200 workers at its Normal, Ill., facility because "production has been shifted to Japan." The plant will be closing for good on Nov. 30, 2015.
And the list goes on.