NAFTA Punches LaV Again

Years ago when NAFTA was signed into law allowing free trade between the U.S., Canada, and Mexico, I thought it was a pretty good idea.  Afterall, both sides of the political aisle in Washington were in support of this idea … if Reagan, Bush Sr. and Bill Clinton were ALL behind it, then it must’ve been a decent plan.  My  mother-in-law fretted about it, though.  She was pretty sure it was a dirty, rotten, no-good plan.

Almost immediately after NAFTA was signed into law, manufacturing and factory jobs started going South of the border.  Businesses were able to build their products for a whole lot less money because they just didn’t have to pay as much to their employees.  A few years passed and finally my mother-in-laws employer shut them down too.  She worked at Dame, a sewing factory which made Levi jackets and Carhart jackets. She knew LEVI would go to Mexico as soon as NAFTA passed because the bluejean plant was headquartered in Texas.  She said all they had to do was move across the border to save millions, maybe billions.  It was a smart business decision for them, but devastating for their workers. 

On January 1, 1994, the treaty became law in the U.S.  Now – almost 15 years later – we are still feeling its negative impact.  The DNJ reported this morning that LaVergne is losing 160 computer manufacturing jobs to Mexico

The MPC LaVergne operations will be transferred to a 300,000-square-foot plant in Juarez, Mexico, operated by Singaport-based Flextronics computers. Juarez is directly across the Rio Grande river from El Paso, Texas.

The loss of jobs at the MPC LaVergne plant comes in addition to the pending shutdown of the nearby Whirlpool appliance plant, which will result in about 500 layoffs.

I think it’s a very sad day when our nation has shifted from an agriculture society to industrial and now to a service society.  Industrial is really what made our economy incredibly strong.  Fair wages for fair work built the middle class – especially in a nation where people are not afraid to work hard.  There was a lot of interesting conversation going on in The Tax Man is Here post about how hard work equals becoming rich.  I’m going to have to side with the people who say that sometimes no matter how hard you work, you can’t get ahead.  For example, there was a time in my life (a discouraging time for sure) when I worked 65-75 hours a week and my GROSS pay was $12,000.  One job was in the service industry, another in education.  I know I’ve worked my entire adult life and I’ve worked intelligently and with unfailing energy.  But I am not rich.  And I’m having a hard time accepting the fact that I probably won’t ever be rich and it’s highly unlikely that my Powerball retirement plan will work out.  I’m gravely concerned that Social Security may be dead by the time I reach retirement age… though I just received a little notice this week about how much I can expect to get when I do turn 62 or 65 or 67.

Ordinary people in the United States are scared right now.  We’re all going broke because we can’t afford to pay $3.25 a gallon for gas to drive to our jobs that may or may not be there by the end of the month… with the promise that gas prices will probably hit $4.00 p/gallon by the end of summer.  If we can afford to pay billions trillions for a war, why can’t we find the money, inclination, and FORTITUDE to help our own people first?  It’s not a question of the American people being lazy.  Not at all.  It’s a question of not having jobs that pay a living wage, finding a way to make buying food and gasoline affordable, finding a way to keep a roof over our heads.

Maybe this is my Open Thread Friday rant.  There you go.

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14 Responses

  1. Good Blog. I will continue reading it in the future. Nice layout too.

    Aaron Wakling

  2. I agree with you. My father-in-law and sister-in-law are ones losing their jobs at Whirlpool in the coming months. There is got to be something that we as Americans can do.

  3. I believe in capitalism, but when corporations take advantage of the common person and drive the middle class into poverty, it makes me think that having price controls set on necessary goods, such as fuel, groceries, and clothing may be needed. Keep the free market for unnecessary goods; but for stuff people have to have, there is no reason for 50% inflation over a 6 year period (1.60/gallon to 3.20/gallon).

    That dovetails somewhat into the very intelligent blog by Kathy regarding NAFTA; tariffs were in place to level the playing field for the American worker. Now, there is no reason for the corporations to keep factories here when in Third World countries they can hire someone at 5 cents an hour and throw waste and garbage into the rivers and streams with little or no repercussion. If you are holding large amounts of stock, though, hey, it’s great that NAFTA passed. If the corporations are getting you elected, it is also great the NAFTA passed. If you’re making $9 an hour in a sock factory just to keep food on the table and the mortgage paid, the sock factory moves to this other place after the passage of NAFTA, and then you have to take a job at McDonald’s at $6.50 an hour until you find another job, it’s not so great NAFTA passed.

    A Democrat signed NAFTA and a Republican is not denouncing the oil companies for raping us all. It really doesn’t matter who gets elected this fall. Good entry, Kathy – I think everybody has needed to rant.

  4. I didn’t even touch on the fact that Exxon made BILLIONS in profit this last quarter. I’ve about decided that oil industry execs are just a bunch of THUGS who’ve found a legal way to rob us.

  5. MY point on the other threadh wasn’t to solely work harder. You can go pull weeds 20 hours a day and you’ll still only get paid what a weed puller gets paid. WE have to work smarter. And raping those who provide jobs by overtaxing them is not the answer. I’m not talking about mega-corps. I’m talking about small business, sole proprietorships, LLC’s… This is what drives America.

    This country is moving from a manufacturing country to a service-oriented country, and we in La Vergne have to change along with it. Otherwise we will end up like Detroit, stuck in the past. Car manufacturing didn’t get sent overseas, it was shipped to Tennessee, Alabama, Georgia, and Mississippi.

    Here’s my concern about NAFTA. On the one hand, I don’t like it just because I hate buying stuff that might be made by slave labor in China. On the other hand, do we want to start paying $100 for a pair of jeans? How about $3,000 for a new ‘discount’ refrigerator? And remember when Tube TV’s and Computers used to cost $3k – $5k for an entry level model? Because remember, if we eliminate NAFTA, we will either pay huge tarriffs on imports that we get for free now, or the jobs will come back to the US but the cost of labor will be significantly higher. Something needs to change, but I don’t know what.

    My complaint about congress isn’t about the cost of oil; I consider that a supply and demand problem and the fact that too many in this country refuse to drill our own oil out of Alaska and off the FL coast. No, my problem is that we went through all of this 30 years ago and never developed an alternative fuel source?

  6. Our country is moving toward a larger percentage of people in poverty. This is due to the service-oriented shift and less semi-skilled, middle class jobs.

    While the U.S. still has advantages with infrastructure and other things important to industry, the tariffs that were removed made it cheaper to outsource the labor. Many automakers have been given large incentives to move to the union unfriendly south. Other sectors have not had those incentives, so they have chosen to go with the cheap labor and lower environmental standard.

    If the tariffs were put back into place, the corporations might try a scare tactic and raise prices dramatically, but that shouldn’t happen. The price of jeans may go up from $25 to $35, but at least they’ll be American made, and people will have a good paying job to buy them with.

    Michael, I do agree with you on the last point.

    I may get roughed up by some top 50 company if I keep talking like this!

  7. Excellent blog, Kathy T., and some thought-provoking comments by everybody else. Where this country is headed in the next 25 years or so scares the heck out of me. If we don’t deal with some of these issues now, our kids will certainly have to pick up the pieces in the future. Not quite the legacy I wanted to leave my daughter.

    The way it stands now, the rich don’t need help, the lower class gets it from the government, and it’s the middle class that gets totally screwed (excuse my language).

    I was very wary of NAFTA when it first passed and now it appears my fears were justified. I wish I had a solution, but if I did, I’d be running for President!

  8. There were two other points I wanted to make:
    The price of technology has always gone down with time; and

    We’ve always been taught it is supply and demand, yet the lower supply is yielding record profits…sounds like they’ve got you on the line, Michael. Nothing personal, you have many great comments. Most people believe what they tell us. That is just my opinion on that one topic.

    There is no equalization (i.e. price controls) to ensure that a company can’t make record profits at a time when supply is or may be low. The price will go up; but this is price gouging at a national level.

  9. I don’t have a heck of a lot of time to pontificate this morning, but I wanted to say this. First: the gap in wages doesn’t have to exist. Sure, there are always going to be jobs that pay lower than others, but when you consider that the healthcare benefits of the employees of United Healthcare were absolutely SLASHED last year while their CEO got a *several* million dollar bonus in addition to their *several* million dollars a year salary, something’s wrong.

    American workers have got to stand up and say, “You know what? This isn’t right or fair and we’re not going to stand for it.” Employees of health insurance companies shouldn’t have crappy health insurance, ya know? Ridiculous.

    As far as what our economy is based on, a manufacturing based economy is gone forever. Time for America to invest some money in education and technology and move to a tech-based economy. The rumblings are there, we just need to go for it.

    Anyway, this isn’t as in-depth as I’d like to go with this, but I’ve gotta go, I’m off to a technology conference. :-P

  10. I mean, yes gas prices are crazy and hurting everyone, and yes the gas companies are greedy. But at the same time, they are charging excatly what we will pay. Supply and Demand, if they want to charge $15 a gallon of gas, and people still don’t think to work closer to home, or get a bike or something, they can get away with it.
    Problem is, they know that to jump REAL high at one time will force people to change what they are doing and stop using gas, so what they do is inch it up on you little by little. But living in america, and being capitalist they can charge whatever the market will bear like you would if you were selling widgets, its our own fualt we became dependant on them. As for NAFTA, it was dumb in the first place, and all economist love the idea that it may help the WORLD economy, but it hurts the stronger ones while the 3rd world sap our strength. BUt, that will always be the case, once china and mexico are built up and no longer will accept 5 cents an hour, theres still plenty other 3rd world countries out there for us to extort. Tax Imports, use the tax money to fund some sort of security that checks every box and crate that comes into the US, and even the playing field.

  11. Wow Ivy, we agree on something!

    Yes, the US should focus on technology, but I think it will be another several years before people forget the tech buble burst and start deciding to try a career in IT is a good idea (the tech bubble burst wasn’t caused by technology, it was caused by crazy investors. I think most people forgot that).

    Frank, I somewhat agree with you. The supply/demand argument is a hard one to make when the cost of the primary product (oil) costs the same as it always did ($0). That said, 10 years ago there were 10 million chinese in beijeng riding bicycles, today those 10 million people are driving Kia’s. We haven’t inreased the amount of oil that is pumped daily, so we do have higher demand and no increased supply.

    In regards to the multi-million corporate golden parachutes, I think it’s bad for those companies, but it’s up to the stock holders of those private companies to decide what to pay their CEO’s.

    Also, someone mentioned healthcare. Something I noticed recently paying bills follwing my childs birth is that health insurance isn’t the problem, the cost of healthcare is the problem. Why does a 10 minute ultrasound cost $600??? We have insurance and materinity care and birthing cost us $3k out of pocket. I understand the doctors stance on their charges, but until we do something to get the actual cost of healthcare lower, neither universal healthcare (blah) or improvements in health insurance will help with costs.

  12. Here’s something to keep everybody thinking:

    LINK:
    http://www.iht.com/articles/ap/2008/04/11/business/NA-FIN-US-Bakken-Oil.php

    Basically, this article states we already have the technology to go get this valuable resource that lies a scant 2 miles below the surface in the north central part of our great country.

    I say we waste no time getting it as it will buy us much needed time to develop solar and wind power for all of mankind to enjoy for eons to come.

    Write your congressman. I already did.

    We must start somewhere.

    I’m Just Sayin’….

  13. Excellent post! These are some hot topics. As long as we continue to outsourse our jobs to Mexico, India, China, etc, we will continue on this trend of becoming a service based work force in this country. We hear lots of things like how the American worker can not compete in the world wide work force because we have outrageous demands like fair pay for labor, insurance, and vacation time. Recently, I personally saw my own crappy customer service call center job being slowly yet steadily outsourced to the Phillipines.
    I believe that we need to focus our efforts on higher education for everyone, not just the fortunate few, specifically in the sciences and math :engineering careers, medical careers, programmers, these are the fields that still maintain a supple marked in the work force. being a competitive player in one of these fields will only help you to establish a firm foundation in an ever changing world.
    As far as the oil execs. my view on this is sure, they are thugs who want to rob us, but what about us driving our SUV’s, Hummers, Pick up trucks, guzzeling up all the fuel and driving the prices up ever higher and higher. There are green cars available, and tax credits available to those who buy them. There’s even a do-it-yourself kit to turn your regular car into a bio-fuel car. It costs about $250 and then your car can run off of spent mickey d’s grease.
    An interesting side note, in regards to the price of fuel, is that when I took calculus, I learned that in the energy required to overcome air resistance goes up as the cube of speed. It takes about 10% more fuel to cover a given distance at 110 km/h than at 100 km/h. Driving at 90 km/h reduces fuel consumption by 20% relative to driving at 110 km/h. Remember the 1970’s campaign “Drive 55, save lives”? ut-uh, it was about fuel conservation. If we all slow it down a bit, our gas will go further, when we make our gas stretch out further, the demand lowers, and we take back control of this whole supply and demand situation.

  14. The funny thing is, after at least six months of operation, the plant at juarez had yet to build one computer.

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