|COMING OR GOING|
November 2, 1993
As Congress prepared to debate the hotly contested North American Free Trade Agreement, Paul Solman of WGBH-Boston traveled to rural Alabama to put a human face on the tariff fight.
JIM LEHRER: Now, jobs and NAFTA. In less than three weeks, NAFTA, the North American Free Trade Agreement, will come before Congress, and as the deadline nears, both sides have stepped up the debate. Business Correspondent Paul Solman of public station WGBH-Boston went to Alabama recently to look at the people and jobs behind the rhetoric. Here is his report.
PAUL SOLMAN: To sort out the issue of jobs and NAFTA, we head South, way South, to a sleepy town in rural Alabama. If the bottom line here is that the population of 999 is happy, it may be for a simple reason. Many of them have good, secure jobs at the local manufacturing company, Crystal Lake, where local families have earned their livelihood for more than 60 years making corn brooms.
EDWARD PEARSON: We'll see some people who have been here 50 years, and you probably have got 50 percent that have been here 10 years or more. And there are still a few that have been here that are even past retirement age and want to keep working.
PAUL SOLMAN: According to Vice President Edward Pearson if NAFTA passes, there will be no joy in Autaugaville. Many workers, he says, will lose their jobs.
EDWARD PEARSON: About half this plan will, all of this department that you see here, but about a hundred people in this town of a thousand people will stand to lose their jobs within two years.
PAUL SOLMAN: Ed Pearson is the third generation of his family to run this plant. Over the years, he's seen the industry become more and more competitive with much of the competition coming from Mexico. Crystal Lake still ekes out a profit because the broom industry is protected as we'll explain in a bit. And it has to be, since the raw materials come from Mexico and Mexican workers earn maybe a sixth what they pay here.
GRANGER PALMER: I wouldn't wish to compete, not with the kind of wages that Mexicans are earning, you know, a dollar. I couldn't live off a dollar an hour. You know, and I'd rather not have to compete with that kind of, you know, wage rate.
PAUL SOLMAN: If NAFTA passes and cheap Mexican brooms flood across the border, these workers probably will lose their jobs. In fact, NAFTA nemesis Ross Perot Save Your Job, Save Our Country, Why NAFTA Must be Stopped -- Now! by Ross Perot with Pat Choate points to the endangered broom industry as one reason to defeat the trade pact. If NAFTA is enacted, he writes, U.S. broom factories will be forced out of business. Perot was right. NAFTA could do away with some 3,000 U.S. broom jobs, and according to the AFL-CIO, a great many other jobs as well.
TV AD SPOKESMAN: In Washington, big corporations and lobbyists are spending millions making false claims about the NAFTA trade deal but across America people go into factories, to farms, to offices know NAFTA means jobs going South. Economists who've studied job loss say we'll lose up to 500,000 American jobs to NAFTA. Americans want to expand trade but not by trading away their jobs. NAFTA, it's a bad deal for America and Americans know it. [On Screen at end of TV Commercial: Paid for by the Unions of the AFL-CIO]
PAUL SOLMAN: Now, many economists consider half a million lost jobs a shaky figure. Moreover, it includes jobs yet to be created in factories that under NAFTA would be built in Mexico instead of the U.S. But no matter what number you use, it's more than just broom makers who are at risk.
Already in Mexico, there are American auto plants, refrigerator plants, almost any kind of plants you can think of. Even my craftsman neighbor, Sal Zapala, who handcrafts false teeth, is losing business to cheaper, lower quality, he says, Mexican competition. But no Americans will feel the pain any more directly than our friends in Alabama. Their company was started by Edward Holmes Pearson back in the 1930s for the sole purpose of providing jobs. You see, cotton prices had dropped too low during the Depression to sustain the local sharecroppers.
The first Pearson was the town's great philanthropist but realizing the workers needed jobs more than handouts, he started the broom company. His son, James, on the right, kept up the tradition and expanded the business.
JAMES PEARSON: I just felt like that that was one of the reasons I was put on earth, to provide employment for people in the community.
PAUL SOLMAN: Because that's what your father told you, or --
JAMES PEARSON: No, that's not what he told me, but, you know, I see the need for it. I was raised that way, and that's just what I believe.
PAUL SOLMAN: Today James Pearson's son, Ed, seems as committed as his forbearers to keeping jobs in town. Ed Pearson could actually produce brooms cheaper in Mexico, but he says --
EDWARD PEARSON: I can't just pack up my bags and go to Mexico, because I can make a few pennies more or actually a lot more money by moving to Mexico. Personally, I, I can't do that to these people here and leave them out to dry.
PAUL SOLMAN: In a sense, people are the argument against NAFTA. Granger Palmer, for example, who's been here 34 years working his way up to union president, or Shelby Broadnecks who has three sisters working at the plant. If NAFTA passes, these jobs may be history. No wonder the union local opposes the pact.
PAUL SOLMAN: Not this NAFTA. Does that suggest that there's a NAFTA you would support?
REGINA HICKS: Yes. We would support a trade agreement that would be a fair agreement, one that would implement the same kinds of environmental laws and labor laws that we have here in this country.
PAUL SOLMAN: It isn't realistic, is it, to expect Mexico to have the same, you know, labor laws or minimum wage that we have in the United States?
REGINA HICKS: Maybe not the same but they could be greatly improved over what they are now. These are good jobs, and this is a good company. Our members who work here, they earn a good living, and they cannot compete with the cheap labor that workers are paid in Mexico. It'd be impossible.
PAUL SOLMAN: Impossible. So the jobs are threatened as is the whole community. Danetter Underwood has ten relatives working at the plant.
DANETTER UNDERWOOD: I love what I do.
PAUL SOLMAN: Really?
DANETTER UNDERWOOD: Yes.
PAUL SOLMAN: What do you love about it?
DANETTER UNDERWOOD: Because I know that there's a lot of people that do not have a job, and I know if I come to this job, I know I got a job to pay my bills and everything and take care of my child.
PAUL SOLMAN: These people are proud of their brooms and how many they make. Underwood gets through five dozen an hour. It may not be highly skilled work but as it turns out, it's a lot tougher than it looks.
WORKER: You need to take off your tie because it might get caught in this wire.
PAUL SOLMAN: Okay. [attempting to make broom] So that's a little shoulder there like -- at least four brooms you've already made, and I'm basically hitting myself on the index finger at this point. That was the thumb. Getting hit, getting hit. All right. Oh -- and --
PAUL SOLMAN: One wire burn, two sore fingers, and eight minutes later, a factory reject. My teacher, meanwhile, Brady Sullens, can assemble a perfect corn broom every 50 seconds or so. It takes a full year to become an efficient, quality operator. So the company has invested in these people, they've invested their time as well, but in skills very hard to transfer if the factory closes. What about a job in cotton farming, which is one reason people came to Autaugaville in the first place? Well, it turns out that with the mechanization of the industry, four hundred acres of cotton are now farmed by four part-time people. It once took ten times that number. But there is a booming paper mill just down the road. What about working there? We put the question to Granger Palmer.
GRANGER PALMER: Are you gonna guarantee me they gonna hire me down at the paper mill?
PAUL SOLMAN: Well, but I mean, they're going to have to hire somebody.
GRANGER PALMER: Probably so, but will you guarantee me a job down there if I lose my job?
PAUL SOLMAN: Well --
GRANGER PALMER: Because I have to compete against this low wage group.
PAUL SOLMAN: Well, of course, we couldn't guarantee any jobs. In fact, as we made our way through the plant, we couldn't see any jobs at all. So we asked Union Camp's plant manager, John Anderson, if he could guarantee Palmer a job.
JOHN ANDERSON: No. I could not guarantee that either.
|Those slated to benefit from NAFTA|
PAUL SOLMAN: Now we were really moved by the Alabama broom workers, as we imagine you are. Their immediate vulnerability to NAFTA, and this is true of many workers in many industries, comes through loud and clear. By contrast, the arguments for the treaty are abstract, much harder to visualize or feel. But, say NAFTA supporters, that doesn't make them any less real. Eventually, they argue, NAFTA will create more U.S. jobs than it loses, even in Alabama. Yes, the pro NAFTA forces concede the U.S. will lose broom jobs, but we only have these jobs because the U.S. imposes a 32 percent protective tariff on all Mexican brooms coming into the country. NAFTA would phase out that tariff over 12 years, phasing out these workers as well.
EDWARD PEARSON: Because when they take 32 percent off the tariff, I can't beat 'em. When they take 10 percent off I can't beat 'em.
PAUL SOLMAN: So the tariff, say NAFTA supporters, simply means that American consumers are paying artificially high prices for brooms in order to protect obsolete American jobs. But while NAFTA will bring down tariffs in the U.S., it will bring down tariffs a whole lot more in heavily protectionist Mexico. And that's the key to the pro NAFTA argument, that Americans will sell in Mexico as never before, creating jobs in the process. At Union Camp, for instance, even if their paper mill is automated --
JOHN ANDERSON: Our industry would benefit from NAFTA. It would be a boost to the Mexican economy. That boost would in turn create more consumer demand for goods, goods that require packaging. We're in the packaging business. And we have very competitive facilities in Union Camp. We're going to get a part of that business, given an open market situation.
PAUL SOLMAN: The point is under NAFTA, Mexico will have to drop its protective tariff against U.S. paper products. Companies like this, where hi-technology has replaced semi-skilled labor, say they'll sell more in Mexico once that barrier comes down, meaning more U.S. jobs in the long run.
JOHN ANDERSON: We anticipate an additional 15 plus or minus jobs would develop rather rapidly with the approval of NAFTA.
PAUL SOLMAN: Fifteen more jobs companywide didn't sound like a lot to us, but if Congress doesn't approve NAFTA, Anderson says his company might eventually set up a plant in Mexico and create the new jobs there to get around Mexico's protective tariff.
PAUL SOLMAN: You mean you are more likely to put a plant in Mexico if NAFTA doesn't pass?
JOHN ANDERSON: That's right. Without NAFTA, these trade barriers tend to force a company to locate a facility south of the border in order to avoid the tariffs. Whereas, with NAFTA, and the elimination of these tariffs, Union Camp anticipates additional facilities in the U.S., additional jobs in the U.S., and then shipping our products into Mexico, rather than locating a plant there.
PAUL SOLMAN: Now, you don't have to believe Anderson's relocation threat, but he's certainly not the only manager around here who claims he'll add jobs if NAFTA passes. In nearby Trusco, Alabama, outside Birmingham, lies AMEREX. They make fire extinguishers, many of them for export, which they package in the very boxes that Union Camp expects to sell more of.
AMEREX figures to sell more too once NAFTA is approved and Mexico's fire extinguisher trade barriers come down. Again, that should mean more jobs. Owner Ned Payne even extended an invitation to the broom makers of Autaugaville 90 minutes away.
NED PAYNE: Come to Birmingham, come to Trusco, we're looking for people. We're in -- we have a hard time hiring here. It may not be true everywhere but it's true here. We, we are looking for qualified people all the time, and we, we are installing more and more training programs so that we can help anybody who isn't qualified.
PAUL SOLMAN: In fact, Payne has had such a tough time finding people that 15 of his 500 workers come from a prison release program and are transported here daily from the local jail. It might be a real hardship to uproot and move here from Autaugaville but AMEREX says it'll be hiring. And even though the company hopes to automate many of the jobs here, Ned Payne says there'll be more work for his suppliers.
NED PAYNE: Anything we sell more of is going to create some few jobs all over the country in all kinds of plastics and metals and elastomers, and all kinds of products, so that as we expand our sales despite what happens in our own factory, we're building jobs everywhere.
|The slow benefit and fast hurt|
PAUL SOLMAN: But the problem is new jobs like these build slowly, over time. The old ones disappear in a hurry, and even AMEREX is unlikely to hire more than a few of the broom workers whose community will be under siege in any case. NAFTA supporters respond by saying that's the price of progress. Consider Central Bank of the South and its brand new offices in Downtown Birmingham. To U.S. banks, the Mexican market has been closed for decades. NAFTA would open it, and according to Carol DeCastra, that means the bank will be hiring.
CAROL DeCASTRA: Definitely. It'll have to as trade finance expands and we'll have to have people to service them and people to, to make the loans and people to pay off the loans, and the loan officers to visit with the companies to generate the loans. And the market -- we're also not only located in Alabama, but we're located in Florida and Texas as well, and of course, the market in Texas is just tremendous for this kind of activity.
PAUL SOLMAN: And it's not just DeCastra's institution. Just about every big bank and insurance company on the Birmingham horizon stands to hire new employees over time if NAFTA passes. Moreover, the U.S. is already losing its manufacturing jobs to low wage countries.
CAROL DeCASTRA: Has been happening. It's not a matter of going to happen. It's already happened. It's not just Mexico. It's Malaysia, Thailand, and Indonesia. So where do we want to lose our jobs to? Do we want to lose jobs to the Far East, or if we have to lose jobs, which I'm not a proponent that we lose jobs, but if we have to lose jobs, why not lose 'em to our neighbor to the South, where it's just going to benefit, and the Mexicans want to buy American, they like American. 65 percent of all imports into Mexico are American-made products.
PAUL SOLMAN: Okay. How do the anti-NAFTA's respond to Carol DeCastra? They oppose the loss of jobs whether it's to Malaysia or Mexico, and NAFTA, they say, will actually speed up that process.
They want to slow things down until we've got new jobs for these people or at least what President Clinton keeps promising, a job training program that actually works, to which the typical, seemingly cold-hearted economist finally responds, job training may be a good idea but even without it, free trade will create more jobs of the very kind Americans should really want than it destroys.
It's just that it'll take a while, to which opponents say, in their summation, there's more pain than gain in the here and now, and we're not willing to wait for the hereafter.