South Carolina’s manufacturing revival lures new business

Economy

This is part of an ongoing series of reports called "Chasing the Dream, which reports on poverty and opportunity in America."

PATRICIA SABGA: That's the sound of manufacturing jobs on the way. Two thousand of them expected within two years, when this 500 acre plant near Ridgeville, South Carolina, starts rolling out vehicles for Swedish auto giant Volvo.

KATERINA FJORDING: This is our very first factory on the American continent. We're going to have a full-fledged plant, where you can build cars from scratch, basically.

PATRICIA SABGA: Katarina Fjording is the company vice president overseeing the new facility. NewsHour Weekend was given a first look at the construction site, which is already boosting the economy.

KATERINA FJORDING: Anywhere we can, we use services and companies that are as local as possible.

PATRICIA SABGA: When the factory opens in 2018, the production line will be filled with high-skilled workers — many trained at one of South Carolina's 16 technical colleges through the state-sponsored program Ready South Carolina, or Ready SC.

KATERINA FJORDING: The state has lined up different ways of supporting this project, and bringing us here. And one key factor was Ready SC, where they actually do pre-hiring, and pre- pre-staging, pre-screening, and pre-training.

PATRICIA SABGA: The program is part of the state's economic revival strategy that's lured other big global manufacturers like BMW, Honda, Mercedes, and Michelin.

Manufacturers are coveted not only for the jobs they create on the factory floor. They have what's called a multiplier effect – spawning more jobs from producers and services that want to do business with the factory and its workers. And economists estimate that one auto job in South Carolina creates as many as four in turn.

Once heavily dependent on textiles, South Carolina saw its traditional manufacturing base decimated by automation and globalization — forces that since 1990 caused roughly 150 thousand factory jobs to disappear or migrate to countries where workers are typically paid far less.

But South Carolina has been clawing back manufacturing jobs – adding more than 30-thousand of them since the Great Recession — thanks to a combination of economic incentives, robust supply chains, trading infrastructure. There's also an abundance of cheap labor. Due in part to the lowest union membership in the country.

BOBBY HITT: 25 years ago, we were what I call a three T state. That's textiles, tobacco, and tourism.

PATRICIA SABGA: Bobby Hitt is South Carolina's Commerce Secretary.

BOBBY HITT: Now, we're an aerospace and automobile manufacturing state, which gives us a broader base with the big supply chains and more succ- a more successful operation, manufacturing-wise.

PATRICIA SABGA: US Aerospace behemoth Boeing started assembling its 787 Dreamliner in South Carolina five years ago.

JOAN ROBINSON BERRY: About 30 miles of wiring in that airplane.

PATRICIA SABGA: Joan Robinson Berry is vice president of Boeing South Carolina, which currently employs 75-hundred full time workers in North Charleston.

JOAN ROBINSON BERRY: There's a lot of good reasons for being here. It's that ecosystem – government, community, supply base, but more importantly, an- a skilled and motivated workforce.

PATRICIA SABGA: But labor organizer Mike Evans, with the International Association of Machinists and Aerospace Workers, says Boeing is building that industry on the backs of non-union workers who are getting a raw deal compared to workers in the company's unionized flagship plant in Everett, Washington.

PATRICIA SABGA: What kind of deal does a Boeing worker in South Carolina get, compared to their unionized counterparts in Washington State?

MIKE EVANS: Their counterparts' experience is a lot different. Having a union contract. The wages and benefits are much better than what they're experiencing here in South Carolina.

PATRICIA SABGA: According to the union's calculations, after six years on the job, assembler mechanics in Washington State make roughly 39 dollars an hour, while their non-unionized counterparts in South Carolina makes around 23.

JOAN ROBINSON BERRY: I don't know the facts on that, but here's what I do know — is that both the union and Boeing evaluate pay based on regions and market.

MIKE EVANS: What they'll tell you is that it's all about this being South Carolina, the cost of living is cheaper, and so forth. But we've done our research on that. And it's very minimal.

PATRICIA SABGA: Boeing opposes a union for its South Carolina workers, because it says it will make the plant less nimble and therefore less competitive.

JOAN ROBINSON BERRY: Boeing here in South Carolina, would not benefit from having a union organized here. The entire strategy around advanced manufacturing's changing. We're bringing new and innovative things together. It's not the same skill set every day, and then it's going to be static. And that's kind of the union environment.

PATRICIA SABGA: And South Carolina is attracting investment from all over the world.

BOBBY HITT: In the last eight years, there've been ten automobile plants announced on this continent. Eight of them went to Mexico. Two of them came to South Carolina. The world is looking at us in the United States in a slightly different way. I think the ones that win are the ones that are flexible, one that understand what a company needs.

PATRICIA SABGA: But labor activists say South Carolina is lowering the bar nationwide.

ERIN MCKEE: I moved here in 1996, and one of the first activist things that I did was we protested outside a convention.

PATRICIA SABGA: Erin McKee is President of the South Carolina AFL-CIO.

ERIN MCKEE: Back in 1996, the signs said, "South Carolina: last stop before Mexico."

PATRICIA SABGA: And do you think that still holds true?

ERIN MCKEE: Yes. I think we are the race to the bottom.

BOBBY HITT: How can we be racing to the bottom when our employment is down, our manufacturing involvement is up, our growth overall in our economy is steaming along, and we're attracting companies from all over the world?

ERIN MCKEE: Just because jobs are created, unless they're good jobs where people can actually pay their bills and not just live on credit, and have retirement and health insurance, and can plan for the future, it's not really a good job.

PATRICIA SABGA: Manufacturing conjures images of the golden era of America's middle classes. A time when factories provided blue collar workers with steady jobs that paid significantly higher than the U.S. average.

A typical manufacturing worker earned around 21 dollars an hour in September- 5 dollars less than the average for all workers.

DOMINICK WHITE: I previously worked at Honda South Carolina. Like every job, it had its ups and downs.

PATRICIA SABGA: The downside for Dominick White was working between 2010 and 2012 as a so-called permatemp. That's a worker hired through a temp agency who puts in full-time hours but often without benefits and for lower pay than full time direct employees of a company.

How did your compensation and sort of experience differ from the full-time employees on the shop floor?"

DOMINICK WHITE: Basically, I was a temp for the first two years. I didn't get any raises. I made $9.65.

PATRICIA SABGA: Later, when he was hired by Honda fulltime, White earned more than 18 dollars an hour.

DOMINICK WHITE: Being a temp kind of sucked because you do the same or more than someone that would be considered full time, but you basically make half what they did.

Hard numbers on permatemps are hard to come by, because the U.S. Department of Labor does not count them as part of the manufacturing workforce. But Researchers say a bad deal for permatemps can negatively impact full time workers.

GEORGE GONOS: Those depressed wages for temp agency workers come back and drag the wages of all workers down in those occupations and in those industries where temp workers are used.

PATRICIA SABGA: Florida International University's George Gonos studies how perma-temping ripples through the broader economy.

GEORGE GONOS: Full-time permanent workers can't stand up and demand higher wages and better conditions when they know they're jobs are the next to go, the next to be converted perhaps to temp agency work.

DOMINICK WHITE: A job is better than no job, and that's why a lot of people don't complain, or don't, you know, come forward, as other people may say about the unfairness of the job that they're on.

PATRICIA SABGA: Boeing also uses permatemps it calls "contractors."

JOAN ROBINSON BERRY: How we use our contract labor is really based on ebbs and flows. When we're in a development side of our business, we'll bring in more contract labor, and as we get into a production environment that slows down.

MIKE EVANS: We understand there needs to be flexibility built in, too. We just don't want to see it get abused.

PATRICIA SABGA: How does the use of perma-temps, or full-time temporary workers differ in South Carolina, versus the unionized plant, Boeing plant in Washington?

MIKE EVANS: Well, our Everett plant doesn't allow temporary workers on the production line.

PATRICIA SABGA: But South Carolina officials are loath to dictate perma-temp time limits to employers.

BOBBY HITT: There has to be flexibility in the workplace. That lack of flexibility is what has been destructive to manufacturing in the United States in the past.

PATRICIA SABGA: And the newest big manufacturer to land in the Palmetto state, Volvo, may import some changes.

Do you have a policy on perma-temps, for how long you'll keep somebody as a perma-temp before matriculating them to become a full-time employee?

KATERINA FJORDING: We don't have an official policy. And we normally only use them to fluctuate when the people are on sick leaves, or vacation, et cetera. Maybe we're talking 90 days, or maximum six months.

PATRICIA SABGA: And state officials are confident, the market will deliver for workers.

BOBBY HITT: We have remarkable employers here. We have more coming. The employers are going to have to be able to hold those workforces.

PATRICIA SABGA: A workforce with less security than generations past – but working nonetheless.

Chasing the Dream: Poverty and Opportunity in America is a multi-platform public media initiative that provides a deeper understanding of the impact of poverty on American society. Major funding for this initiative is provided by The JPB Foundation. Additional funding is provided by Ford Foundation.

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