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Manufacturing Losses Weigh Heavily on Ohio

Monday, March 03, 2008

Provided by USA Today
Written by David Lynch

NILES, Ohio — It's late morning on a workday, a time when these men would normally be found on the factory floor. But that was before the factory packed up and moved to Mexico.

Now they sit around a table in a one-story steelworkers union office and wonder what they'll do with the rest of their working lives.

STORY: Some Ohio firms have done well under NAFTA

After more than 60 years in business, their employer, Amweld Building Products, announced in October that it was closing two local plants and shipping the work to Monterrey, Mexico. Some workers got the news when armed security guards swarmed the assembly line and ordered them away from their machines. Many who had worked at the plant for decades mourn the loss of good-paying jobs, which around here are about as common as icebergs in the Sahara. "Some of the best-paying jobs in the United States aren't in the United States anymore," says Bob Ulrich, 58, idled after working at the plant since 1969.

The cost of current trade policies is a key issue in Tuesday's Ohio Democratic presidential primary. But the issue is far more complex than political rhetoric suggests.

Ohio's Mahoning Valley once was emblematic of industrial America, thickly populated with auto and steel plants, employing men whose strong backs and high school diplomas were their chief credentials.

Ohio lately has been bleeding such jobs; more than 257,000 factory positions have evaporated since the beginning of 2000. Less than a mile from the Amweld plant, 54 General Electric workers lost their jobs last month when the company halted light bulb production. Indalex Aluminum Solutions is closing in neighboring Girard at the end of March, putting 150 people out of work. An additional 450 workers will lose their jobs in April when Johnson Rubber in Middlefield, about 30 miles away, shuts down.

On Main Street in Niles, there's a memorial to local hero William McKinley, the nation's 25th president, a modest Army-Navy post (advertising a fish fry on Fridays) and a block-long string of empty stores bearing "For Rent" signs. Many people here blame the silent, steady erosion on a series of trade deals that began with the 1994 North American Free Trade Agreement (NAFTA).

Sensing a link between trade-related anger and votes in the Ohio primary Tuesday, Democratic presidential candidates Barack Obama and Hillary Clinton have assailed the trade strategy pursued by both Republican and Democratic administrations for nearly two decades.

The rivals last week promised to renegotiate NAFTA's terms with Mexico and Canada, add tough labor and environmental requirements to any new accords and re-orient trade policy from the needs of Wall Street's moneyed elite to the protection of hard-hit workers.

These are not the first comforting election-year promises these men have heard. Experience has taught them to be skeptics. Craig Plant, 34, jobless after eight years making steel doors at Amweld, is dismissive of Clinton's and Obama's vows to fix the controversial trade pact. "It's just a smokescreen for, 'We're pretty much not going to do anything,' " he says.

The road to closure

Economists disagree about how much of Ohio's manufacturing plight is due to trade. The state's manufacturing employment of 989,400 actually increased slightly after NAFTA took effect in January 1994 and didn't begin declining for more than seven years.

One study, by Martin Baily, chairman of the Clinton administration's Council of Economic Advisers, and Harvard University's Robert Lawrence concluded that trade causes no more than 3% of all mass layoffs.

More important in the loss of manufacturing jobs, they say, is that computerized tooling has made factories far more efficient. In 1995, for example, it took 2.4 man-hours of work to produce 1 ton of steel at Cleveland's main steel plant, then owned by LTV. This year, the current owner, India's Mittal Steel, estimates it will produce a ton of steel using precisely half as much labor.

Trade policy critics, such as Robert Scott of the Economic Policy Institute, insist that NAFTA and expanded trade with low-wage countries such as China are to blame for more than half the manufacturing jobs lost since 2000. Demand for foreign-made goods is crowding out sales of products made in the USA. "The NAFTA model is broken," he says.

In Niles, Amweld's road to closure included frequent changes of managers, especially after a private equity firm called Patriarch Partners took control in 2004. The company had outsize ambitions befitting the age of globalization, saying it aimed to become "the Pepsi-Cola of steel doors," the workers say.

When a competitor began importing doors from China, Amweld distributed promotional material that read: "Proudly American … Amweld … An American Manufacturer" against an American flag backdrop.

Barbara Paynter, a company spokeswoman, said Amweld executives were not available to comment.

In October, Amweld announced it was closing its Ohio facilities in Niles and Garrettsville. The company said it had been unable to extend existing factory leases and blamed rising costs for energy, health care and workers' compensation for the elimination of jobs paying an average of $18 per hour. "We want you to know that this was a very difficult decision, and we understand this is going to be very difficult for you and your families," said the company's statement.

Mark Plant, 56, Craig's father and a 38-year Amweld veteran, says the company then brought in Mexican laborers to crate up the factory tooling. "They told us what they'd make down there, something like $50 a week. How are you going to compete with that?" he says.

After the 2001 recession, Ohio continued to hemorrhage jobs longer than the rest of the country. For a century, the Buckeye State has been synonymous with large corporations, from John D. Rockefeller's Standard Oil at the dawn of the 20th century to Goodyear or Procter & Gamble today. What once had been its industrial pride was now dead weight. The state's non-farm employment didn't bottom out until November 2003.

Since then, job creation has been puny, less than 1%. If the state had produced new jobs at the same rate as the nation as a whole, more than 288,000 unemployed Ohioans would be working today. But in an age in which Silicon Valley's nimble garage-based entrepreneurs are the embodiment of job growth, Ohio has lagged on new business ventures. Six out of every seven jobs in Ohio are outside the factory gates, and it is in the non-manufacturing sector that the state has failed to develop new jobs.

"We haven't created the service economy jobs at the rate the rest of the economy has," says economist Timothy Dunne of the Cleveland Federal Reserve Bank.

With Ohio still in the early stages of a wrenching transformation, the first glimmers of an alternative future can be seen in ventures such as Cleveland's JumpStart program. Housed in a brick building in the shadows of Progressive Field (formerly Jacobs Field), home to the Cleveland Indians baseball team, JumpStart is a self-described non-profit venture capital firm that aims to assist fledgling entrepreneurs.

JumpStart was formed several years ago after Entrepreneur magazine ranked northeast Ohio dead last among 61 U.S. regions for 10 of 12 years ended in 2002. CEO Ray Leach, 42, wants to spawn "knowledge-based" companies with products for global customers. So far, he's invested more than $9 million in 26 early-stage companies.

The aim is to help area entrepreneurs, including many who are midcareer veterans of large corporations, get far enough to attract private capital. One early success has been PreEmptive Solutions, a software company in Mayfield Village, just east of Cleveland, which has grown a blue-chip customer list that includes Microsoft, FedEx and the U.S. Army.

With PreEmptive Solutions employing around 25 people, it will take thousands of such successes, however, to fill the yawning void left by manufacturing's implosion. And asked whether it will be possible to retrain manufacturing workers for tomorrow's jobs, Leach answers: "That's what Ohio is going to find out, and find out on a very large scale."

Adverse conditions

The men at Amweld are coming to grips with exactly that challenge. In December, the U.S. Labor Department certified the steelworkers' lost jobs as trade-related, making the men eligible for aid under the federal Trade Adjustment Assistance (TAA) program. "A significant number of workers at the firm are age 50 or over and possess skills that are not easily transferable. Competitive conditions within the industry are adverse," read the government's antiseptic conclusion. The workers get two years of help with health care coverage, relocation allowances and retraining.

But as safety nets go, this is a thin one, and individual circumstances of age and health shape their decisions. At 32 years old, Brian Ulrich — Bob's son — feels he's young enough to start over, so the former high school football player has gone back to school, studying nursing at Kent State. When he graduates in two years, he figures he'll be able to earn almost $50,000 annually, about what he made at Amweld.

His dad, Bob, who started at Amweld after a tour of duty in Vietnam, has made a different choice. For him, times were good as recently as two years ago when he made a career-best $54,000. Learning a new career at age 58 doesn't seem like such a good idea. "If I go to school for two years, I'd be a 60-year-old man looking for work. It'd be ludicrous," he says, shaking his head in frustration.

He spends his time cycling among the remaining area manufacturers, filing résumés he knows are discarded as soon as he leaves. So far, he's had two job interviews.

Health insurance is a major worry for burly Charles Johnstone. At age 54, he's just endured a bout with colon cancer. Although the TAA provides a 65% tax credit on what he would spend for private insurance, that's a giant step down from the all-but-free coverage he had on the job.

He chafes at accepting government help and wonders why politicians courting Ohio voters don't make departing employers such as Amweld rather than taxpayers pay for the human wreckage they leave behind. "Make them pay for my needs, my health care, my training. Make them find a job for me," he says, growing animated.

There's a thick carpet of snow lying across what used to be Amweld's employee parking lot. It's 16 degrees out, cold even for late February, when the men return to their former workplace. The massive brick structure, which began life as a boiler factory in the 1890s, is silent. As they wait for a news photographer to memorialize their troubles with a photo, they peer through the windows, listen to the trucks rumbling along Plant Street and thrust their hands into their pockets to keep warm.

They talk of the weddings and funerals, the bowling and the drinking, that they shared along with work. They trade good-natured insults and swap tales of former co-workers. And they arrive at a verdict on their situation that's difficult to dispute. "It's just sad," Bob Ulrich says.

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