Irwin Industrial Tools, owned by US-based Newell Rubbermaid, has announced 105 New Zealand manufacturing jobs are to be lost in Wellsford. The plant manufactures circular saw blades.
The NZ Herald:
Operations director Michael Kelly yesterday blamed "a challenging economy and other business factors" for the company's downsizing.
"This decision has been a difficult one to make, and in no way reflects on the hard work and dedication of our workforce in New Zealand."Those are nice words from Mr. Kelly, but he wasn't the first Irwin exec to use them recently. A quick Google shows exactly the same crocodile tears were shed last September when Irwin Tools announced the end of 71 years of manufacturing at their founding site in DeWitt, Nebraska.
"Today was a very difficult day for all of us here in DeWitt," said David Doolittle, a corporate spokesman based in Atlanta. "This was a difficult decision that in no way reflects the hard work of the employees here through the years."Why do I call these crocodile tears? Irwin Industrial Tools parent company, Newell Rubbermaid, since at least the end of 2005, have been working to a long standing plan to cut one third of their factories.
Doolittle said higher labor costs were just part of the reason the plant was closing. Operating costs and raw materials are also cheaper in China, he said.
(Jan 16, 2006) ...Newell Rubbermaid Inc. will close its 300,000-square-foot Goody Products Inc. factory in rural Manchester, Ga., which has turned out combs and hair brushes since 1963.The present downturn appears to have very little to do with the closing of the Wellsford plant. The plan referred to above clearly envisages any new products are coming out of China. With that in mind, the circular saw blades made in Wellsford come into focus:
The plant is the latest casualty in Newell Rubbermaid's plan to shutter one-third of its 80 manufacturing sites in the next three years.
When the plant closes in July, Newell Rubbermaid will move some Goody work to its other factories and outsource the rest. "What gets outsourced will get outsourced to China,'' said Todd Helms, Goody's vice president of human resources.
Case in point: the division’s Marathon-branded circular saw blades. With the housing boom of the 1990s and into the first half of this decade, home builders wanted saw blades that could cut faster to build more homes. The company developed a thinner blade, and varied the widths of the teeth.
“So what that does is you’ve got one tooth that takes out just a little bit of material and the next tooth cleans it up,” said John Smith, vice president of research and development of construction accessories for Newell Rubbermaid. The result: a saw blade with a 20 percent faster cutting time, he said.
But as housing construction turned from explosion to implosion, the company last year intensified marketing of a blade with welded tips that lasts up to 50 percent longer, the company says.“
Back in the day it was all about speed,” Smith said. “Today, unfortunately, they’re not building as many homes and everybody is looking at every dollar that they spend and looking to get more cuts for the money.”I'm betting those new blades come from China.
The Irwin Tools "Vise-Grip" factory in DeWitt, was another victim of Newell Rubbermaid's long standing plans to move manufacturing to China. The factory had a history in DeWitt extending back to 1938.
"All that we've known is working in the factory," said Jurgens.
Many employees started right out of high school, she said, and have never had to fill out a job application or make a resume. ...
... Employees said Wednesday they were told they’ll get one week of severance pay for each year they worked at the plant, with a maximum of 13 weeks.If one searches on "Newell Rubbermaid Closure" in Google, there is no shortage of links over the past 5 years reporting a long series of factory closures, mainly in the United States.
As of Wednesday, the plant had 330 employees, down from about 500 just a few years earlier. Production will be transferred, at least in part, to China.
This is consistent with my own experience with AT&T, where I often worked day and night to help propose global networks to connect the manufacturers of the world with their planned factories in China. Their timetables were typically for a 3 to 5 year migration of production to that country. The wave I was seeing in 2003 would be peaking about now. I do wonder what role all those millions of lost jobs might have had in causing large numbers of mortgages to go bad over the past couple of years...and in the years ahead.
Certainly, the global downturn has put Newell Rubbermaid under considerable pressure to show strong quarterly results, but manufacturing jobs were not supposed to be part of the cost cutting:
CHICAGO, Dec 18, 2008 (Reuters via COMTEX) -- Newell Rubbermaid slashed its quarterly sales and profit forecasts and said it would cut up to 10 percent of non-manufacturing jobs due to a deep slump in the global economy, sending its shares down 30 percent.
...
Newell said it would cut 8 percent to 10 percent of its salaried jobs, amounting to 800 to 1,000 professional and managerial positions. It said the cuts, which already have begun, would continue into 2009.Either they changed their mind about cutting manufacturing jobs since Xmas, or the closure of the Wellsford plant was part of the wider, longstanding plan in the group to move jobs to China.
Newell has about 20,000 employees worldwide. Nearly half of those jobs are in manufacturing and would not be affected by the announced staff cuts, the company said. Newell also said that starting on Jan. 1 there would not be any pay increases for the entire year.
However you look at it, the loss of the jobs in Wellsford is just one data point in a tsunami of data points that record the mass migration of manufacturing from the West to the East and it has been programmed in since long before the present downturn. What we can't know for sure is to what extent the present downturn is a product of the same process. Certainly there are other factors at work, but it seems to me that the steady erosion of the manufacturing base in North America, Europe and Oceania was never going to do anything but have a long term, cumulative and negative effect on the economies of the countries losing the largest proportion of jobs.
The irony is that trade with China is anything but free. They have an extensive and longstanding system of tarrifs and import controls and restrictions on foreign ownership. This isn't about "free trade" at all. It's about a gold rush by the worlds corporates to a state where workers have few real rights, social services almost non-existent and labour is cheap and kept in line by government-run trade unions, the police and - if necessary - the military.
But having sent all their jobs off to China, and made their workers redundant, who did they think they would then sell their products to?
I was idly wondering about that earlier... How many businesses are using the financial crisis as an excuse to outsource core parts of their business? Even though the company may be doing quite well?
ReplyDeleteBut having sent all their jobs off to China, and made their workers redundant, who did they think they would then sell their products to?
ReplyDeleteThere was always the dream of the billions-strong markets of the East; I think the long-term plan was to focus more and more on selling (as well as producing) in these huge, and thus potentially much more lucrative, populations.
While there certainly has been wealth growth and increased demand in BRIC countries, MNCs have perhaps choked the life out of the Western consumer a tad prematurely for their purposes. (Not that they're ever going to admit that the trade policies they lobby and bribe for so sedulously had anything to do with our grossly unbalanced, cratering global economy.)
Red Oak: I used to own pigs. These were kune kune pigs. Covered in course fur, half the size of a commercial porker and very intelligent and friendly. They also grazed on grass, which helped me keep the feed bill down. Problem was, they also like to eat grubs. To get the grubs, they had to dig up the grass. After a few months, there would be no grass left...and no grubs....and they would all look at me like I had done something wrong.
ReplyDeletePeople are like pigs. Consume whatever, whenever like there's no tomorrow...and when tomorrow comes, they go all pathetic and beg to be saved.
MNCs are like that, too. Just people after all.