COVER/Art Cullen and Jim Cullen

Shipping Work Out, Third World Labor Standards In

There was a perversity about Gateway Computers announcing just after Labor Day that it would lay off hundreds of manufacturing employees and shift production to outside contractors or outside the country.

Ted Waitt, the CEO with the ponytail, was nowhere to be seen on the announcement. Rather, his hip open-shirt lieutenants were saying that they wanted to concentrate more on marketing and service, and less on manufacturing computers. And they didn't say a whole lot more than that. What the heck -- what do they owe their employees, customers or stockholders?

The Wall Street Journal reported that sources close to Gateway say 1,100 jobs will be cut. A company spokesperson called the report inaccurate, but refused to provide details, such as: Will the jobs move to Mexico?

It would fit the national pattern. Over the past three years the USA has lost 3.2 million jobs, including 2.5 million manufacturing jobs, many of which have left the country seeking lower labor costs and less regulation.

AFL-CIO President John Sweeney in a Sept. 3 speech in Detroit noted, "We're importing $500 billion dollars a year more than we're exporting because US companies and our trade laws and practices have been sending manufacturing jobs overseas at alarming rates." A Rutgers University study reported that nearly one in five US workers had lost his or her job in the past three years. "Conservative columnist Paul Craig Roberts rightly observes that, 'the US economy is creating jobs -- but not for Americans,'" Sweeney said.

Sweeney noted that 100,000 manufacturing workers in Michigan have lost their jobs to overseas competition in the last two years. Now US-based corporations are adding to the jobs crisis by "outsourcing" millions of white-collar jobs in computer sciences, engineering, financial and medical services. By the end of this year, according to Business Week, General Electric will have sent a total of 20,000 aircraft, medical and research jobs to India and China.

Many high-tech companies have taken advantage of low-cost, English-speaking workers in India. It's cheaper for companies such as Microsoft and Dell -- just to name a couple -- to wire Indian workers in Bangalore to answer your phoned-in question about what's wrong with your computer. The Republican Party has even outsourced fundraising calls to Indian telemarketers, according to the Business Standard of New Delhi, which reported Jan. 31 that an Indian firm had landed the contract to make telephone solicitations for the GOP after the same firm, HCL eServe, had handled telemarketing for an anti-abortion campaign for a US politician.

Indian software and computer service companies have reported a four-fold increase in employment, from 25,000 in 1999 to 106,000 in 2002, the magazine said.

Sweeney noted that a group called "WashTech," affiliated with the Communications Workers of America, recently released a tape of a conference call in which IBM's top human relations executives were discussing transferring three million US service jobs to China and India over the next 12 years. A Forrester Research study predicts US employers will move 3.3 million white-collar service jobs and $136 billion in annual wages overseas in the next 15 years.

President Bush's plan to privatize 425,000 federal jobs could send many high-tech jobs overseas, the Austin American-Statesman reported Sept. 5.

"In other words," Sweeney said, "US companies and US trade policies are about to do to white collar workers what they've been doing to blue collar workers for the last 10 years -- and many of these jobs are not coming back," he said. "If we don't wake up and treat job loss and job deterioration as a national disaster, that deadly combination is going to put our economy down-for-the-count and render the American Dream comatose."

Founded in the mid-1980s in a barn near Sioux City, Iowa, Gateway was a quick success. So successful that it crapped on Iowa and moved over the Missouri River to South Dakota, land of no corporate income taxes. Then a few years back it crapped on South Dakota and moved corporate headquarters to Silicon Valley, whence the company lost its bearings and went into the tank. It has lost money 10 of the last 11 quarters. Its major manufacturing centers in Sioux Falls and North Sioux City, S.D., are about to get a major whipping.

When in hock, move to Mexico.

Why not? Midwestern manufacturing stalwarts Maytag (Newton, Iowa), John Deere (Moline, Ill.) and Ertl Farm Toys (Dyersville, Iowa) have set up shop just south of the border in the maquiladora towns. And if Mexico gets too pricey, check out China. HP, formerly Hewlett-Packard, used to point with pride to its made-in-USA products; now it assembles its merchandise in Mexico and China.

It seems the thing to do: Dump the workers who got you where you are.

In the past 10 years, Sweeney noted, NAFTA and the WTO have lowered incomes for workers in Mexico and Canada as well as workers in the USA. Trade deficits with our NAFTA partners have resulted in a net loss of jobs. Now some in the corporate-controlled Congress want to extend the damage to 34 countries in the Western Hemisphere through the Free Trade Area of the Americas (FTAA). Sweeney said it will have 10 times the impact of NAFTA -- or, as some critics put it, "we'll have NAFTA on steroids."

"Clearly we're on a collision course with disaster, and the danger is compounded by the fact that we're replacing the high-wage, full-benefit jobs we're losing with low-wage, no benefit jobs that force families to depend on taxpayer assistance for medical care and rent subsidies," Sweeney said.


In the maquiladora plants, they pay the princely sum of $4 a day. If you're lucky, you can make $60 a week. These statistics come from the agricultural trade attaché to the Mexican embassy in Washington. We talked to him over a lunch of turkey fillets processed in Storm Lake by immigrant Mexican workers who make $9 an hour.

What with NAFTA and all, I asked this guy, how long it will be before we're all making 60 bucks a week? He acted like he could not understand what we were talking about.

We said: When it is cheaper to ship corn to Mexico than it is to ship Mexicans to Storm Lake, Iowa, how long will the pork and poultry industries stand here?

He blinked.

Excuse us, we were a bit behind the times. Actually, Smithfield Foods has been raising hogs and slaughtering them in Mexico for a couple years because its workers live on next to nothing. A cardboard box will do.

Then the processed pork can be shipped back to you for breakfast.

And, the attaché pointed out, as a selling point, Mexico has virtually no environmental standards.

A peasant corn-grower uprising in the southern Chiapas region did not seem to register with this dude. We suggested it might be because we are dumping cheap corn on Mexico. And he replied we should. Those poor people in Chiapas, whoever they might be, are better off ditching the cornfields and moving to the maquiladora plant to make $4 a day pulling loins for Smithfield or Tyson, he suggested. We are cheap corn growers, they are cheap slaughterhouse workers. It's a beautiful marriage.

Meanwhile, back in Iowa, the average meatpacking wage has dropped from $28 an hour in 1978 (adjusted for inflation to 2001) to the stated meatpacking average wage in 2001 of $11.95 per hour. That is, if you can hack the work of butchering and processing 13,000 hogs a day. Most people can't. The meatpacking industry has turnover rates of upwards of 100% annually.

So it would be more convenient, I suppose, for the injured workers to move back into their third-world hometown near Guadalajara if the meatpacking plant were closer.

You expect Smithfield to crap on you. That's their business, after all. But Gateway?

They're just another Nike or Kathy Lee.

Other employers use the threat of moving jobs and plants overseas to scare workers who are trying to form and join unions. In the process they undermine community standards set by union wages and benefits. All the while, the Bush administration takes a combative stance toward organized labor and refuses to address the need for industrial and job-creating policies and programs. The White House refuses to extend unemployment benefits to workers whose assistance has run out. It refuses aid to states that are experiencing budget crises, which are especially hurting education and health care, and the White House continues to push for trade deals that have no protections for workers.

And now the same general crew that selected George W. Bush as president is trying to do away with overtime pay. US Sen. Tom Harkin, D-Iowa, has been railing against it lately, and he thinks it will make a big deal in the November 2004 elections.

"It's not enough that we're shipping our jobs to Third World nations, now we are shipping Third World labor standards to Iowa," Harkin told us. "It is the most insidious, under the cloak of darkness attempt to undermine the 40-hour workweek that I have seen in my 28 years in Washington."

A lowering tide strands all boats.

Believe it, folks: The tide is coming in. A sixty-buck wage can be spotted with a periscope.

Harkin went on about what we should do: Negotiate trade agreements that protect the environment, pay a living wage and absolutely prohibit child labor. Look how far the populist wing of the Democratic Party has gotten with that platform over the past 20 years.

Harkin said we shouldn't blame Gateway CEO Waitt -- he is just working the system presented him. I say we should: It's phonies like Waitt who are ruining Iowa, ruining South Dakota and ruining the US of A.

If Gateway had stayed put in Iowa and had not gotten too big for its britches, it likely would be making money today. John Deere makes money, why do stockholders demand more on the backs of our poor Mexican neighbors?

Iowa is trying like the dickens to make a go of it. It has us fighting South Dakota, Nebraska, Illinois and Minnesota for every lousy job we can get. But when you bend over and abandon your tax code, drop your manufacturing wage by more than 50%, refuse to adopt air or water quality standards (in Iowa, anyway), bust all the manufacturing unions and it still isn't good enough, what the heck do you do?

What can you say to Ted Waitt that will bring his head around?

Nothing. Not when the Mexican government guy thinks it feels good to get screwed.

But there is one thought that gives us comfort: There's room in hell for all of them.

See also the AFL-CIO website at The labor federation also has set up a separate website ( to petition Congress to save overtime pay.

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