U.S. factory work is returning, but the industry has changed

Los Angeles TimesMarch 9, 2013 

  • Making personal computers

    In October, Lenovo announced it was going to start making personal computers in Whitsett, a small community in Guilford County.

    The Chinese company, which has its U.S. headquarters in Morrisville, plans to create 115 jobs, and invest $2 million in the facility, to help supply its U.S. market.

    At the time, the decision was seen as toe-dipping before taking the plunge.

    “This mostly looks like it is an experiment, a hedge against the future,” Steve Kleynhans, research vice president with the Gartner Group, said in an interview with The News & Observer in October. “I think it’s always good to have a diversified selection of manufacturing facilities around the world to help you if you run into supply-chain hiccups or natural disasters or whatever.”

    The company also is expanding research centers in Japan and China.

    Staff reports

— Giant machines are tearing down the old bleachery – another reminder to Chuck Smith that this old mill town doesn’t make much anymore.

Just about everyone he knows was employed at one point making, folding or bleaching towels until the mills started to close, and family members to lose their jobs, in the 1990s and 2000s. Like most of Griffin’s residents, Smith can name all the old mills in a slow Georgia drawl.

“There was the Thomaston mill that was here, and the Dundee mill, and the Highland mill, but they tore that one down just like they did this one,” he said, watching a bulldozer push piles of metal around what used to be a factory for bleaching towels. “These mills used to employ all the people in this city.”

Recently, the town had reason to be optimistic: Retail behemoth Wal-Mart announced that it will spend $50 billion buying U.S.-made goods over the next 10 years. It cited 1888 Mills, which runs the last mill left in Griffin, as one company that would benefit from this pledge.

Wal-Mart will sell 1888’s Made Here towels, manufactured in Georgia, in 600 stores this spring and in another 600 later this year. This enables the company to add manufacturing jobs.

The retailer’s effort will help businesses and “give them the nudge they need” to bring manufacturing back to the United States, Wal-Mart U.S. Chief Executive Bill Simon said in announcing the initiative. It’s part of a much-heralded trend of “onshoring,” in which companies including Apple, Lenovo, Otis Elevator and General Electric have said that growing logistics and labor costs overseas have motivated them to move some manufacturing back to the United States.

But if Griffin is any example, Wal-Mart’s much-lauded pledge isn’t likely to do much to turn around a decades-long manufacturing decline here or in the rest of the country. That’s because manufacturing has changed dramatically since it left American shores. Workers have been replaced with machines, and the number of jobs that people could get right out of high school has been reduced. And as much as companies pledge to move manufacturing back to the United States, they’re mostly moving just small parts of their larger global operations in order to be closer to U.S. markets.

“People talk about manufacturing being a big source of job growth,” said Tom Runiewicz, principal for the industry practices group at IHS Global Insight. “It’s going to grow, but it’s not going to be a big source of total employment. It’s just a drop in the bucket.”

1888 Mills, for instance, will add just 35 jobs because of the initiative – better than nothing, but a pittance in a town of 23,000. The company will still make 90 percent of its goods in overseas factories.

“We don’t envision the entire industry going back to the United States – low-cost Asian manufacturing will still be the base for volume,” said Jonathan Simon, CEO of 1888 Mills. “But for just-in-time service, U.S. manufacturing does make sense.”

The United States lost 6.3 million manufacturing jobs between January 1990 and the industry’s low point in January 2010 – a 36 percent decline – according to the Bureau of Labor Statistics. Since that low point, the industry has added nearly 500,000 jobs, which barely begins to offset the losses.

A walk through the spacious 1888 factory in Griffin shows why job gains have been slow despite onshoring: Machines spin threads of cotton into yarn, a process once done by hand. They weave the yarn into thick rolls of fabric, cut the fabric into towels, and sew the hems. Where a whole factory was once needed to bleach and color the towels, a Rube Goldberg-like machine does that work with minimal labor. Another machine dries the towels.

“It’s all automated,” Douglas Tingle, founder of 1888 Mills, said on a tour of the factory. “Some of this is the latest technology advancements.”

That automation is part of the reason that, although labor costs are higher in the United States than in other countries, it can make sense to make towels and other products here. But there are other reasons as well: If 1888 needs to make changes to towels, it can get the finished product to Wal-Mart more quickly from Griffin than it could from China. Also, the rising price of oil is increasing shipping costs.

“One of the things you might see is production coming back here, but not with as many jobs as used to be the case,” said Jared Bernstein, a senior fellow for the Center on Budget and Policy Priorities and former chief economist for Vice President Joe Biden.

Non-union jobs

Whether the jobs that are returning are good jobs depends upon whom you ask.

Karen Dias sits at a sewing machine in a cavernous 1888 room repairing towels that machines haven’t hemmed correctly. She’s a 19-year veteran of the mill and says she likes the job, the company and her peers.

“For what I do all day, I get paid good,” Dias said.

But Chuck Johnson, 48, had to quit his job at 1888 because his lungs couldn’t handle the dust and particles given off by the manufacturing. He’s now unemployed, waiting for his disability application to go through.

“I had to keep the machines running, sweep the floor, keep the dust off machines, walk from one warehouse to another,” said Smith, chewing on peanuts on the front stoop of a house near an old mill. “But my lungs couldn’t handle it no more because of the dust.”

One characteristic of those new manufacturing jobs is that they are rarely unionized. Companies tend to locate their operations in Southern right-to-work states and in more rural areas where people are “maybe a little more appreciative of the job,” said Harry Moser, founder of the Reshoring Initiative, which helps companies looking at bringing manufacturing back to the United States.

In the South, land is cheap, taxes are lower, and “there’s this image of the rural farm boy who grew up fixing the tractor and the plow,” Moser said. “He or she has a better work ethic than someone in a big-city environment in the Northeast.”

The jobs at 1888 Mills or Lenovo are not unionized, nor are those at Otis Elevator, which is moving jobs to Florence, S.C., from Nogales, Mexico.

Even the jobs that are unionized typically have lower salaries and fewer benefits than manufacturing jobs in the industry’s heyday. General Electric, for instance, is moving some jobs from China to Kentucky. But the union representing GE workers there “has chosen to take significant concessions in wages and benefits over the years,” said Chris Townsend, political action director of the United Electrical, Radio and Machine Workers of America, a union that represents some GE workers but not those in Kentucky. “Corporate leadership has decided to launch a PR effort to convince people that jobs are coming back. But we’re still talking about a few thousand people where there used to be tens of thousands.”

Whither the middle class?

The trends worry people such as William Spriggs, chief economist for the AFL-CIO. If the nation is merely adding low-wage, nonunion manufacturing jobs, he said, it will have a hard time retaining a middle class.

“If we don’t get back to high-wage jobs for a sector as big as manufacturing, there isn’t an easy path for the recovery,” he said.

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