Long after the company shut the plant, uprooting 390 $10-an-hour jobs and sending them to Mexico and Texas, Jackie Calvin cannot bury the thought: Could she have saved the jobs of the folks who trusted her?
“It does bother me. It does,” Calvin said softly.
With 34 years at the plant, she was chairman of Machinists Union Lodge 172 at Danville’s Valmont Electric Inc. factory, which let its last production worker go in December.
Pleading hard times and citing competitors paying one-tenth as much to Mexican workers, the company wanted a 40 percent wage cut and a three-year wage freeze. The union found $1.6 million in savings.
But it was not enough to save the 46-year-old plant and its work force of mostly middle-age women, veterans of 20 or more years.
Today, a prairie wind whistles by the abandoned factory in this blue-collar town.
The same fate may face thousands of other workers if the government goes ahead with one of the most sweeping adjustments of U.S. trade rules ever.
Congress this year is widely expected to vote on the North American Free Trade Agreement negotiated last year by the Bush administration, a pact that would tie together the advanced economies of the U.S. and Canada with the growing but far less developed economy of Mexico.
Trade between the U.S. and Mexico has been accelerating anyway, ever since Mexico began easing rules and lowering tariffs for its once virtually closed economy beginning in the mid-1980s. The reforms began under former Mexican President Miguel de la Madrid and then greatly accelerated after Carlos Salinas de Gortari became president in 1988.
And jobs have been heading south for 25 years under the maquiladora program, which gives special trade concessions to foreign companies manufacturing mainly in northern Mexico for export.
All three North American governments want the new agreement, which they hungrily expect will bring new jobs, businesses and investments to each. For the U.S., increased trade with Mexico already has saved high-skilled, high-paid jobs in sectors such as heavy equipment, which the Mexicans have been buying in huge amounts to transform their country into an industrialized one.
Still, as the barriers come down and some businesses do go to Mexico, the nation will be hearing from more Jackie Calvins and more Danvilles.
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How deep and far-reaching will the consequences be?
Although the answer will come in stages-NAFTA is designed to cushion losses by lowering some barriers over periods as long as 15 years-it should fall somewhere between the extremes: Neither will factories race en masse to Mexico, nor will a nirvana be created in which exporters flourish, thousands of high-paying jobs are created and laid-off workers readily start anew.
The worst-case scenario, as predicted by the Economic Policy Institute, a liberal Washington think tank, sees 550,000 U.S. jobs vanishing by the year 2002.
That prediction, however, is at odds with government estimates of a net gain of 175,000 jobs by 1995, and the recent prediction by the U.S. International Trade Commission that U.S. employment would grow less than 1 percent over the long term.
And some work in Mexico is also likely to move to the U.S. By opening the Mexican market to U.S. corn products, the agreement is likely to uproot thousands of Mexican farmers, sending some across the U.S. border-even though one of the goals of the agreement is to slow the growth in illegal immigration from Mexico by creating jobs there. This will stir the competition for low-wage jobs.
Bob Cohen, an economist with the Economic Strategy Institute, another Washington research group, offers a more encouraging view of NAFTA’s early years. As many as 135,000 jobs will be created annually in the first four years, followed by a spurt reaching as high as 220,000 new jobs yearly, Cohen said.
By 2002, however, the trend will go the other way, he said. Instead of new jobs in machine tools, telecommunications and heavy-equipment production, there will be losses in auto parts, small-car production, the apparel industry and meat and poultry processing. The job losses may total 220,000, he says.
Institute economists also say the Great Lakes states are most vulnerable because the region has many auto-related jobs of the sort that can be transferred.
“The only industries that will be able to stay here are those with ultrahigh skills,” said Pat Choate, a Washington economist. “Once there is an agreement, and there is guaranteed safety for companies, you’ll see a stampede. It will be like the Oklahoma (land) stampede.”
Lost jobs are not the only problem for labor. Wages are likely to tumble, experts say, as companies pressure their employees and unions to compete against workers abroad who get a fraction of their wages. Mexican factory workers earn $2.17 an hour in wages and benefits, a tiny fraction of the $11.18 in wages alone for their U.S. counterparts.
One-fourth of the companies polled last fall by the Roper Organization for The Wall Street Journal said they are likely to use NAFTA as “a bargaining chip to keep down wages in the U.S.” Forty percent of the companies also said they are likely to shift some production to Mexico.
So far, taking wage cuts has proved only a short-term reprieve for some workers facing Mexican competition. Although workers for Zenith Electronics Corp. in Springfield, Mo., took pay cuts in 1987 in return for a vow to preserve their jobs, the company said business conditions worsened last year and shifted the work to Mexico.
The Zenith workers are the kind who seem to have the most to lose-the same kind who have lost before. Experts say the electronics, auto parts, telecommunications, furniture and textile and apparel industries are most likely to shift production south.
These are the industries that have expanded the most in the maquiladora, or free-trade zone, in Mexico, where about 500,000 workers are employed by 2,500 companies-two-thirds of them linked to U.S. companies, according to the U.S. General Accounting Office.
Many of the job losses in the auto parts, electronics and telecommunications industries have come in the great industrial centers of the Midwest such as Chicago and Detroit, as well as the small towns like Danville that once could rely on their blue-collar jobs.
Companies with plants in Mexico’s free-trade zone in the past decade closed 42 facilities and wiped out 67,088 jobs in Illinois during the same period, says Dave Ranney, an economist at the University of Illinois at Chicago.
His study is deceptive in that it measures only how many jobs were lost in Illinois, not how many the companies created in Mexico. Ranney says it is an important measure, nonetheless, because it shows how companies transfer investments between countries.
It does not measure how many jobs might have been lost altogether in the U.S. if companies had not had the safety valve of sending some work to Mexico to take advantage of low wages.
And jobs created in Mexico raise the standard of living there, drawing in more U.S. products, say proponents of NAFTA.
“If you want us to buy your products, we have to have the money,” said Oliver Farres, Mexico’s consul general in Chicago. “You talk about trade in Mexico. Think about trade with Mexico. It has to be a two-way street.”
But once NAFTA takes effect and trade barriers disappear, experts such as Ranney say, more U.S. jobs will become vulnerable.
U.S. truckers eventually will be competing, for example, with Mexican drivers who will be allowed to drive in the U.S. for the first time. Some farm workers in Florida will lose jobs as selected Mexican fruits and vegetable imports grow under NAFTA.
So, too, sugar workers in Florida and Louisiana will find their jobs in jeopardy as trade barriers to Mexican sugar come down.
Similarly, organized labor worries that U.S. food processors will shift work. They already express strong concern that beef-packing houses across the Midwest and Plains states will send the difficult, labor-intensive work south to reap the advantages of lower wages.
A study by the U.S. Office of Technology Assessment discounted the likelihood of many packing houses’ relocating but said a number of poultry-processing plants might indeed make the move to Mexico.
And expecting U.S. companies to shift only low-tech jobs would be a mistake, advises Harley Shaiken, a labor expert at the University of California at San Diego who has studied industrial growth in Mexico.
“Mexico has the capacity to be the next high-tech export platform, and if that becomes the case, other industries are vulnerable,” he said.
Nevertheless, job losses, government studies show, are most likely to hit those workers least able to find new careers at similar pay. These are low-skill workers in labor-intensive jobs such as putting together electric parts for new-home construction at the Valmont plant.
“By the time I get out of school, I’ll be 57, and you know nobody is going to hire me full-time,” said Calvin, who until recently was studying accounting at a local community college under a federal program for workers laid off from companies that shifted jobs overseas.
Whether they go to school or not, the Valmont workers are unlikely to find jobs matching their old wages.
“They’ll get $8 an hour if they are lucky, but most probably will get $6 an hour,” said Janice Hamilton, a worker at the Illinois Department of Employment Security office in Danville.
Although $10.90 an hour may not seem high, the workers’ wages were a factor in the company’s decision to move the plant, says Brian Stanley, Valmont’s vice president and treasurer at its offices in Valley, Neb.
“We were forced to do it because our competitors had already done it,” he said. The company tried to lower its costs and boost productivity at the plant, which had been losing money for three years, but it was not enough.
“How can you beat the Mexican wage?” said Stanley, whose company had earnings of $13.2 million last year.
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In Juarez, Mexico, where Valmont employs about 1,800 workers, the company pays about $3.12 an hour in wages and benefits, a small fraction of the $15-an-hour package in Danville, according to Stanley.
Since losing their jobs at Valmont, Alice and Dwayne Spezia have spent long hours considering what’s available in Vermillion County, where 1 out of 10 workers was jobless in November.
“You go around and around, and there are no jobs. It’s hard on everyone,” said Alice, who worked on the production line. They both look for work because they tell themselves that one of them has to find a job with health-care benefits.
And there are other changes in store for the Valmont workers.
At the union hall, business agent Alfred “Alfie” Bott probably will retire in the spring because he doesn’t have enough locals to support his job. He was not planning to retire at age 62. “You can’t sit around and do nothing,” he said.
Marilyn Ray, who is studying at the Danville Area Community College to become a medical office worker, worries how she will pay for the trailer she bought several years ago when she thought she had a job forever at Valmont.
Donna Carrigan, who put in 33 years at Valmont, finds there are days when she doesn’t want to leave the house or talk to anyone. “I’m pretty bitter. I’m depressed. But I dumped out all of them depression pills,” she said.
At a workers’ gathering, Janice Smith hears others talk of getting on with their lives but says she is not ready to stop grieving.
“It’s going to take time to learn to let go,” she said.
Jackie Calvin, who supports herself and her elderly mother, has no choice about putting Valmont behind her and starting over. She works nights, as she did before the plant’s closing, as a bartender at Rosie’s Tavern.
Much to her displeasure, she recently had to drop out of the government-paid community college classes because she couldn’t study and take care of her mother while working nights.
“It was just too much stress,” she said.
She also spends much time on the telephone or in person helping Valmont workers, just as she did for years as the lodge’s chairman. She can tell from their voices, she says, just how tough it has been for them.
“I always think, `Was there something that I could have done to save these jobs,’ ” she said. “It bothers me, you know, ’cause you try to do the best for everybody.”
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Next: How trade with Mexico can add jobs in the Midwest.