Sucked into the offshoring Whirlpool
Critics of the $787 billion Recovery Act complain it is not doingenough to revive the economy, but they rarely ask why the companiesthat are receiving stimulus contracts and grants are not hiring morepeople. Now one of those recipients is facing a growing controversyover its employment practices in a case that helps explain why jobsremain in short supply.
Appliance maker Whirlpool is under firefrom organized labor for its decision to shut down a 1,100-workerrefrigerator plant in Evansville, Indiana and shift the work to acompany factory in Mexico. The announcementwas actually made last August, but it did not get national attentionuntil recently, when union activists realized that Whirlpool had been given a $19.3 million grantby the U.S. Department of Energy to develop "smart appliances." Thefunding was part of the Recovery Act's $4.5 billion pot of money toencourage the development of the smart transmission grid.
The grant was not directed to the Evansville plant, but unions arenonetheless indignant that a company engaged in exporting jobs to aforeign low-wage location is receiving federal aid. The company madethings worse for itself by warningworkers not to participate in a planned protest demonstration featuringAFL-CIO President Richard Trumka. The union at the plant, IUE-CWA Local808, has filed an unfair labor practice charge over the warning.
This situation shows the difficulty of using stimulus funds or otherincentives to generate employment at a time when so many largecorporations no longer have an interest in producing things in theUnited States.
Consider Whirlpool. For decades its production activities werealmost entirely located in the USA. In the 1980s that began to changeas the company started to focus more on overseas markets. It boughtlarge shares in the Canadian company Inglis, Mexico's Vitromatic andthen the European appliance business of the Dutch company Philips. In1990 Forbes wrote that Whirlpool was "going global -- with a vengeance."
If Whirlpool's foreign expansion was meant only to meet demand inforeign markets, that would be one thing. But the company began aprocess of reducing its manufacturing in the United States and otherdeveloped countries while increasing it in foreign low-wage havens. Oneof its favorite havens was Mexico. In the late 1980s the company closednumerous U.S. plants and shifted production to Mexican maquiladoraplants. In 1996 the plant in Evansville lost about 265 jobs when somerefrigerator production was moved to Mexico. In 2003 Whirlpool shiftedsome production from its facility in Fort Smith, Arkansas to a newplant south of the border.
The latter move came a decade after a bitter dispute between thecompany and the workers in Fort Smith represented by the AlliedIndustrial Workers union. In 1989 Whirlpool unilaterally imposedconcessions on members of AIW's Local 370, prompting the union tolaunch a national boycott of the company. In 1991 the head of the localconfronted Whirlpool executives and directors at the company's annualmeeting, calling on them to abandon their "narrow-minded, shortsighted,union-busting behavior." The dispute was not settled until 1993.
In 2006 the Evansville and Fort Smith plants lost a total of about1,200 jobs to Mexico. Or, in the antiseptic terms of Whirlpool's press release: "The company also is adjusting its workforce levels at several of itsNorth American manufacturing facilities to optimize production levelsand take advantage of its expanded manufacturing footprint."
In other words, the current shutdown plan in Evansville is just thelatest in a series of "adjustments" by which Whirlpool is riddingitself of decently paid U.S. workers and replacing them with muchcheaper labor abroad. The 1,100 losing their jobs are the remnant of aWhirlpool workforce in Evansville that back in the early 1970s totaled nearly 10,000. Companywide, 26 of Whirlpool's 37 production facilities are now located outside the United States.
It did not seem to occur to Whirlpool that there was anythingunseemly about accepting federal stimulus funds at a time when it wasclosing a domestic plant. In fact, something similar happened sevenyears ago. In 2003, during a period when the downsizing of theEvansville plant was already under way, the company accepted a $1.3million grant from the U.S. Department of Energy -- via the IndianaDepartment of Commerce -- to help develop a new manufacturing processfor energy-efficient refrigerators produced in Evansville (source:Associated Press, February 8, 2003 via Nexis).
Until the federal government is prepared to do something seriousabout offshoring, it should at least refrain from giving financialassistance to firms that engage in the practice, even if the aid isgoing to a different part of the company -- and even if it is for alaudable purpose such as promoting energy efficiency. The federalgovernment now has a (non-public) contractor misconduct databaseto help it avoid giving procurement awards to bad actors. Perhaps thereshould also be a list of job-exporting companies which would beineligible for federal aid until they reaffirm their commitment todomestic production.
