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Free versus fair

Missouri firebrick workers say
trade pacts may shift their jobs
Thursday, November 20, 2003 | 12:00 a.m. CST; updated 6:28 p.m. CDT, Monday, July 21, 2008

In a small maroon picture album, Ron Dunkle keeps blurry pictures of a rain soaked crowd on a dark Seattle street and lines of men in blue parkas standing determined behind a fence lined with riot police.

The images document Dunkle’s trip in November 1999 when he and Carl Roberts traveled to Seattle to represent the concerns of mid-Missouri’s United Steelworkers of America Local 790 and protest the policies of the World Trade Organization. The Perry and Mexico natives traveled more than 2,000 miles because the workers at their firebrick plants feared free trade policies would shift their jobs to cheaper labor markets.

Three years after Dunkle and Roberts returned home that fear became reality.

“Everything they talked about is exactly what happened,” Dunkle said of the events.

In March 2002, Dunkle, Roberts and 300 others lost their jobs when the AP Green Refractory in Mexico shut down. Mid-Missouri was once heralded as the “Firebrick Capital of the World,” manufacturing firebricks for the blast furnaces and kilns used in the steel industry. Of seven refractories, only two continue to operate in Fulton and Vandalia.

ANH Refractories, the parent company of the Missouri firebrick factories, cited “sharply lower demand from the financially troubled steel industry” as a significant factor in the company’s recent filing for Chapter 11 bankruptcy. Economists say the steel industry is suffering largely due to cheaper imports from Russia and China.

Richard Craighead, president of Local 790, is in Miami to join the chorus of opposition to the next step in expanding international free trade. This week, international delegates are meeting in Miami to discuss the next step in international free trade — the Free Trade Area of the Americas — that would eliminate taxes and tariffs throughout the Western Hemisphere, creating the largest free trade bloc in the world.

“If this thing passes, manufacturing jobs will be going out of this country like a sieve,” said Jim Bousquet, staff representative for local 790.

“I’ll tell you what, if somebody calls it free trade, it’s not somebody like us that’s lost their job because of it,” Dunkle interjected. “It wasn’t free to us.”

“And it wasn’t fair either,” Roberts added.

Falling from profitability

In 1976, when Craighead started working at the AP Green refractory in Fulton, the industry was the life of the community. The brick factories employed hundreds of mid-Missourians and local kids could count on getting work that paid a decent living, Craighead said.

But his hometown feels different now. The union that once had 3,800 regional workers has lost close to 90 percent of its membership. Every day when he goes to work, Craighead knows it could be his last.

“If your plant’s not profitable, you’re not going to be there; that’s just natural” explained Craighead, a 27-year employee of AP Green in Fulton. “But we’re not talking about that here. We’re talking about trade laws opening the doors and jobs leaving to go overseas.”

Paul Rainsberger, director of the MU Labor Education program, said it’s clear that the process of globalization has had a negative effect on U.S. labor levels. The Free Trade Area of the Americas — the most ambitious free trade agreement yet — may accentuate the problem, he said.

[photo]

At an informational meeting held Thursday, Nov. 13, 2003 at the Local 790 union hall in Mexico, Mo., buttons and bumper stickers advertised union members' attitudes toward the proposed Free Trade Area of the Americas, which union members believe would represent yet another blow to local manufacturing jobs. (BETH WELSH/Missourian)

“The truth is a high percentage of international free trade is simply transfers within corporations across national boundaries,” Rainsberger said. “The corporations that employ people in this country are the same ones taking advantage of considerably lower wage rates in the Chinas, Indias and Brazils of the world.”

Because of increasing imports from Mexico, Russia and China, dozens of steel plants have gone bankrupt, Dunkle said. And when a plant like GST Steel in Kansas City closes shop, it doesn’t just mean 812 employees are out of a job, it also means mid-Missouri brick factories have lost another customer.

“When all the steel industries went bankrupt, we were left holding the bag on a lot of it and pretty soon we ended up in bankruptcy ourselves,” Craighead said.

Competing with southern neighbors

Union workers contend the Free Trade Area of the Americas could be the policy that finally breaks the brick industry’s back.

Close to a decade after negotiations began in 1994, the Miami meeting will be the 8th Ministerial aimed at finalizing standards for a 2005 deadline. According to the Office of the U.S. Trade Representative, tariffs in sectors such as chemicals, steel and textiles likely would be eliminated upon passage as well. By 2015, USTR supports the elimination of all tariffs and taxes in trade between the 34 nations.

Ricardo Reyes, spokesman for the U.S. Trade Representative, said the free trade agreements benefit consumers by providing cheaper goods. “Trade does require adjustment,” he said. “It requires countries to find their relative strengths and concentrate on those. So when you’re trying to trade with a country whose main comparative advantage is a lower skilled workforce with lower wages, that workforce in the U.S. needs to go through some adjustment.”

Rainsberger said the FTAA could directly affect the few remaining Fulton and Mexico employees because FTAA countries, such as Brazil, are emerging giants in the steel industry. Firebricks from Chile and Argentina are already starting to displace U.S.-made bricks, said Bousquet the union representative.

The difference in wage rates is dramatic. For instance, metal workers’ average wage in Colombia is 97 cents an hour compared with $20.51 an hour in the United States, Rainberger said. Aging U.S. plants, which have undergone little modernization in the past two decades, are another incentive to move abroad, he said.

“Companies have a choice: Begin with a new investment in modern plants with low wages abroad or continue in the old industries in the U.S. playing catch up in investments and high wages,” Rainsberger said.

Already, ANH Refractories has operations in Mexico and Indonesia. However, the company declined to comment on future plans.

Worrying about the future

David Boone, director of economic development for the city of Mexico, said the plant closure was a significant setback but new manufacturing industries, such as Bentley and Spartan Light Metals, are steadily replacing the jobs lost at AP Green.

“The problem is, in today’s market, it’s difficult to replace very high paying jobs with excellent benefits like AP Green,” Boone said.

[photo]

Don Deichman (left, at podium) speaks to attendees of an informational meeting held at the Local 790 union hall in Mexico, Mo. on Thursday, Nov. 13, 2003. The meeting was called to provide information about the proposed Free Trade Area of the Americas, which union members believe would represent yet another blow to local manufacturing jobs. (BETH WELSH/Missourian)

According to the Economic Policy Institute, workers who lose their jobs to free trade earn an average of 23 percent less in their next jobs. That’s certainly the case in Mexico, said Brad Lower, who lost his job in 2002 when National Refractories Co. closed. Now, some of the folks who made upwards of $20 an hour are lucky to earn $10 an hour, he said. “Now, we’re just trying to buy groceries,” Lower said.

Back when the plants were running, payday would mean restaurants all around Mexico were full. Now more than $3 million in annual wages are gone and a fair number of the restaurants are boarded up. In downtown Mexico the only businesses left are a few antique shops, Bousquet said. Head into the residential areas and you’ll see hundreds of houses for sale, Roberts said. The city will even pay you $1,000 to buy a house within the city limits, Dunkle said.

That’s why Craighead is going to Miami. He and his co-workers are worried the FTAA will put their jobs and communities at risk of further decline.

Rainsberger said there are models of economic alliances that satisfy union concerns about companies exploiting cheap labor markets. In 1994, when the EU was being created, labor unions were concerned that corporations would run south to lower wage countries such as Greece and Portugal to avoid the higher wages of the north such as Germany and Denmark, Rainsberger said. But the EU labor board specifically worked to bring wages up in the southern countries.

“The missing concept here is there should be a uniform set of standards expected of each participating nation, otherwise whatever advantage the U.S. has in production or efficiency is wiped out by an erosion of conditions in other countries,” he said.

That’s the message Craighead took to Miami.

“Everyone knows there’s going to be a global economy, the place is just too big anymore,” Craighead said. “But the solution is fair trade laws. No unions are against free trade, we just want fair trade.”


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