Recessionary Shock Therapy

The Recessionary Shock Doctrine: Shutdowns, Outsourcing

July 28
1:10 pm

A General Motors plant in Lake Orion, Mich.   (Bill Pugliano/Getty Images)

At the White House, President Obama’s team reportedly jokes, "Never pass up the opportunity of a good crisis."

In other words, it is crucial to use the current economic crisis to drive through badly-needed reforms that corporate special interests could successfully obstruct in normal times.

However, Corporate America has its own strategy for exploiting the economic crisis. In the name of cost-cutting driven by hard times, corporations are engaging in a massive spree of plant closings, job relocations, and mass layoffs.

When the going gets tough, the tough get going—to the Sunbelt, Mexico, or China.

Of course, these moves drastically deepen the recession by directly reducing the buying power of U.S. consumers and instilling insecurity among the bottom 80 percent of American families.

The epidemic of job destruction and corporate extortion continues unabated, and it’s all too visible in Wisconsin, where I live. More than ever, this wave is sweeping around the state and hitting employers crucial to communities’ economic futures:

  • General Motors devastated the economy of Janesville by shutting down a plant employing 2,800 workers, the town’s biggest source of jobs. (Janesville’s jobless rate is now 14.4 percent and nearby Beloit—where many GM suppliers were located—is at 18.6 percent.)
  • More recently, Kenosha learned it will take a major blow with the relocation—despite commitments to the UAW—of more than 800 Chrysler-Fiat engine jobs to a low-wage plant in Saltillo, Mexico where wages and benefits will likely run about $4 an hour. Chrysler was once Kenosha’s biggest employer, but it is now wiping out the last of the 38,000 auto jobs Wisconsin once had.

The very latest case is Mercury Marine threatening to close its unionized outboard-engine plant in Fond du Lac and transfer operations to an existing plant in non-union Oklahoma, leaving 2,000 jobless workers in the dust. Fond du Lac would also lose its biggest and highest-wage employer.

Workers in Wausau average about $50,000 a year, hardly a fortune. But in right-to-work Oklahoma, pay is one-third less that at the non-union Mercury Marine plant.

The International Association of Machinists has accurately described this as another case of "corporate extortion." Mercury Marine, despite having recently signed a four-year contract with the union, now mercurially wants to virtually "eliminate nearly all the terms in the current contract," the IAM said.

Corporate loyalty to workers and communities clearly has its limits. "Mercury Marine has benefited for decades from state and local tax incentives and public support," IAM business representative Russell Krings points out.

But when it comes to extracting wage cuts from workers and tax breaks from states, "[y]ou can never give enough," one Wisconsin union leader concludes from years of experience.

No matter how much the union concedes or how many millions financially-squeezed Wisconsin comes up with in incentives, they can never feel secure. (Against this backdrop, it was an almost hallucinatory experience to read a Milwaukee Journal Sentinel columnist declaring firmly, "as a whole, business is the general interest of the state.")

The onslaught of plant closings and relocations—both threatened and real—will continue until the Obama administration comes up with an industrial policy that prevents corporations from playing off workers and states against each other in order to further drive down wages.

But the Obama administration, encrusted with the "financiers first" mentality of men like Lawrence Summers (head of the White House’s National Economic Council), will not even begin to contemplate such a policy until the AFL-CIO and Change to Win begin backing up workers with real resources to fight plant shutdowns in Fond du Lac and elsewhere.

That would mean nationally spotlighting corporations like Mercury Marine, a subsidiary of Brunswick, for its failure to honor its union contract and its obligations to Wisconsin because of past tax concessions.

It would also mean encouraging and fully supporting militant action across the nation to confront every corporation that is using the pretext of the deep recession to outsource more jobs.

Every U.S. firm that turns its back on workers and communities during this national economic emergency—like Mercury Marine—needs to be thoroughly embarrassed through a concerted national strategy by labor—and so does the Obama administration.

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