Friday, May 8, 2015

Nike to Reshore Jobs? Connect the Dots . . .

First read a few of the latest headlines, stitch the information together, and then read Robert Reich's lasted post about Obama's visit to Nike today — then connect the dots . . .

May 7, 2015 -- L.A. Times: Planned layoffs jump to three-year high. Layoffs announced by U.S. companies jumped 68% in April to 61,582 — the highest monthly level since May 2012. Lower oil prices were the cause for the increase and have pushed announced job cuts for the first four months of the year up to 201,796 — a 25% increase from the same period last year. About 265,000 people applied for first-time unemployment benefits last week.

May 4, 2015 -- New data from payroll firm Automatic Data Processing reported that private sector job growth slowed in April for the second straight month. The 169,000 net new jobs added were the fewest in more than a year. But the Labor Department reported that economy added 223,000 jobs in April (up sharply from 126,000 created the previous month); and that the unemployment rate dropped to 5.4% — but those who are not in the labor force increased by another 16,000 from last month (up from 93,175,000 to 93,194,000) — and that makes over 11 million more since the Great Recession ended in June 2009.

May 7, 2015 --- Siemens, the German industrial giant, said that it would cut 4,500 jobs ... The job cuts bring the total number of layoffs this year to almost 12,000 out of a global work force of about 340,000 ... Roughly half of the latest round of cuts will be in Germany, where about one-third of all Siemens employees are based ... Germany’s low unemployment rate (at 4.7 percent, the lowest in the eurozone) has emboldened unions to seek higher wages after years of increases that barely kept pace with inflation. While bigger pay increases may be justified, they can encourage companies to invest in places where unions have less power. Slow growth in the eurozone has prompted Siemens and many other companies to look to the United States and Asia for growth while scaling back operations closer to their headquarters. [Currently Siemens employs approximately 46,000 people in the U.S., so maybe the U.S. will see an uptick in low-paid non-union workers in anti-union Southern and "Right-to-Work" states.]

May 4, 2015 -- Dow Chemical just announced a bunch of layoffs. The U.S. chemical giant, which had $58 billion in sales in 2014, will cut 1,500 to 1,750 positions (3% of its global workforce) in its effort to boost profitability.

April 30, 2015 -- GM will lay off 1,000 people — in Canada, to move the production of the Camaro back to America with tax incentives from the city of Lansing, Michigan. [Jobs were going to Canada and Mexico after NAFTA — but now the over-saturated labor market in the U.S. might look more appealing with the beat-down labor unions and stagnant wages. Is America now the third-world country where jobs are being offshored to, rather than from? During the auto bailouts, new union workers took a 50% cut in pay. What are GM wages in Canada and elsewhere around the world?]

Apr 28, 2015 -- By the end of last week Wisconsin employers had notified the Department of Workforce Development of 3,543 planned layoffs, putting the state on pace to eclipse 10,000 in 2015. That would be the highest number of layoffs announced in Wisconsin since 2011, when Gov. Scott Walker first took office. [But now that Gov. Scott Walker has since signed a "Right to Work" law, will more jobs from Canada (and elsewhere around the world) come back to the U.S. for it's low wages and tax "incentives"?]

May 1, 2015 --- The number of manufacturing jobs that are returning to the U.S. — or coming to the U.S. for the first time — from overseas has hit a record level. 60,000 were added in the U.S. in 2014 (versus 12,000 in 2003) — either through so-called reshoring (in which American companies bring jobs back to the U.S.) or foreign direct investment, in which foreign companies move production to the U.S. -- In contrast, as many as 50,000 jobs were “offshored” last year, a decline from about 150,000 in 2003.

Some claim the reason for "reshoring" is because of "patriotism" — and the pursuit of a positive corporate image — and that more Americans were making an effort to buy U.S.-made products. [But is it really because of that, or in some cases, it's just more profitable to hire low-paid American workers in an over-saturated labor force in places where there's anti-union sentiment?]

The "job creators" were constantly claiming Americans lacked skills, but at the NASDAQ website, they're saying they are reshoring jobs back to the U.S. because we HAVE skills. "Companies gave several reasons for reshoring ...including government incentives ( more tax breaks), the skilled workforce, capitalizing on the value of a "Made in USA" label and automation. [Automation? Can't they automate in China, Camabodia, Vietnam, Mexico and Canada?]

Harry Moser, founder and president of the Reshoring Initiative: "With 3 to 4 million manufacturing jobs still off shore, we see huge potential for even more growth..." [Yes...when America finally became the next new "emerging market" — like it once was in 1492.]

May 7, 2015 -- Prior to Obama's visit to Nike's headquarters today, former Labor Secretary, Robert Reich, summed it up at the Chicago Sun Times:

It’s true that over the past two years Nike has added 2,000 good-paying professional jobs at its Oregon headquarters, fulfilling the requirements of a controversial tax break it wrangled from the state legislature. That’s good for Nike’s new design, research and marketing employees.

But Nike’s U.S. workers make only a tiny percent of Nike’s products. In fact, Americans made only 1 percent of the products that generated Nike’s $27.8 billion revenue last year. And Nike is moving ever more of its production abroad. Last year, a third of Nike’s remaining 13,922 American production workers were laid off.

Most of Nike’s products are made by 990,000 workers in low-wage countries whose abysmal working conditions have made Nike a symbol of global sweatshop labor. As wages have risen in China, Nike has switched most of its production to Vietnam, where wages are less than 60 cents are hour. Almost 340,000 workers cut and assemble Nike products there.

In other words, Nike is a global corporation with no particular loyalty or connection to the United States. Its loyalty is to its global shareholders.

Trade agreements like the Trans Pacific Partnership protect corporate investors but lead to even more off-shoring of American jobs. They make it safer for firms to relocate abroad – the Cato Institute describes such investor protections as “lowering the risk premium” on offshoring – thereby reducing corporate incentives to keep jobs in America and upgrade the skills of Americans. If the Trans Pacific Partnership goes into effect, American wages will be dragged down by further losses of manufacturing jobs.

All workers with similar skill levels face downward wage pressure when Americans displaced from better-paying manufacturing jobs join the glut of workers competing for non-offshorable jobs. Jobs being lost to imports pay Americans higher wages than the jobs left behind. The Trans Pacific Partnership – which includes 12 nations, including Vietnam — would lock us into an expanded version of the very policies that have failed most American for the past 20 years.

No doubt Nike is supporting the TPP. The corporations would get a tax cut on its Vietnamese and Malaysian-made goods. But even with the tariffs in place, Nike’s current expense for those $100-plus shoes is less than $10 per pair. So don’t expect that tax cut to result in cheaper prices for American consumers. Needless to say, the TPP wouldn’t require Nike to pay its Vietnamese workers more. Nikes’ workers are not paid enough to buy the shoes they make much less buy U.S. exported goods. Nike may be the perfect example of life under TPP.

Yahoo: While at Nike's headquarters today, Obama said this trade agreement is in America's best interest. "Just do it," he said, echoing Nike's slogan. Nike makes most of its shoes overseas. Of Nike's slightly more than 1 million factory contract workers, more than 9 of 10 are in Asia. The largest number is in Vietnam, one of the countries in the Trans-Pacific talks.

Nike claimed the TPP agreement would allow it to manufacture more shoes in the U.S., and said if deal is approved, they and its U.S. manufacturing partners would create up to 10,000 jobs over 10 years in the United States. That would only be 1,000 jobs a year, or 84 jobs a month — while tens of millions remain unemployed in America.

Obama said, "That means thousands of new jobs in manufacturing and engineering and designs in Nike facilities across the country, and potentially tens of thousands of new jobs along Nike's supply chain here at home. That's what trade can do." [Bull$hit!]

Obama said, "Under this agreement, Vietnam would actually for the first time have to raise its labor standards. It would have to set a minimum wage. It would have to pass safe workplace laws to protect its workers. It would even have to protect workers' freedoms to form unions for the very first time." [But what about OUR workers Mister President?]

Obama must support child labor in Vietnam and corporate tax dodgers ... and that's why he's visiting Nike's HQ and why he's pushing for fast track of the TPP trade agreement. Check out Nike's slaver labor camps — then tell us how to sell a shoe for $180 that cost just $5 in labor to make — then connect the dots . . .


  1. "Rising Trade Deficit Slows Job Growth in Manufacturing"

    Posted May 8, 2015 By Dean Baker at the Center for Economic Reasearch

  2. Bullshit indeed!

    i really believed my heart of hearts that Obama was the great progressive hope in 2008. That he was a true liberal in the vein of FDR.

    I just cannot understand his support of free trade vis a vis his comments on the campaign trail in '08

    I would just like to see one scholarly economic report that "proves"

    free trade raises the standard of living for the USA's poor and middle class.

    I guess i won't hold my breath as i would soon be dead.

    thank you Bud.

  3. Any reshoring is better than none. It shows that American firms are willing to sacrifice profits by paying American wages, which no matter how low, are tens of times higher than Vietnam or even lower cost countries.

    1. I find this (your) argument to be lacking. Sorry. Sure anything is better than letting everybody starve and die in miserable poverty but why was it allowed in the first place?

      So the 1% are deciding to be a little nicer to the american proletariat so they won't roll out the guillotine?

      When I graduated with an engineering degree in May 1994, the ink had just dried on NAFTA and I swear I was not at my first job more than 6 months before they started shutting down the factory and sending jobs to Mexico. Over time I think the number of factories closed is close to 50,000?

      I've seen hundreds of good honest hard working americans lose their livelihoods so that the 1% could increasingly engorge their profits.

      Bottom line for me is if you are an adult working a full time 40 hour/week job you should be paid enough to afford a middle class standard of living for your entire family.

      thanks again Bud.

    2. 67,161 less U.S. factories since 1997

    3. I see. American manufacturers are reshoring because costs in China have gone up. If we sign the TPP with countries like Vietnam and even lower wage countries, then they will not reshore, and more factories will close to move offshore.

    4. I'm working on something right now: "Reshoring Myth Exposed".

      And because wages went up China, they aren't reshoring to the U.S. --- but are offshoring/outsourcing to lower wage countries. But with automation and robots, even low wages might not matter that much in the future.

    5. The low skilled manufacturing jobs may be lost forever to low cost countries or to automation and robots. However, what about all the high skilled jobs that we send to India? After all, most American technology companies like IBM, Microsoft, HP, Oracle, etc. hire double or triple the number of Indians compared to Americans. IBM for example is the second biggest employer in India, behind the Indian government. Many of those technology jobs are highly paid, some over a hundred dollars an hour and we are not even talking management, but rather hourly work. Losing these jobs deprive Americans of the skill needed to grow and compete in the long term.

      Apart from technology, all kinds of jobs that require English language proficiency have been outsourced to India... legal back office, banking back office, medical diagnostics, document editing, call centers and so on. As for call centers, the Industry employs millions in India serving any country that uses spoken English. Their staff are trained to speak with the local accent so well, that you won't notice that they are not Americans or British or Whatever.

      Coincidentally, American household income peaked around 1999 or 2000, just prior to the wave of technology outsourcing to India. 1999 was the year that we sent all the Y2k work to India and discovered that they can do it cheap and good. After Y2k the equivalent of factory offshoring happened in technology, but you it wasn't felt because technology was still growing fast, and it happened to the backend jobs like maintenance first. Anyway, has anyone studied the impact of outsourcing highly paid service jobs to India and leaving the lousy ones behind for Americans?

  4. New York Times: Tepid job numbers in March were revised down, to a mere 85,000 jobs added — the first month without a six-figure rate of gain since the middle of 2012. And there is no meaningful progress toward Americans earning higher wages, with a mere 0.1 percent gain in hourly pay and a downward revision to that March number as well ... Economic growth came to a halt in the first three months of 2015, and revisions to gross domestic product are likely to show it actually contracted.

    New York Times: In March, the trade deficit widened by $15.5 billion to $51.4 billion — 5 percent higher than a year before ... The Commerce Department reported a [meager] 0.2 percent annual growth rate in the first quarter ... Incorporating the new March trade data, the damage now looks even worse. Barclays now estimates that gross domestic product fell at an 0.3 percent annual rate last quarter; Macroeconomic Advisers estimates a negative 0.4 percent; and Goldman Sachs has marked its estimate down to a retraction of 0.5 percent ... The effect of a stronger dollar [leave] American exporters struggling with de facto higher costs — imported goods looking cheaper in the United States and thus gaining advantage over domestic-made goods.

    The major U.S. stock markets continue making all-time record highs. Corporate taxes as a share of GDP and corporate profits are historically low. U.S. businesses made $1.8 trillion in after-tax profits last year. To date they have over $2.1 trillion in overseas profits stashed offshore. They are also currently paying historically low "effective tax rates" — while many pay no tax at all, and may actually get a government subsidy. Last year the U.S. merger-and-acquisitions market (in business deals worth $1 billion or more) rose 43% from the year before. And last year American companies have spent nearly $1 trillion on stock buybacks and dividends. The capital gain tax rate is still too low, and why Warren Buffett's secretary still pays a higher tax rate than her boss. (If a handful of companies are reshoring jobs, it appears to be too little, too late.)