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NOVEMBER 2004
Offshore outsourcing poses a growing threat to jobs
by Rick S. Bender, President of the Washington State Labor Council, AFL-CIO

Washington’s workers have endured plenty of economic downturns and cycles over the last 30 years. But something more worrisome is now happening to workers in our state and their employers.  

A new report on our state by the Industrial Union Council of the AFL-CIO compiled for the first time several sources of information to create a picture of the role trade plays in manufacturing job losses in our state. It finds that 27,000 jobs in our state have been lost in just the last three years due to trade.

We often hear about the wonderful benefits of trade for our economy, but the conventional wisdom rarely acknowledges the costs. But when families lose their incomes and lose their opportunities for a better future because of imports, outsourcing and offshoring we should acknowledge the damage. If you want to find out what companies in your local area have laid-off local workers or moved production overseas, simply click on the new job tracker at www.workingamerica.org. 

This first-of-its-kind research project relied on publicly reported official data to measure trade-related job losses. The findings are stark. Since 2001, Washington has shed 66,700 manufacturing jobs, amounting to nearly a fifth of our manufacturing job base. Topping the list of Washington cities affected were Seattle, Tacoma and Spokane. Spokane’s loss amounted to 7,000 jobs. Local examples include the Bayliner Marine Corporation in Spokane Valley, which laid-off 127 workers, and the Alcatel Internetworking company also in Spokane Valley that cut 100 jobs.

The shocking finding is that 40 percent of these lost jobs were trade related. That’s nearly 30,000 good family-wage jobs lost due to trade. Sometimes the cause was imports, sometimes offshoring.  The researchers pulled data from Trade Adjustment Act (TAA) petitions and Worker Adjustment and Retraining Notification (WARN) notices. They also searched the news reports in the comprehensive Lexis/Nexus data base for reports of layoffs and plant closings.

Even though this report is groundbreaking, there’s still much digging to do to uncover the real cost of trade. Because the WARN act only applies to large-scale layoffs, by employers with at least 100 employees, the report’s estimates exclude smaller layoffs and smaller employers. That indicates the numbers are probably greatly understated. And the cost is not only in jobs. Entire industrial sectors, some of which have national security implications, are being decimated.

For example, there were about 760 job losses from aluminum processors, including Kaiser Aluminum’s shut down of its smelters. While the 2001 electricity crisis created by Enron was in part responsible, aluminum companies nationwide suffered as well. The cause: In large part because of China’s dramatic expansion which drove up the cost and diminished the supply of alumina. The huge increase in China’s capacity for aluminum production when the Three Gorge Dam goes on line means a future aluminum industry in our state, or nation, is doubtful. What does that do for national security?

The report details cases across our state of dozens of companies that have shut down or laid off workers due to trade. The Boeing Co. is the largest example, with import competition from its European-subsidized competitor Airbus causing layoffs since 1999. In food manufacturing, nearly two-thirds of the jobs lost were identified as import-related. Grandview’s Agrifrozen Foods cut 368 jobs as the company reduced production because of import pressures and high energy costs. The company reportedly has moved some production to Mexico.

Shifting production out of the U.S. is a growing trend in high tech, too. Three companies in the Vancouver area are responsible for sending more than 500 jobs off shore since 2001. WashTech, the union representing high tech workers, has documented dozens of cases where American workers are training their Chinese or Indian replacements before being laid off.  Now the insurance and investment company with nearly 12,000 employees in the Northwest, SAFECO, has announced its plan to outsource its information technology (IT) jobs in a move dubbed, “SmartSource.”

It’s past time to pay attention.  Now we even have to think about how our national security might be compromised by this loss of basic manufacturing capacity.  Cheap, low-wage foreign labor markets are luring “American” multi-national corporations to abandon our domestic workforce.  We need to act to change this downward spiral.  Pretending it will go away won’t make it so. 

Rick Bender is President of the Washington State Labor Council, AFL-CIO,
the largest labor organization in the state.

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