Saturday, February 27, 2010

Blue-collar workers hanging on by thread

Blue-collar workers hanging on by thread

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They arrive at work at 7:25 a.m. and many of their cars are rusting buckets of crud. Except for the boss's. He drives a Volvo.

Walk in the door at Schaefer Screw Products and there is the enemy -- the clock. The oil vapors and solvents are overwhelming. The yellow light is dispiriting. The workers don't want to be here. The liquor bottles in the weedy lot out back tell part of the story. The graffiti in the bathroom -- profanely denouncing "hard workers" -- tells the rest.

The workers punch the clock at precisely 7:30 a.m., not a minute later since they would be docked 14 minutes and nobody in America works 14 minutes for free. A quiet resignation settles over them as the roar of the screw grinding machines rev up. Want it or not, they need to be here. After this place, there is no place. Not in today's America.

This machine shop may be the next wobbling domino in the collapse of the American manufacturing sector and the struggles of its blue-collar workers. There are at least seven shops nearby that are available for lease.

Schaefer Screw is in an industrial section of Garden City north of Ford Road, about two miles west of Detroit.

My brother Bill Parker and his wife Kim work there. Bill, 35, made $70,000 shuffling subprime mortgages for Rock Financial in 2006. He used to wear suits and now he wears oily jeans making $8.50 an hour counting and cleaning screws. For Christmas, he got a $43.80 bonus and evicted from the house he wrote the mortgage on.

"Dude, I was making more than that in high school," he said. Then he recited the new battle cry of a generation: "I'm just glad to be working."

Schaefer Screw is a three-generation mom-and-pop shop dating back to 1946. By all rights it should have a "For Sale sign" in the window. Its jobs should be overseas in places like Guangzhou and Juarez and Bangalore, where the labor is cheap.

Free trade is friend and foe

The ironic bit is this: Schaefer Screw would not be here at all had it not been for the cheap Chinese labor that supplies the plant with screws and bolts and fittings and nipples. Inside its 20,000-square-foot frame sits a snapshot of American lives of desperation: falling wages, fewer hours, homes nearing default, a business nearing failure, worker/management friction.

"I got a call from New York in 2001," recalled the owner Mike Szalay, 45, who along with his brother Mark took the place over from his father Sanford, who took it from his father Mike. The caller was a competitor, but also a friend. "He warned me that my prices were too high. He said guys in China are coming in and they're going to kill you. Get with it. NAFTA is here. So I kicked a few pieces over there I wasn't making money on, standard plumbing fittings. I thought I'd give it a try. They came back. The quality was good; the price was right."

NAFTA, the North American Free Trade Agreement, created a free trade block beginning in 1994. But that is only part of the story. The World Trade Organization (WTO) began quietly in 1995, encouraging a sort of worldwide NAFTA that all but eliminated international trade barriers. China was admitted in November 2001 and since then Michigan has lost nearly 400,000 manufacturing jobs or nearly 50 percent of its industrial work force.

"It's got its roots in the Big Three," Szalay said of the job losses. "The big boys made so much money, they gave the unions whatever they wanted, no matter what productivity was. They gave a guy $28 an hour to lean on a broom. So it trickled down and my guy wanted $20 to lean on a broom. It got so bad they figured out a way not to pay the guy with the broom. They moved whole factories, whole industries overseas.

"But now it's swung too far. We've got nothing left here. I'm employing people in menial jobs just to keep them going. And I'm scared to death that this place is going to die. How are we going to pay this national debt back? The stimulus? What sort of jobs are we going to tax? Where's the value in the money?"

Schaefer employs 20 people, down from 40 when the WTO began. It is considered a manufacturer, but only about 25 percent of the product is made on site. What choice did he have?

"I'm a distributor technically," said Szalay.

Except for the few machinists filling spot orders, the menial jobs consist basically of removing screws from a box that says Made in China, counting the bits, cleaning them and putting them into new boxes that do not say Made in China.

There are machines that can count and clean screws more quickly and efficiently than a human being, Szalay said, but the machines cost $50,000 plus maintenance and software. In today's America, a human being is cheaper than a machine in the short run.

At the same time, Szalay had to ask his workers for concessions: a 5 percent reduction in pay and a 20 percent cutback in hours. This is not unusual. The average hourly earnings for the American worker fell last year by nearly 2 percent when adjusted for inflation, according to the Bureau of Labor Statistics. Of the more than 8 million jobs lost in the past two years -- 2 million were the good-paying jobs in the manufacturing sector.

The workers were not pleased. When Szalay went back into his office, a machinist said this of the boss: "I'm sicka hearing about the economy. What's he gonna do? Trade in his Hummer for a Porsche?"

He traded it for the Volvo.

Struggling to get by

For workers here, Szalay is the closest they will come to THE MAN. And by THE MAN they mean the bozos in Washington, D.C., who voted for the trade agreements and the bank deregulations that let the jobs slip away and money disappear into thin air.

When they say THE MAN, they mean the wolves on Wall Street who amplified the housing bubble and nearly took the world economy down. Instead of paying the price and going out of business and collecting their own unemployment checks, the Wall Street wizards got a multibillion-dollar bailout paid for in part by that $43.80 screw factory bonus. Now those wizards are making beaucoupbonuses again while some see darker clouds on the horizon.

Goldman Sachs, which was a heartbeat away from failure in 2008 and received $40 billion in federal aid, paid out $16 billion in bonuses and compensation in 2009 -- an average of nearly $500,000 per employee. The bank paid just $14 million in taxes. At the same time, Deutsche Bank forecasts that a quarter of homeowners are underwater and RealtyTrac.com reported 315,000 foreclosures in January, the most for that month on record. Many economists are predicting a bleak year in the housing market if wages and unemployment don't improve.

"You feel the whole thing's a swindle," says Cindi Borbi, the 59-year-old account manager behind a desk behind a cloud of cigarette smoke. Her husband took his life last year after being let go from his auto supply firm. He left his wife a broken heart, a mound of debt and a house she can't pay for. "I'm looking for a basement if you've got one."

Amanda Wollschlager, 26, is giving up her home. Her husband was laid off a year ago from a white-collar job at an auto supplier. His unemployment benefits will run out in March. They are packing up the baby and heading to Arizona. "We heard there's jobs out there, hopefully," she said.

Mike Straw, 42, must be the most honest man in America. Straw, a 12th-grade dropout, earns $8 an hour but takes home about $75 a week. Up to his neck in house payments on a house that is no longer worth what he owes, Straw has decided to pay instead of walk away.

Why?, he was asked. A lot of people are walking out on debts.

"A lot of people do, but I don't," he said. "If everybody walked away on what they owe, where would we be?"

And with that, the lunch bell rang. Everybody was huddled around the time clock like it was the only thing giving off heat.

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