Assignment #19

When Foreigners Buy Factories: 2 Towns, 2 Outcomes

(remember in this article that "foreigner" means non-American, not non-Taiwanese)

HOLLAND, Mich. — Four years ago, a small factory on the edge of town here was not doing well and slowing firing workers. Then Siemens, the German industrial giant, bought the plant and folded it into a global enterprise. Today, the factory is shipping wastewater treatment equipment to Asia and the Middle East and employing twice as many workers.

“Globalization has been good for Holland,” said David J. Spyker, vice president of a Siemens unit.

About 60 miles to the northeast, saying the same thing will be met with anger. Two years have passed since a Swedish company shut down the largest refrigerator factory in the country, along the Flat River in Greenville.

The company, Electrolux, sent production to Mexico, eliminating 2,700 jobs from a town of 8,000 people.

“Everybody talks about Electrolux around here the way the rest of the country talks about Hurricane Katrina,” said Becky Gebhart.

As foreign buyers descend upon the United States, buying up large areas of the industrial landscape and putting millions of Americans to work for new owners, these two cities offer examples of different examples for a nation still uneasy about being on the selling end of the global economy.

More than 200,000 Michigan residents worked for subsidiaries of foreign companies as of 2005.

Yet in a state that has lost 300,000 manufacturing jobs since 2000, foreign investment has not been enough to compensate.

Gov. Jennifer M. Granholm, was bitterly disappointed by Electrolux’s decision to abandon Greenville.

She had promised to persuade the company to stay, assembling a package of more than $120 million in state and local tax credits. The city offered to build a new factory. The local union agreed to give up as much as $33 million a year in wages.

“They said, ‘There is nothing you can do to compensate for the fact that we are able to pay $1.57 an hour in Mexico,’ ” Ms. Granholm recalled during a recent interview.

Electrolux bought the Greenville factory in 1986 from an American firm. It succeeded for many years, but two decades later, Electrolux — like a lot of other companies — decided it could cut labor costs by moving production to another country.

As unemployment benefits expire, many of the city’s former workers are still seeking the next job. Sales at restaurants, hardware stores and car dealerships have plummeted, prompting them to dismiss workers, adding to a downward spiral.

Despite the bitterness, Ms. Granholm has traveled to Japan and Europe in pursuit of expanded trade and foreign capital. “We don’t want to just be victims of the global economy,” she said. “Pursuing international investment is one strategy to get jobs.”

Questions:
1.) How can globalization help small towns where there is no work?

2.) How can globalization hurt towns that depend on industry?

3.) Are there any similarities to the situation in Taiwan?

For the real article, see the NY Times:

http://www.nytimes.com/2008/04/07/business/07sale.html?_r=1&hp&oref=slogin