07 Mar Leo Gerard: When a Coin Drops in Asia, Jobs Disappear in Detroit
Last year, free trade hammered Michigan’s 11th Congressional District, located between Detroit and Flint, killing manufacturing, costing jobs and crushing dreams.
It’s not over, either. Another 11th District company, ViSalus Inc., told the state it would eliminate 87 jobs as of last Saturday, slicing its staff by nearly 400 since 2013 when ViSalus was the second-largest direct sales firm in the state.
The numbers are staggering. The Economic Policy Institute (EPI) released a report last week showing that America’s $177.9 billion trade deficit in 2015 with the 11 other countries in the proposed Trans-Pacific Partnership (TPP) trade deal caused 2 million job losses nationwide.
This trade deficit reduced jobs in every U.S. congressional district except two, EPI said, but Michigan’s 11th had the ignoble distinction of suffering more as a share of total employment than any other district in the country. It was 26,200 jobs. Just in 2015. It was tech workers in January and teachers in July and tool makers in August and auto parts builders in October.
Manipulation of money killed those jobs. It works like this: Foreign countries spend billions buying American treasury bonds. That strengthens the value of the dollar and weakens foreign currencies. When a country’s currency value drops, it acts like a big fat discount coupon on all of its exports to the United States. And it serves simultaneously as an obscene tax on all U.S. exports to that country.
Among the TPP countries, Malaysia, Singapore and Japan are known currency manipulators, and Vietnam appears to be following their example. EPI found that currency manipulation is the most important cause of America’s massive trade deficits with TPP countries. Trade deficits mean products are shipped to the United States rather than made in the United States. The math is simple. A drop in Asian currency means a drop in U.S. jobs.
EPI looked at what types of imports the 11 countries sent the United States last year to determine what types of industry and jobs America lost as a result. The overwhelming majority was motor vehicles and parts. That’s why Michigan was the biggest loser of all of the states. The auto sector was followed by computer and electronic parts – including communications, audio and video equipment – and primary metals – including basic steel and steel products.
In addition, EPI found job losses in industries that serve manufacturers, like warehousing and utilities, and services like retail, education and public administration.
Each of these kinds of losses occurred last year in Michigan’s 11thdistrict, located in the heart of America’s car manufacturing country in southwestern Oakland County and northwestern Wayne County, where Detroit is parked just outside the district’s lines.
In January, in Michigan’s 11th, Technicolor Videocassette of Michigan, Inc., a subsidiary of the French multimedia giant Technicolor SA, laid off 162 workers in Livonia. That same month, what was once a vibrant chain of cupcake stores called Just Baked shuttered several shops, putting an untold number of bakers and clerks in the street, some with last paychecks that bounced.
In April, Frito-Lay told 17 workers that they’d lose their jobs later that year when it closed its Birmingham warehouse.
In July, 231 teachers in the Farmington Public Schools learned they would not have work in the new school year. One of them, 25-year-old Val Nafso, who grew up in Farmington, told the Oakland Press, “I hope things change where people who are passionate about teaching can enter the profession without 1,000 people telling them “Don’t do it…get out now.”
In August, DE-STA-CO, a 100-year-old tool manufacturer, told Michigan it would end production in Auburn Hills, costing 57 workers their jobs.
In October, Waterford laid off 39 firefighters. The township had received a $7.6 million grant in 2013 to hire them, but just couldn’t come up with local funds to keep them. That happens when factories close and bakeries shut down. Township officials told concerned residents they’d looked hard at the budget, “We started projecting out for 2017 and it flat lined,” Township Supervisor Gary Wall told them.
Later that month, FTE Automotive USA Inc., an auto parts manufacturer, told Michigan it would close its Auburn Hills plant and lay off 65 workers.
In the areas around Michigan’s 11th, horrible job losses occurred all last year as well, which makes sense since EPI found 10 of the top 20 job-losing districts in the country were in Michigan.
Auto supply company Su-Dan announced in September it would close three factories in Oakland County by year’s end, costing 131 workers their jobs.
In October, a division of Parker Hannifin Corp. in Oxford, Oakland County, that manufactured compressed air filters told its 65 workers they wouldn’t have jobs in 2016. “There’s a lot of people there that are paycheck to paycheck, and it’s going to hurt them,” Michelle Moloney, who worked there 25 years, told a reporter from Sherman Publications.
The threat of the TPP is that it does absolutely nothing to stop this job-slaughter. Lawmakers, public interest groups, manufacturers, and unions like mine all pleaded with negotiators to include strong provisions in the deal to punish currency manipulators. They didn’t do it.
They included some language about currency manipulation. But it’s not in the main trade deal. And it’s not enforceable.
Swallowing the TPP would be accepting deliberately depressed currency values in Asian trading partner countries and a permanently depressed economy in the U.S. car manufacturing heartland.
It’s the TPP that should disappear. Not Detroit.