U.S. town pays steep price for free trade

Tennessee jobs go to Mexico, Honduras

May 22, 2000|By Marego Athans | Marego Athans,SUN NATIONAL STAFF

CELINA, Tenn. - For decades in this once-bustling town, aside from hunting and fishing, one thing was certain: OshKosh B'Gosh.

The clothing factory had employed generation after generation, from high school through old age. But in 1994 came the North American Free Trade Agreement, and soon OshKosh closed its plants here in favor of cheaper operations outside the United States.

Twelve hundred people lost their jobs. The county's unemployment rate shot up to 35 percent (worse than the national rate during the Great Depression.) Charles and Mary Ann Hamilton had to close Hamilton's Department store - a fixture for 34 years - because spending money dried up.

"It killed this town," said Johnny Crowder, whose used car business since then is off 60 percent, the worst it's been in 40 years. "We had all our eggs in one basket and when they left, they took the basket."

The troubles in Celina (pop. 1,493) are repeated throughout the rural South, where apparel and textile towns have been abandoned by their main employers.

While the migration of low-skilled jobs to other countries began decades ago, the problems have been particularly pronounced since the North American Free Trade Agreement (NAFTA) took effect in 1994, giving companies new incentives to move production plants across the border. Since then, nearly a half-million jobs have been lost in the apparel and textile industries alone.

Overall, the trade agreement's effect on the U.S. economy is hard to judge. Advocates and opponents continue to debate the score, each armed with their own statistics on trade, investment and jobs.

Proponents say the agreement has raised the continent's productivity by eliminating trade barriers across borders, and consumers pay less than they otherwise would for certain items because companies followed cheaper labor to Mexico. Critics say the agreement served mostly to boost company profits at the expense of U.S. jobs.

NAFTA was never intended to make everyone a winner, said Matt Murray, head of the economics department at the University of Tennessee at Knoxville, but rather to increase the size of the economic pie, with the three slices belonging to Canada, Mexico and the United States. "What NAFTA is silent on is who gets a bigger and a smaller slice of the pie," he said. "Countries may lose, and, within countries, people may lose as well."

In places such as rural Tennessee, market forces began eating away at the supply of low-skilled jobs long before NAFTA was signed, Murray said; the trade agreement just speeded up the erosion.

Bigger decisions ahead

Whatever role it played, NAFTA and its effects are being viewed by some analysts as a tame preview of what's ahead in a proposal to bring China into the World Trade Organization, scheduled to be considered by Congress this week.

The WTO agreement, which is expected to spur massive investment in China, would open a much greater market - 1.3 billion Chinese - and "will look like NAFTA on steroids," writes Robert Scott, an economist at the Economic Policy Institute, a labor-backed research center.

While the robust national economy has helped many urban areas shift displaced workers into other jobs, it has masked the difficulties still felt in places such as Celina, where low-skilled work forces are further hampered by geographic isolation.

Clay County, population 7,000[scr: : 7,268 ]-NT, where Celina is the county seat, is a pristine spot 97 miles northeast of Nashville on the Kentucky border. The main roads ribbon up and down hills, cross rivers that feed Dale Hollow Lake and wander past clusters of grazing cows. "Home of the finest people in the world," the welcome sign says.

Since it opened its Celina plant in 1953, the Wisconsin-based clothing maker had been the town's economic foundation, employing husbands and wives and later their children. Christmas parties, with their country bands and big Southern meals, had the feel of extended family gatherings. Even the boss, Kenneth Masters, was a hometown kid who worked his way up from bundle boy in 1962 to vice president for manufacturing.

So it was difficult for people here to imagine that OshKosh would desert them, even though the labor-intensive apparel industry had long ago begun its migration in search of cheaper labor - the same thing that brought it to the South from the North in the first place.

"People thought OshKosh would be there forever," said Liz Boles, who worked there for 20 years. "They got fooled."

Then, in 1996, global trade caught up with Celina. Three OshKosh plants in Clay County closed, with production transferred to Honduras and to Mexico, where the company contracted with local manufacturers. While the move probably would have happened at some point anyway, said Masters, NAFTA speeded up the process by making it impossible to compete without cheaper labor.

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