‘Globalization: It’s Not Just Wages’

By June 21, 2005Dobbs Watch

Dobbs WatchUnder that headline ran an interesting piece by Lou Uchitelle of the New York Times. Apparently, the other Lou — Dobbs — doesn’t read the Times, or at least he doesn’t heed it.

Uchitelle, well-known to us, is an earnest if liberal reporter who covers stories with an economics angle. This is a typical Uchitelle piece, a fairly thoughtful case study of NAM member Whirlpool Corporation. The article starts out by talking about German-made washing machines being shipped to the US in spite of a $32/hour labor cost in Germany, as compared to a $23/hour rate here. “Globalization is often viewed as a rootless process of constantly moving jobs to low-wage countries”, he says, (Lou Dobbs, are you listening….?) “But the issue is more complex.” If the New York Times has figured that out, why hasn’t Dobbs?

The article notes that the manpower required to make appliances is declining, with the advance of mechanization, productivity and innovation. This, says Uchitelle, “dilutes the drawing power of lower wages.” Correct.

We’ve also made the point repeatedly that manufacturers tend to locate their facilities to be close to the customer, and Uchitelle’s piece bears that out. Noting that Whirlpool pays $23/hour in Ohio, as compared to far less in Mexico and China, he quotes Whirlpool’s CEO as saying, “…For one hour of labor [the amount of labor going into each machine], the difference won’t begin to cover shipping costs….”

Finally, he quotes the plant manager from Whirlpool’s Ohio plant as saying, “The reason we are here and not outsourced is that we do excellent quality work…”

As we’ve said in this space so many times, we are the best manufacturers in the world. If Lou Dobbs would believe that and look at some of the facts he is so fond of ignoring, maybe he could get off the outsourcing issue and get back to chasing his imaginary wave of illegal immigrants full time.