The high cost of free trade Maytag workers face plant closing

“NAFTA allowed Maytag to commit the premeditated murder of our community,” said Dave Bevard, a 30-year veteran of Maytag’s refrigerator plant in Galesburg, Ill. Trade deals like the North American Free Trade Agreement (NFTA) and the Free Trade Area of the Americas (FTAA) “are definitely not for us,” he told the World.

“NAFTA has failed on every level, in every way possible,” he said in a telephone interview Nov. 10. “The prospects are pretty grim.”

Bevard, 51, should know. As president of the Machinists union representing 1,400 hourly workers at the plant, he is at the center of a human catastrophe in this western Illinois town.

In October 2002 Maytag, the third largest appliance maker in the U.S., announced it was closing its Galesburg plant and relocating its operations to a “maquiladora” in Reynosa, Mexico, by December 2004. In Mexico, it plans to pay manufacturing workers about $2 an hour, far less than the $15 an hour wage the average Galesburg worker makes.

“The company laid off 380 people on Sept. 26,” Bevard said. A little over a year from now, all 1,400 workers – plus about 300 people in management – are slated to hit the unemployment line.

Galesburg, a city of 34,000, is still reeling from the shock. Maytag is the area’s largest employer and has been an anchor of this all-American town. The refrigerator plant has operated for 52 years, providing employment, decent wages and benefits for three generations of workers.

In 1994, just after the passage of NAFTA, the company started pressing the union to make contract concessions, particularly in benefits. When contract talks rolled around again in August 2002, Maytag’s management became even more aggressive toward the union, Local Lodge 2063 of the International Association of Machinists.

“The company came to us with a take-it-or-leave-it proposal. We made big concessions in health care, in attendance policies, and in other areas. It was very upsetting,” Bevard said. But members felt they had little choice.

“When we agreed to the contract, a company negotiator said, ‘Well, at least you can take solace that you did what you needed to do to save your jobs,’” Bevard said. “Six months later they announced the closing.”

“You can’t help feeling betrayed,” he said.

The union isn’t alone in feeling cheated. The state and the city gave economic incentives to keep the company in Galesburg. Since the mid-’90s, the state provided $7.5 million in grants and loans. The city passed a one-quarter percent sales tax hike to give Maytag an extra $3 million. Other tax abatements, to the tune of about $4 million, were also thrown into the pot.

But in the end, Maytag decided to take the money and run. It now claims it paid too much in property taxes, and seeks a $300,000 refund before it skips town.

Rep. Lane Evans (D-Ill.), who represents the area, characterized Maytag’s actions as “an insult to this community.” He said the closing highlights the failure of NAFTA. Some lawmakers have called on Maytag to repay what it got in tax breaks.

The ripple effects of the plant closing will reverberate throughout the region, as Maytag’s $150 million annual payroll goes up in smoke.

“Western Illinois University did a study of related job losses if the plant closes – for example, teachers, fire fighters, service workers, small businesses – and they estimated that Knox County alone will lose 5,000 jobs,” Bevard said.

Already, he said, small businesses like the music store in the mall and the town’s 50-year-old bookstore are closing. A local health clinic has reported a big surge in stress-related illnesses. And pressure is increasing on workers at two other manufacturing companies in town – Gates Rubber and Butler Manufacturing – to make wage and benefit concessions.

It all adds up to an economic calamity that shows little signs of abating.

NAFTA has also been a bad deal for Mexican workers, Bevard said. “Service workers in Mexico are getting paid 58 cents per hour. Trade agreements like this are dropping everyone down to the lowest common denominator. … All they do is give a fast track for a corporation to make a fast buck.”

As if to illustrate his point, Maytag’s financial reports show that Chairman and CEO Ralph Hake received at least $1.7 million in pay in 2002.

The author can be reached at malmberg@pww.org