by Naomi Klein
Other methods of sidestepping the costs and responsibilities of employing workers with children are reported on a more haphazard basis throughout the zones. In Honduras and El Salvador the garbage dumps in the zones are littered with empty packets of contraceptive pills that are reportedly passed out on the factory floor. In the Honduran zones there have been reports of management forcing workers to have abortions. At some Mexican maquiladoras, women are required to prove they are menstruating through such humiliating practices as monthly sanitary-pad checks. Employees are kept on twenty-eight-day contracts —the length of the average menstrual cycle —making it easy, as soon as a pregnancy comes to light, for the worker to be dismissed.47 In a Sri Lankan zone, one worker was reported to be so terrified of losing her job after giving birth that she drowned her newborn baby in a toilet.48
The widespread assault on women’s reproductive freedoms in the zones is the most brutal expression of the failure on the part of many consumer-goods corporations to live up to their traditional role as mass employers. Today’s “new deal” with workers is a non-deal; one-time manufacturers, turned marketing mavens, are so resolutely intent on evading any and all commitments that they are creating a workforce of childless women, a system of footloose factories employing footloose workers. In a letter to Human Rights Watch explaining why it discriminated against pregnant women in the maquiladoras, General Motors stated plainly that it “will not hire female job applicants found to be pregnant” in an effort to avoid “substantial financial liabilities imposed by the Mexican social security system.”49 Since the critical report was published, GM has changed the policy. It remains, however, a stark contrast to the days when the company made it a banner policy that the adult men working in its auto plants should earn enough not only to support a family of four but to drive them around in a GM car or truck. General Motors has cut about 82,000 jobs in the U.S. since 1991 and expects to cut another 40,000 by the year 2003, moving production to the maquiladoras and their clones around the globe.50 A far cry from those days when it proudly proclaimed, “What’s good for General Motors is good for the country.”
Migrant Factories
Within this reengineered system, the workers aren’t the only ones on a day pass. The swallow factories that employ them have been built to maximize flexibility: to follow the tax breaks and incentives, to bend with the currency devaluations and benefit by the strict rule of dictators. In North America and Europe, job flight is a threat with which workers have become all too familiar. A study commissioned by the NAFTA labor commission found that in the United States, between 1993 and 1995, “employers threatened to close the plant in 50 percent of all union certification elections…. Specific, unambiguous threats ranged from attaching shipping labels to equipment through out the plant with a Mexican address, to posting maps of North America with an arrow pointing from the current plant site to Mexico.” The study found that the employers followed through on the threats, shutting down all or part of newly unionized plants, in 15 percent of these cases —triple the closing rate of the pre-NAFTA 1980s.51 In China, Indonesia, India and the Philippines the threat of plant closure and job flight is even more powerful. Since the industries are quick to flee escalating wages, environmental regulation and taxes, factories are made to be mobile. Some of these swallow factories may well be on their third or even fourth flight, and as the history of subcontracting makes clear, they touch down more lightly at each new stop.
When the flying multinationals first landed in Taiwan, Korea and Japan, many of their factories were owned and operated by local contractors. In Pusan, South Korea, for instance —known during the eighties as “the sneaker capital of the world” —Korean entrepreneurs ran factories for Reebok, L.A. Gear and Nike. But when, in the late eighties, Korean workers began to rebel against their dollar-a-day wages and formed trade unions to fight for better conditions, the swallows once again took flight. Between 1987 and 1992, 30,000 factory jobs were lost in Korea’s export processing zones, and in less than three years one-third of the shoe jobs had disappeared. The story is much the same in Taiwan. The migration patterns have been clearly documented with Reebok’s manufacturers. In 1985, Reebok produced almost all its sneakers in South Korea and Taiwan and none in Indonesia and China. By 1995, nearly all those factories had flown out of Korea and Taiwan and 60 percent of Reebok’s contracts had landed in Indonesia and China.52
But on this new leg of the journey, the factories were not owned by local Indonesian and Chinese contractors. Instead they were owned and run by the same Korean and Taiwanese companies that ran them before the move. When the multinationals pulled their orders from Korea and Taiwan, their contractors followed, closing up shop in their home countries and building the new factories in countries where labor was still cheap: China, Indonesia, Thailand and the Philippines. One of these contractors — the largest single supplier for Reebok, Adidas and Nike — is a Taiwanese-owned company called Yue Yuen. Yue Yuen has closed most of its factories in its homeland of Taiwan and chased the low wages to China, where it employs 54,000 people in a single factory complex. For Chi Neng Tsai, one of the company’s owners, it simply makes good business sense to go where the workers are hungry: “Thirty years ago, when Taiwan was hungry, we also were more productive,” he says.53
Taiwanese and Korean bosses are uniquely positioned to exploit this hunger: they can tell workers from personal experience what happens when unions come in and wages go up. And maintaining contractors who have had the rug pulled out from under them once before is a stroke of management genius on the part of the Western multinationals. What better way to keep costs down than to make yesterday’s casualties today’s wardens?
It is a system that doesn’t do much for the sense of stability in Cavite, or for the Philippine economy in general, which is already unusually vulnerable to global forces, since the majority of its companies are owned by foreign investors. As Filipino economist Antonio Tujan told me, “The contractors have displaced the Filipino middleman.”54 In fact, Tujan, the director of a Manila-based think tank highly critical of Philippine economic policy, corrects me when I refer to the buildings I saw inside the Cavite Export Processing Zone as “factories.” They aren’t factories, he says, “they are labor warehouses.”
He explains that since all the materials are imported, nothing is actually manufactured in the factories, only assembled. (The components are manufactured in yet another country, where the workers are more highly skilled, though still cheaper than U.S. or European workers.) It’s true, now that Tujan mentions it, that when I climbed up the water tower and looked down on the zone, part of what contributed to the unbearable lightness of Cavite was that apart from one incinerator, there were no smokestacks. That’s a bonus for the air quality in Rosario but odd for an industrial park of Cavite’s size. Neither was there any local rhyme or reason to what was being produced. When I walked the zone’s freshly paved streets, I was surprised by the variety of manufacturing going on. Like most people, I had thought that Asian export zones were mostly filled with garment and electronics producers, but not Cavite: a factory making car seats sat next to one making sneakers, across the way from a factory with dozens of aluminum speedboats piled up by its gate. On another street, the open doors of a factory revealed racks of dresses and jackets, right next to the plant where Salvador made novelty key chains and other small toys. “You see?” says Antonio Tujan. “We have a country whose industry is so deformed, so unbelievably mishmash, that it cannot exist by itself. It’s all a myth, you know. They talk about industrialization in the context of globalization, but it’s all a myth.”
No wonder the promise of industrialization in Cavite feels more like a threat. The place is a development mirage.
The Shoppers Take Flight
The fear that the flighty multinationals will once again pull their orders and migrate to more favorable conditions underlies everything that takes place in the zones. It makes for an odd dissonance: despite the fact that they have no local
physical holdings —they don’t own the buildings, land or equipment —brands like Nike, the Gap and IBM are omnipresent, invisibly pulling all the strings. They are so powerful as buyers that the hands-on involvement owning the factories would entail has come to look, from their perspective, like needless micromanagement. And because the actual owners and factory managers are completely dependent on their large contracts to make the machines run, workers are left in a uniquely weak bargaining position: you can’t sit down and bargain with an order form. So even the classic Marxist division between workers and owners doesn’t quite work in the zone, since the brand-name multinationals have divested the “means of production,” to use Marx’s phrase, unwilling to encumber themselves with the responsibilities of actually owning and managing the factories, and employing a labor force.
If anything, the multinationals have more power over production by not owning the factories. Like most committed shoppers, they see no need to concern themselves with how their bargains were produced —they simply pounce on them, keeping the suppliers on their toes by taking bids from slews of other contractors. One contractor, Young Il Kim of Guatemala, whose Sam Lucas factory produces clothing for Wal-Mart and J.C. Penney, says of his big-brand clients, “They’re interested in a high-quality garment, fast delivery, and cheap sewing charges —and that’s all.”55 In this cutthroat context, each contractor swears he could deliver the goods cheaper if the brands would only start producing in Africa, Vietnam or Bangladesh, or if they would shift to homeworkers.
More blatantly, the power of the brands may occasionally be invoked to affect public policy in the countries where export zones are located. Companies or their emissaries may make public statements about how a raise in the legal minimum wage could price a certain Asian country “out of the market,” as Nike’s and Reebok’s contractors have been quick to tell the Indonesian government whenever strikes get out of hand.56 Calling a strike at a Nike factory “intolerable,” Anton Supit, chairman of the Indonesian Footwear Association, which represents contractors for Nike, Reebok and Adidas, called on the Indonesian military to intervene. “If the authorities don’t handle strikes, especially ones leading to violence and brutality, we will lose our foreign buyers. The government’s income from exports will decrease and unemployment will worsen.”57 The corporate shoppers may also help draft international trade agreements to reduce quotas and tariffs, or even lobby a government directly to loosen regulations. In describing the conditions under which Nike decided to begin “sourcing” its shoes in China, for instance, company vice president David Chang explained that “one of the first things we told the Chinese was that their prices had to be more competitive with our other Far East sources because the cost of doing business in China was so enormous…. The hope is for a 20 percent price ad vantage over Korea.”58 After all, what price-conscious consumer doesn’t comparison shop? And if a shift to a more “competitive” country causes mass layoffs somewhere else in the world, that is somebody else’s blood on somebody else’s hands. As Levi’s CEO Robert Haas said, “This is not a job-flight story.”
Multinational corporations have vehemently defended themselves against the accusation that they are orchestrating a “race to the bottom” by claiming that their presence has helped to raise the standard of living in underdeveloped countries. As Nike CEO Phil Knight said in 1996, “For the past 25 years, Nike has provided good jobs, improved labor practices and raised standards of living wherever we operate.”59 Confronted with the starvation wages in Haiti, a Disney spokesperson told The Globe and Mail, “It’s a process all developing countries go through, like Japan and Korea, who were at this stage decades ago.”60 And there is no shortage of economists to spin the mounting revelations of corporate abuse, claiming that sweatshops are not a sign of eroded rights but a signal that prosperity is just around the corner. “My concern,” said famed Harvard economist Jeffrey D. Sachs, “is not that there are too many sweatshops but that there are too few … those are precisely the jobs that were the stepping stones for Singapore and Hong Kong and those are the jobs that have to come to Africa to get them out of back-breaking rural poverty.”61 Sachs’s colleague Paul Krugman concurred, arguing that in the developing world the choice is not between bad jobs and good jobs but between bad jobs and no jobs. “The overwhelming mainstream view among economists is that the growth of this kind of employment is tremendous good news for the world’s poor.”62
The no-pain-no-gain defense of sweatshops, however, took a severe beating when the currencies of those very countries supposedly benefiting most from this development model began crashing like cheap plates. First in Mexico, then Thailand, South Korea, the Philippines and Indonesia, workers were, and in many cases still are, bringing home minimum-wage paychecks worth less than when the “economic miracle” first came to bless their nations years ago. Nike’s public-relations director, Vada Manager, used to claim that “the job opportunities that we have provided to women and men in developing economies like Vietnam and Indonesia have provided a bridge of opportunity for these individuals to have a much better quality of life,”63 but by the winter of 1998, nobody knew better than Nike that that bridge had collapsed. With currency devaluation and soaring inflation, real wages in Nike’s Indonesian factories fell by 45 percent in 1998.64 In July of that year, Indonesian president B.J. Habibie urged his 200 million citizens to do their part to conserve the country’s dwindling rice supply by fasting for two days out of each week, from dawn until dusk. Development built on starvation wages, far from kick-starting a steady improvement in conditions, has proved to be a case of one step forward, three steps back. And by early 1998 there were no more shining Asian Tigers to point to, and those corporations and economists that had mounted such a singular defense of sweatshops had had their arguments entirely discredited.
The fear of flying has been looming large in Cavite of late. The currency began its downward spiral a few weeks before I arrived, and since then conditions have only worsened. By early 1999, the price of basic commodities like cooking oil, sugar, chicken and soap had increased by as much as 36 percent from the year before. Paychecks that barely made ends meet now no longer accomplish even that. Workers who had begun to find the courage to stand up to management are now living not only under the threat of mass layoffs and factory flight but with the reality. In 1998, 3,072 businesses in the Philippines either closed down or scaled back operation — a 166 percent increase over the year before.65 For its part, Nike has laid off 268 workers at the Philips factory, where I had seen, through the surrounding fence, the shoes lying in great piles. A few months later, in February 1999, Nike pulled out of two other Philippine factories as well, these ones located in the nearby Bataan export zone; 1,505 workers were affected by the closures.66 But Phil Knight didn’t have to do the dirty work himself — he just cut the orders and left the rest to the contractors. Like the factories themselves, these job losses went unswooshed.
The transience woven into the fabric of free-trade zones is an extreme manifestation of the corporate divestment of the world of work, which is taking place at all levels of industry. Cavite may be capitalism’s dream vacation, but casualization is a game that can be played at home, and contracting out, as Business Week reporter Aaron Bernstein has written, is trickling up. “While outsourcing started in manufacturing in the early 1980s, it has expanded through virtually every industry as companies rush to shed staff in everything from human resources to computer systems.”67 The same impetus that lies behind the brands-versus-products and contracts-versus-jobs conflict is fueling the move to temp, part-time, freelance and homework in North America and Europe, as we will see in the next chapter.
This is not a job-flight story. It is a flight-from-jobs story.
Top: The quintessential free agent. Bottom: Based on a “culture jam” from Adbusters.
CHAPTER TEN
THREATS AND TEMPS
From Working for Nothing to “Free Agent Nation”
A sense of impermanence is bl
owing through the labor force, destabilizing everyone from office temps to high-tech independent contractors to restaurant and retail clerks. Factory jobs are being outsourced, garment jobs are morphing into homework, and in every industry, temporary contracts are replacing full, secure employment. In a growing number of instances, even CEOs are opting for shorter stints at one corporation after another, breezing in and out of different corner offices and purging half the employees as they come and go.
Almost every major labor battle of the decade has focused not on wage issues but on enforced casualization, from the United Parcel Service workers’ stand against “part-time America” to the unionized Australian dockworkers fighting their replacement by contract workers, to the Canadian autoworkers at Ford and Chrysler striking against the outsourcing of their jobs to nonunion factories. All these stories are about different industries doing variations on the same thing: finding ways to cut ties to their workforce and travel light. The underbelly of the shiny “brands, not products” revelation can be seen increasingly in every workplace around the globe. Every corporation wants a fluid reserve of part-timers, temps and freelancers to help it keep overheads down and ride the twists and turns in the market. As British management consultant Charles Handy says, savvy companies prefer to see themselves as “organizers” of collections of contractors, as opposed to “employment organizations.”1 One thing is certain: offering employment —the steady kind, with benefits, holiday pay, a measure of security and maybe even union representation —has fallen out of economic fashion.
