The trade-off for achieving a more globally competitive work force is that more in America could fall well short of the middle-class living standards once expected by manufacturing workers. South Carolina's growing factories illustrate the new economics.
GREER, S.C. —
When German automaker BMW put out the call recently to hire a thousand factory workers here, the people who responded reflected the upheaval occurring in the U.S. economy.
Among the applicants: a former manager of a major distribution center for Target, a consultant who oversaw construction projects in four Western states and a supervisor at a plastics-recycling firm. Some held college degrees and résumés in other fields where they made more money.
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But they’re all in the factory now making $15 an hour — about half of what the typical German autoworker makes.
The trade debate in the United States usually focuses on the jobs lost to factories in the developing world. But the recession has forced countless skilled workers in this country to consider jobs they would have rejected in the past. They now offer foreign manufacturers a resource that was far less common just a few years ago: cheaper wages for better talent.
“We are a low-wage country compared to Germany,” said Kristin Dziczek, director of Labor and Industry Group at the Center for Automotive Research. “And that helps put jobs here.”
But the price of having a more globally competitive work force means more in America could fall well short of the middle-class living standards that manufacturing workers once could expect. Wages adjusted for inflation have declined for these workers since 2003.
At GM and Chrysler, new hires make $14 an hour, or half the amount that existing workers take home. Likewise, at the BMW plant, which is not unionized, new workers earn a little more than half of what those hired earlier make. Some still seemed stunned by their change of circumstances. But they are almost uniformly grateful for the opportunity.
“It’s the best place I’ve ever worked in my whole life, I can honestly say that,” said Debra Harrison, 50, who was laid off at an Electrolux factory 2 ½ years ago and began at BMW in July.
While U.S. manufacturing employment has been in a decades-long slide, the BMW campus here has grown in the 16 years since opening, and is viewed by some as a model of what manufacturers — American or not — might achieve.
It employs 7,000 and has generated thousands of additional jobs in the region at auto-parts shops and suppliers. Moreover, more than 70 percent of the vehicles produced at the factories here are exported; an Obama administration Commerce official who visited the campus last month, Rick Wade, called the plant an “example” of what is possible to move toward the president’s goal of doubling exports in five years.
“We live in a global economy, and this is an example of what can be a win-win,” said Sen. Lindsey Graham, R-S.C., who last month attended the opening of a new 1.2 million square-foot facility. Because of BMW’s success in this Greenville suburb, “Southern politicians are tripping over themselves to attract foreign manufacturers.”
Among the other large private employers in the area are Michelin, the French tire maker, and Robert Bosch, another German manufacturer.
The wage differential between German and U.S. workers is just one advantage BMW finds here. The primary reason for the factory, executives emphasized, is that the United States is the automaker’s largest foreign market. Locating here, among other things, helps moderate the effects of currency fluctuations between the two countries.
“We needed a bigger production capacity — here — to balance production and sales in the U.S.,” BMW Group Chairman Norbert Reithofer said at the opening. “And for me that is the most important point.”
New hires at the plant are not directly employed by BMW but come through a contractor, though the automaker says some of the new workers might eventually be hired by BMW and work their way up to the higher wage.
BMW declined to say what their factory workers in Germany make, explaining, in part, that comparisons are difficult to make because of benefits packages and differing job categories. The International Labour Organization has pegged hourly manufacturing wages in Germany at nearly 24 euros, or more than $33.
Moreover, in a comparison of international labor costs, the German Association of the Automotive Industry reports that the cost of an auto-company employee including benefits is 46 euros ($64 U.S. dollars) hourly in Germany and 26 euros ($36 U.S. dollars) in the United States.
While the opening of factories in foreign markets has sometimes drawn criticism from American unions, the opening of the BMW factory here appears to have been met with little opposition from the German union.
“From a German trade-union perspective, we are not overly concerned,” said Horst Mund, head of the international department at IG Metall, a large German union to which BMW workers belong. “The success of German carmakers depends on the ability to sell cars abroad. We cannot expect all the cars be made in Germany.”
He said that when Daimler decided to make the Mercedes C Class in Tuscaloosa, Ala., rather than in Germany, the union extracted promises that no workers would be left without a job.
“The affected plant got other models to work on and other jobs — so no one was losing,” Mund said. “You can do that as long as you are growing.”
None of the 15 U.S. workers interviewed for this story complained, either. In South Carolina, which has a lower median household income than all but eight states, many consider $15 an hour a good wage.
In conversations outside the plant’s turnstiles and beside the parking lot, the blue-shirted workers uniformly praised BMW and their jobs. They also recounted the sometimes difficult path to getting hired.
“It’s been pretty good — it’s not really hard work,” added Wade Lamay, 40, who used to be a supervisor at a plastic- recycling company.
Ibn Saweuyer-Parks, 60, who holds a bachelor’s degree in math, had been overseeing construction jobs in four Western states and anticipating a comfortable retirement until the economic downturn ravaged his savings.
“I had to get back to work,” he said. But “I work in a wonderful environment.”