'The lights are going off'

Lost jobs in Rockford, Ill., underscore free trade issue

By Mary Leonard, Globe Staff, 10/20/2003

ROCKFORD, Ill. -- On April 15, Ingersoll International Co., a manufacturing mainstay here for 112 years, told its 300 employees to stop work midshift because it was shutting down. The company, one of two in the nation that had produced drilling machines to build F-35 fighter jets, had recently lost a defense contract to a Spanish firm and had been staggered by fast-growing competition from Asia.

Rockford is still struggling, despite upbeat reports of a recovering economy and President Bush's promise to press for fair trade at the Asia-Pacific Economic Cooperation summit in Bangkok today. Last week, Textron Inc., an American firm with factories in 40 countries, announced it was closing two more Rockford plants, bringing the number of Textron jobs lost to 1,030 this year.

Many Rockford business owners and workers say they hear the "giant sucking sound," in H. Ross Perot's words, of high-wage manufacturing disappearing to low-cost countries like China and Mexico. Across the hard-hit Rust Belt, protectionist fever is rising, fueling the rhetoric of candidates from both parties and making Bush mindful of domestic politics even as he promotes free trade on the world stage.

"I'm a free trader, but I'm also a fair trader. And I believe our manufacturing sector, for example, must be treated fairly in foreign markets," Bush said in a recent Cabinet meeting.

In talks on this trip, Bush has tried, without much success, to persuade Japanese and Chinese leaders to stop weakening their currencies against the dollar. US business groups say China's fixed currency keeps the prices of its products artificially low and its trade surplus with the United States at a record level.

Democratic pollster Celinda Lake said the flight overseas of not only blue-collar but also white-collar work is "a huge issue" for voters. "No candidate can be just for free trade anymore, not even the president," Lake said. "There is a lot of intensity out there about lost jobs, and candidates are hearing it at country clubs as well as union halls."

At Rockford's Dial Machine Inc., general manager Eric Anderberg is intense: Since the recession ended in November 2001, he has laid off 35 of his 75 machinists, cut their work week to 32 hours, and contemplates shutting down all production. He blames foreign competition, particularly from China, for drying up demand for Dial's precision tools.

"There's been no recovery for us," said Anderberg, whose plant 85 miles northwest of Chicago is in an industrial park dotted with "For Sale" signs. A conservative Republican, Anderberg does not think the White House is doing enough to help small business owners, who he says cannot compete with Chinese factories that use cheap labor and an undervalued yuan to undercut US prices for manufactured products.

Rockford's unemployment rate was 11.3 percent in August, almost double the national rate of 6.1 percent. A city of 150,000 people, it once prided itself as the industrial fastener capital of the world, molder of the Oscar, and inventor of the hand-cranked pencil sharpener. But Rockford and its suburbs have lost about 20 percent of their manufacturing work force in three years and about 10,000 factory jobs since the nation's recession, according to economic analysts, officially ended in November 2001.

Acme Grinding, Inc., has been in Rockford for 57 years, but this might be its last, said owner Judy Pike. She already has laid off 33 of her 40 employees and did about 35 percent of her business with Textron's fastening plants.

"We've had other recessions, and you could see the light at the end of the tunnel. It wasn't like the jobs weren't coming back," said Pike, who has joined with 85 women in Rockford manufacturing to boycott Christmas gifts with a "Made in China" label. "This time, the lights are going off."

Representative Donald Manzullo, a Rockford Republican and chairman of the House Small Business Committee, is trying to keep the lights on in his district. He has sponsored a bill that would give manufacturers a tax incentive to keep jobs in the United States, amended the defense spending bill to require the content of Pentagon purchases to be 65 pecent American-made, and introduced a resolution urging the White House to "use all available means" to get China, Japan, South Korea, and Taiwan to stop manipulating their currencies.

Manzullo says he is not a protectionist but is intent on "making free trade work" and educating policy makers, including the president, why it is necessary to save US manufacturing, which has shed 2.5 million jobs since 2001. "If you don't have the ability to make things, you become a third-rate nation," Manzullo said.

Jerry Jasinowski, president of the 14,000-member National Association of Manufacturers, said it would be impossible to pass a major free-trade agreement in the GOP-controlled Congress. "I've been struck by the pace at which the House has moved toward a protectionist direction," Jasinowski told reporters in Washington last week.

Democratic presidential candidates have made job recovery their mantra and exchanged barbs over fair trade. Representative Richard A. Gephardt of Missouri reminds audiences he voted against NAFTA, and Representative Dennis J. Kucinich of Ohio says the United States should cancel NAFTA and withdraw from the World Trade Organization.

Former Vermont governor Howard Dean has called for uniform labor and environmental standards for all countries, a proposal that Senator Joseph I. Lieberman of Connecticut says would lead to a "Dean depression," and Senator John F. Kerry of Massachusetts says would leave the United States without trading partners.

Rockford's Democratic mayor, Doug Scott, said he has not heard anything from the Democratic presidential candidates that will get Rockford's economy back on its feet. Facing an $11 million budget deficit this year, the city raised taxes and slashed 50 positions. The public schools are $18 million in the red, and the forecast for next year is a larger deficit that almost surely will lead to cuts in city services, including the fire department and police force, according to the mayor.

In 2000, Bush won the GOP counties around Rockford, but lost the city and the state of Illinois to Al Gore. The community's laser focus on unemployment and its middle-class demographics could make it a bellwether next year for Bush.

Edward Smith, 37, didn't vote for president in 2000. He says he will cast a ballot next year, but not for Bush. In 2002, he was laid off after nine years when his employer, a manufacturer of hydraulic cylinders, moved operations to Ohio and Mexico. He prays that he will find a job, but has dropped home remodeling projects, canceled cable service, and thinks about leaving Rockford and moving to Wisconsin.

"President Bush is requesting billions of dollars to rebuild Iraq, but I don't hear so much about rebuilding our economy and creating jobs here," Smith said. "I'm wondering what his focus is."

With its high concentration of family-owned manufacturing firms -- dating back to the late 1800s, when Swedish craftsmen made furniture for Chicagoans after the Great Fire -- Rockford is accustomed to the ups and downs of the business cycle. The recessions of the 1980s and 1990s brought high unemployment, but the difference then was that demand returned, companies rebounded, and many of the well-paying jobs came back.

That's not happening now, said Rockford labor historian Jon Lundin. "We are really seeing the effect of globalization," a structural change that will require manufacturers to reinvent themselves as leaner, smarter companies that can develop commercial applications from high-tech concepts, Lundin said.

Manzullo helped get Rockford a $3.75 million defense contract to research miniature manufacturing, and an economic-development council is trying to direct the region's entrepreneurial energy into niches in the new economy. It hailed the recent reorganization of bankrupt Ingersoll by an Italian firm that partnered with a small Rockford company and pledged to reopen as Ingersoll Machine Tools Inc., with 70 employees. At its height, Ingersoll employed about 2,200 in Rockford.