View Full Version : OT - How I Helped Move a Factory to Mexico

05-02-2008, 02:55 PM

I found this story interesting...I suspect you will too.


Viewpoint April 21, 2008, 12:01AM EST

How I Helped Move a Factory to Mexico
A temporary job gives a college grad a close-up view of the dilemmas and human cost of competing in a global marketplace
by Nick Leiber

U.S. factories have struggled for decades to compete with cheaper overseas labor and imports. The economy, once partially driven by manufacturing, is now dominated by service businesses. In 1997 there were 17.4 million manufacturing jobs; by 2007 that number had slipped to 13.8 million, according to Bureau of Labor Statistics data.

Many of these factory jobs—and in some cases, the machinery itself—have been shipped to countries in Latin America, Asia, and elsewhere. A version of this familiar scenario played out recently at the Long Island City (N.Y.) plant and headquarters of auto parts maker Standard Motor Products (SMP). Larry Sills, the company's chairman and CEO, says he decided to relocate the bulk of the plant's operations to Reynosa, Mexico, because of reduced demand for the plant's main product line (distributor caps and rotors) and competition from China. He says the company is profitable, but not enough to justify its nearly dozen factories in the U.S. and overseas.

What's driving relocations like this one, of course, is the gap between the wages paid in the U.S. and elsewhere. While a line worker in a U.S. factory earns an average of about $18 an hour, the equivalent job in Reynosa, Mexico, pays up to $3 an hour, including benefits, says Ralph Biedermann, a partner with Mexico Consulting Group in San Francisco. John Christman, director of the Mexico Maquiladora Industry Econometric Service of Boston-based Global Insight, says the annual increase in outsourcing (BusinessWeek.com, 4/7/08) U.S. jobs to Mexico has declined in recent years, replaced primarily by China.

What was it like on the factory floor of Standard Motor Products in the final months before the relocation? We asked Max Leiber, the brother of a BusinessWeek.com editor, to recount his experiences as a temporary worker from January through March at the Queens location, which ended its manufacturing operations on Mar. 28, 2008. His story follows.


After I graduated from college, I moved in with my brother in New York City and started temping and working odd jobs while I tried to figure out the next step of my life. I sorted files at a UBS (UBS) office in Manhattan, painted my brother's apartment, and covered for a doorman in the Bronx, among other jobs. By my third assignment with a temp company, I didn't pay much attention to the job description. I expected an easy time doing mindless office work.

Sending the Work to Mexico
But I was in for a surprise from day one. The building didn't look like an office building. It was a gray factory, six stories tall, that seemed to take up an entire city block. I walked past a few guys having their morning cigarettes, a secretary buzzed me in, and I sat down in a small lobby to wait for the man who would be showing me around. He arrived wearing a shop jacket with an embroidered name tag and introduced himself. He seemed uncomfortable. He didn't smile when I apologized for being overdressed in my red tie and shiny dress shoes. As I followed him from the reception area to the office I'd be working in, I got a sense of the enormous scale of the place, with its giant stacks of pallets and workers whirring by on forklifts.

My job, he explained, would be to assemble data on auto parts the factory produced and send it to somewhere in Mexico. As he started to speed through the details, I interrupted him, asking, "Can I ask you why I'll be doing this? You must already have this data in your database."

He nodded. "That is true," he said. "The reason is so customs can see what's coming in and we can see what's going out."

I interrupted again. "I'm registering this stuff so that it can be made elsewhere? So I'm helping to get all of these people fired?"

He nodded again.

Not Your Fault They're Closing the Factory
"I'm sorry that's the case," I said. "I didn't know I was coming in to help get rid of all these people. I hope there isn't ill will toward me. I just want you to know I'm not proud to be putting people put of work—I didn't know that's what I was here for."

He tried to put a kinder face on the situation. "No one's going to blame you—I certainly don't blame you, but I appreciate you said that to me and you understand what the situation is. No one is going to dislike you—it's not your fault they're closing the factory."

He smiled for the first time, and it was clear he felt more comfortable around me then. "It's not a pleasant situation for anyone, but it's good you understand it from day one," he said. He told me another temp, a young woman, would be arriving at 9 a.m. and would be my immediate supervisor, though he would check in occasionally. Then he left the room.

I thought about the fact that I'd be helping put people out of work. But I felt that he had a point—I didn't make the decision, the people who run the company did. I told myself that if I didn't do this job, someone else would—and it paid well ($16 an hour and time-and-a-half for overtime). Still, registering products to be made elsewhere and putting good people out of work wasn't what I expected I'd be doing as a recent college grad. I assumed they were good people—I learned I was right later.

Acknowledging the Lie
Over the next several days my supervisor showed me around the plant. On one jaunt we ran into a machine calibrator who asked me who I was and what I was doing. I tried to answer his questions as best I could, explaining I thought I'd be working at the factory until the end of March or early April.

When we got back to our office, my supervisor surprised me. "You shouldn't really be telling people what you do here because some people don't know when the factory is going to be closing and when they're going to be losing their jobs," she said

"So you want me to lie?" I asked.

"It's not lying—it's just not telling them everything," she said.

"Listen, I'll lie if you tell me to lie. But you should acknowledge that not telling the whole story is a kind of lying," I said.

I wanted to know more about what prompted the company to move the factory to Mexico. I learned the announcement had been made about a year ago; similar companies also had a global presence, and a few of Standard's main competitors were doing better. My impression, and I'm no expert, was that the company had tried to hold on to its New York City plant for too long. Operating costs were too high. Its motive seemed right to me—to stay in business, it needed to move.

Proud of Their Success
As the factory's closing date neared, the number of last-day events—parties is the wrong word—increased. These events weren't catered. Workers made the food themselves and brought it in: salads, rice and beans, fried fish. I could see the solidarity and kindness in the interactions of the people, mostly Hispanic women who had been there for decades.

Toward the end of my stint, I attended a formal lunch for about 70 longtime employees. It included a speech from someone I assumed was in upper management. He sketched the history of the factory. It had been here for 70-odd years. People had told the company it couldn't have a major manufacturing location in New York City—the costs were too high. He told the audience they had proved the naysayers wrong. He told them it was the global costs of labor that had made the closing necessary. He said that a year ago, when the decision to close the factory was announced, a typical business pundit would have said productivity would go down, but it had actually gone up. He told the audience to be proud of this.

Chasing Lower Labor Costs
I reflected on what he'd said about productivity. If it had gone up, then what were the criteria for sending the factory to Mexico? I saw highly trained, highly experienced people sitting to the right of me. How much would it cost to train workers in Reynosa? How many costly molding devices would be broken? Would this closing really help? I thought about the drawbacks of committing to a strategy that means chasing the lowest labor costs around the world.

In my last few days, I heard Standard had sold the building and was going to rent the top floors for its corporate division and other brass. I made my good-byes and wrapped up my tasks. A week after my last day, the factory ceased its production operations.

I'm not one of the workers who has been making distributor cap components in a factory basement for the past 25 years. I don't have to go look for another job. I took the temp job knowing it would come to an end and I'd move on. The job got me involved with a company dealing with globalization. It allowed me to get an unfamiliar taste of what happens when a factory moves to Mexico. I'm not proud of it.

Leiber is Small Business editor for BusinessWeek.com .

05-02-2008, 07:38 PM
It is a sad story. The media will stick it inside the back page of the finical section of most papers. However the good news is the paper will keep you very informed on Senator Obama's preacher Jeremiah Wright, and the colorful language he uses in his sermons. Will not help any one's paycheck or job security. But it will take your mind of the harsh realities of the cost of gasoline. If the truth be known, this plant was making a profit up to the day it ceased operation. The owners wanted more profit by going out of the country to obtain cheaper labor. Also, they will have less government restrictions. They will be able to screw the help and pollute the environment easier. Jim

05-02-2008, 08:15 PM
I work in industrial HVAC. A long time customer of mine closed their plant here in the USA and expanded their plant in Mexico. They would build manufacturing lines here, train Mexicans on the line and then break down the line and send it to the Mexican plant for production.

They copied the American plant to the inch and reproduced it in Mexico. The EPA regs are nonexistant in Mexico.

I had to cut loose AC equipment and prepair it for shipment to Mexico. All the while loosing my work here. I spit in and put gravel in the refrigerant lines. Screw em. Guess what. About a year later a guard smoking a cigerett blew up the place. They use solid rocket fuel for their process. Luckily no one was killed. Here no one was allowed within the perimeter fence with combustibles.

Another customer of mine has about 2500 tons of chillers and air driers. They buy from closing plants state side and send the equipment to their China plant. The China plant is a copy of the plant here in USA. They had an air drier they bought here and the Chinamen could not get it to work. They tried to get me to go to China to fix it. I have fixed the ones here for years. I told them no thanks and do not care if the unit works or not, they cancel my contract here if they want to. I don't care.

A.K. Boomer
05-03-2008, 10:47 AM
I look at where things come from when I buy them, I do my best but sometimes my hands are tied, sometimes there's not even a choice anymore,
Want to here something really disturbing? Last night I made a salad -- while cleaning the veggies and removing their little stickers i realized this, the tomato's were built in mexico, the yellow,orange and red peppers, Mexico, the clincher is I seasoned it all with garlic powder from china, Italy scores with the extra virgin olive oil (This one doesnt bother me because I dont mind supporting the "old country" once in awhile:p )

USA still wins out and with some of these highest quality ingredients;

Spectrum raw unfiltered organic apple cider vinegar
mortans salt
lucerne blue cheese crumbles
red leaf lettuce
bunny luv carrots
McCormick black pepper

A.K. Boomer
05-03-2008, 12:06 PM
I spit in and put gravel in the refrigerant lines. Screw em.

I understand the frustration, not passing judgment but this is not the answer --- You certainly have the right to be upset but you have to try and catch yourself if you can, The intentional destruction of things benefits nobody --- it just turns out to be a waste of resources and also will increase the price of goods wherever they come from, We have to realize this also -- there is no stopping this freight train,
there is one other very unpopular view, we've been skating for free for quite sometime,
Maybe there was a need for unions back in the day, but when they turn into a kudzu that chokes the very life out of the thing they attach too they also cut there own throat, Good things can come from this --- Originally being from detroit I can tell you first hand that this nation has needed an enema
for quite sometime, You could walk into a GM plant and you wouldnt even know it by what people were wearing --- you would think that by the big bold letters on everybodys shirts and jackets that the cars were called UAW --- What? who in the fuqe is feeding your face? rule # one is any company you work for has to at least stay in business for you to work there to begin with (unless your just part time moving them over sea's)
The local stories i remember from guys that worked there is they would go in to put in there 8 hour shift, they would show up and play cards with other workers for four hours while another worker was double shifting doing his job and the other guy thats playing cards, then after four hours they would switch --- So not only do you have 10 or 20 times the wage factor, Now double that --- Why? because in other countrys if one man can get both jobs done in the first place its called a one man job.
Some stuff seems unfair --- other stuff is inevitable, The mindset of the average US auto worker is not only lacking foresight, its been disillusioned for so long that they still think in some how way shape or form that there getting the short end of the stick, they cannot figure out for the life of them why their all standing around a totally collapsed Boob that is no longer producing any "suckler" milk, Thats the flip side, it's the only thing that really keeps me grounded when I think of the many industries that are heading oversea's, some of it is the inevitable --- the madness simply cant go on here anymore...

The good news is while we will have to become more leaner and hungry The Kudzu will start to grow over there.
If your going to take action try to come up with a good weed killer.
I use GM as an example because it is exactly this that they realize they have to do, they have even offered to "buy out" long time workers so they can get rid of them once and for all --- imagine that, they actually have to give them big money (100,000 or 150,000 plus) just to leave so they can start a leaner force with less kudzu --- What a bunch of crap, there hands are tied in every direction, Dont beat on a dead nipple thats given its all and got sucked dry, go after the kudzu ------ Ask yourself this, do you want a half million dollar home that you get foreclosed on after 10 years or do you want a nice practical roof over your head that you can pay off and maybe take a vacation now and then?
Not enough? better than 99% of the rest of the world.

05-03-2008, 11:50 PM
While this story is a tear jerker of sorts, it leaves out a lot of information. As mentioned in other posts, unions have wrought havoc in the automotive industry. So has the EPA and OSHA.

Let's face it, the era of having one job with one employer for life has passed in this country. As technology changes, jobs change as well.

I'm in sales, and I've called on a number of customers that were being bought out by other companies, undergoing layoffs, etc. It's never fun. At one plant I called on during a layoff, the foreman told the the layoff was a good thing. I questioned his comment. He explained, "By laying off twenty people this week, we're able to keep the doors open and keep 150 more people employed." He had an excellent point. Businesses MUST make a profit to survive.