State not profiting from NAFTA
On the eve of the 10th birthday of the North American Free Trade Agreement, many are wondering if NAFTA was all it was hoped it would be.
Jan. 1 will mark the 10th anniversary of the free trade agreement among the U.S., Canada and Mexico.
It was hoped that the agreement would not only open up trade among the three countries but also would attract jobs to the United States. However, since the agreement was implemented, Alabama alone has lost more than 62,000 manufacturing jobs, according to the Alabama Department of Industrial Relations.
&uot;I think when the federal government passed this nobody really understood the total picture,&uot; said Rep. Betty Carol Graham, D-Alexander City. &uot;A lot were looking at it from the aspect of the people who it would be free to buy from us. They didn’t think they’d also have the opportunity to take our jobs.&uot;
Ahmad Ijaz, an economist with the University of Alabama, said NAFTA only sped up what was inevitably going to happen.
&uot;We have lost some textile jobs and apparel jobs, but we would have lost those anyway,&uot; he said. &uot;NAFTA only accelerated it.&uot;
Need to compete pushed industries overseas
Nancy Young, vice president of communications and community relations for Russell Corp. said it wasn’t necessarily NAFTA that prompted the textile giant to move overseas. In 1998, the company opened its first plant overseas and more followed.
In order to be competitive, Young said the company had no other choice but to move its operation overseas, and the first place it moved to was not Mexico or Canada. It was Honduras.
&uot;If we had a choice, it would have been much easier to keep the plants in the U.S.,&uot; Young said. &uot;We could have kept everyone employed and all the negative reaction that you know you’re going to get all would have been much easier. But you have to step back and look at whether you want to stay in business or not. It’s hard to cut jobs, and as tough as it is, we could either make these cuts or lose all of them.&uot;
Russell fought moving overseas for several years, but in 1998, the company realized it could no longer survive if it didn’t follow suit with the other textile companies.
By moving overseas, companies have a cheaper workforce and less guidelines and regulations to follow. All of those translate to a more affordable product for consumers and to Rep. Betty Carol Graham, D-Alexander City, an uneven playing field.
&uot;We’re put in a situation where we can’t compete,&uot; she said. &uot;It may be free trade, but it’s not fair.&uot;
Alabama leads nation in jobs lost
Russell has four plants in Mexico and four in Honduras. The company is currently building a fifth plant in Honduras.
Although it still has roughly 4,000 employed in its hometown of Alexander City, it doesn’t have the presence that it once did.
The same goes for several mill towns across the state.
Mike Lewis, spokesperson for Rep. Terry Everett who represents the Alabama’s Second Congressional District, said Everett strongly campaigned against NAFTA in 1993.
Everett along with presidential candidate Ross Perot and Rep. Richard Gephardt tried to defeat NAFTA, but they were unsuccessful.
Lewis said shortly after the trade agreement was implemented Geneva County, Slocum, Greenville and more all were impacted.
&uot;I think 15,000 to 20,000 jobs in south Alabama were lost just from NAFTA,&uot; he said. &uot;After it passed, there was nothing we could do to stop the out flux of jobs. It’s been tremendously negative.&uot;
The impact of NAFTA hit southern states the most since most of the jobs in the South were manufacturing. Alabama has lost 17 percent of its manufacturing jobs since 1995 according to Manufacture Alabama, a trade association. Only Mississippi, which lost 20 percent of its manufacturing jobs during that same time, lost more than Alabama.
Loss of manufacturing jobs creates historic budget crisis
The loss of jobs during the last 10 years has also translated to a historic budget crisis for the state of Alabama.
Graham said since the implementation of NAFTA, the state’s income tax collection has continued to decline hitting an all-time low in 2002 where collections were at -2 percent.
&uot;The mass loss of manufacturing jobs is directly related to the decline in state tax dollars,&uot; she said. &uot;That’s one reason we’re in the dilemma we’re in.&uot;
From 1998 to 2001, the average household income in Alabama decreased by $3,100. Since the state’s general fund is based largely on sales and income tax collections, officials are projecting 2004 to be the worst budget crisis in state history.
Finding a new niche
Graham, who serves in the Commission on Manufacturing Economic Stimulus on Free and Fair Trade, said the impact of NAFTA and the loss of manufacturing jobs across the state has the commission looking at all ways to diversify the state’s industry.
&uot;Alabama has relied more heavily on manufacturing than any other state,&uot; she said. &uot;It’s difficult to foresee in the future ever having the level of manufacturing jobs we once did.&uot;
The commission is focusing more on technology driven jobs, which are more skilled and higher paying positions than manufacturing jobs.
Ijaz said the state has made gains with the automotive industry, but he doesn’t know if that will ever replace manufacturing.
&uot;Some manufacturing jobs have been replaced by the automotive industry,&uot; he said. &uot;But those have got to be relatively high-skilled workers. A lot of the production is computerized. It’s not just cutting and sewing.&uot;
Graham said the state would continue to look for ways to replace the manufacturing jobs lost in the past 10 years, but until she believes the federal government needs to step in.
If that doesn’t happen, Graham said American dollars would continue to head overseas along with American jobs.