Tuesday, January 22, 2008

Milwaukee businesses leaders seem to want a return to the 19th century

Milwaukee businesses leaders seem to want a return to the 19th century

At a recent Public Policy Forum luncheon, some Milwaukee business leaders criticized the city's business climate. Their comments suggest that many corporate leaders remain committed to low wage, low skill economic strategies that have cost Milwaukee thousands of middle class jobs and contributed to the city's growing rates of poverty and inequality ("Business leaders want to warm city's climate," Jan. 11, www.jsonline.com/705904).

Complaining that CEOs don't get the same red carpet treatment in Milwaukee that they get in China, Oilgear boss Richard Armbrust said: "Get on a plane, go to China, and you get picked up in a limousine with lights flashing."

Armbrust's message mirrored the widely publicized comments of former RedPrairie Corp. CEO John Jazwiec, who attacked Wisconsin as "socialist" and suggested that the state flag included a "hammer and sickle" shortly before he resigned after reporting an unsubstantiated home invasion.

The country whose business climate Armbrust finds so appealing is a dictatorship where child and sweatshop labor are rampant, worker health and safety barely an afterthought, independent unions non-existent.

Chinese-made products, from toys to toothpaste to fish, have been found to be tainted with harmful agents. U.S. toy importers are demanding increased government regulations to ensure consumer safety.

As China has become the world's sweatshop, it has also become one of the biggest contributors to global warming. Milwaukee CEOs may get the red carpet treatment when they visit China, but pollution is so bad in many Chinese cities that its people can barely breathe.

Armbrust's desire to return to the 19th century was echoed by Briggs & Stratton CEO John Shiely, who said it was unlikely Briggs would open a new factory in Milwaukee because "we still have problems with the tone in this town. . . . Other places admire wealth creators. They don't beat them up."

So what strategy does Shiely want to be admired for? For almost 25 years Briggs beat up its employees as it pursued a less-than-admirable business model based on high-volume, low-cost production. Many of its foreign competitors pursued a model of low-volume, high-quality production in premium markets. (Full disclosure: My sister was employed by Briggs during most of these years and was an elected union leader).

Briggs even fought clean air regulations, ignoring the potential for green markets. As a result of Briggs' 25-year-war against its employees, which included outsourcing jobs to the South, China and Mexico while pursuing wage and benefit concessions in Milwaukee, thousands of wealth-producing employees lost their jobs.

Briggs' plant on 124th St. is closed, the one on N. 33rd St. abandoned. And these "leaders" wonder why they aren't given red-carpet treatment in Milwaukee? Are they really this tone-deaf?

The city they are bashing has the nation's eighth-highest poverty rate and seventh-highest child poverty rate. One of three kids lives in poverty. More than 45% of African-American males are unemployed.

Before international competition became a serious threat, Milwaukee's corporate elite began moving production in search of low-cost labor and short-term profits. The interests of others, particularly those who devoted their lives and labor to help these businesses prosper, were ignored.

When global competition heated up, Milwaukee's elite chose to compete on cost rather than on quality and service. Milwaukee's deindustrialization and deunionization are a byproduct of these low-road strategies, which stand in contrast to Germany, another mature industrial economy, where manufacturing and workers are flourishing based on high-wage, high-skill production.

As Milwaukee's CEOs abandoned their workers, they promised to help the city and people left behind. For more than 30 years, since the Greater Milwaukee Committee promoted the Performing Arts Center and the Grand Avenue Mall as catalytic urban redevelopment projects, Milwaukee's corporate leaders have promoted downtown development as a panacea.
When the festive marketplace model failed to deliver, they promoted a publicly subsidized convention center. Later, the GMC launched the Initiative for a Competitive Milwaukee, and then Johnson Controls' Metro Markets came along, promising a market approach to urban revitalization. The former created one high-wage job, the six figure consultancy of Harvard professor Michael Porter. The latter little more than a three-part series in the Journal Sentinel.

Since former Gov. Anthony Earl convened the Wisconsin Strategic Development Commission in the early 1980s in response to Kimberly-Clarke CEO Darwin Smith's threats to leave Wisconsin, demands for lower taxes, deregulation, privatization and subsidies have dominated the agenda. The efforts have resulted in increased poverty, unemployment and growing inequality in Milwaukee.

Milwaukee's CEOs shamefully used this luncheon to press their narrow economic agenda of reducing labor and other production costs. They dream of a "red carpet" world where wages are low and grateful chauffeurs cater to their every whim. For Milwaukee's working people, many of whom can barely afford to fill their gas tanks and heat their homes, much less hop on a plane, this "dream" is increasingly a nightmare world of haves and have-nots.

Michael Rosen is an economics instructor at the Milwaukee Area Technical College.