As more low-skilled jobs work their way out of the hands of U.S. workers' and into those of low-cost laborers overseas, many in the U.S. shout "what's in it for us?" Adaptation to circumstances like this has never been easy. But, as anyone who has taken 6th grade biology knows, adaptation is critical to continued evolution and survival, whether you're a salamander, lion, or sock factory worker in Fort Payne, Alabama.
The following example of Fort Payne's sock industry dominance challenged by cheap imports from Honduras, China, and Pakistan, demonstrates that being edged off the factory floor by a low-cost labor force overseas doesn't always have to create a net loss to people in the United States. It can, in fact, result in improved circumstances for our citizens here. Fort Payne, Al, shows us that's not just crazy talk.
I caught wind of this story in a blog post at Marc Andreeson's blog.pmarca.com, and it seems it can be traced back to an NPR story found here. Marc does a great job at putting the pieces together:
The [US government] today announced it has [decided] to... apply a textile safeguard measure [i.e., protectionist tariff] on cotton socks imported into the United States [from Honduras]...
"[The US government] reached this decision after careful consideration of all available information and comments submitted by all interested parties. [What's that smell?] The substantial increases in imports of cotton socks from Honduras found during the investigation have led [us] to move forward with the safeguard [i.e. protectionist tariff] process..." said Deputy Assistant Secretary of Commerce Matt Priest...
[The US government] made a determination that a safeguard measure [i.e. protectionist tariff] is warranted with respect to imports of Honduran origin cotton socks based on the substantial growth in imports from Honduras. Imports of cotton socks from Honduras were 27.3 million dozen pairs through the first eleven months of 2007, an increase of 99% from the same period a year earlier. [The evil brown people are strategically swamping us with cotton socks!]
Based on the substantial level of imports of cotton socks, [the US government] determined that it will not, at this time, make a determination to apply a safeguard measure with respect to wool and man-made fiber socks. [The evil brown people are not yet strategically swamping us with wool and man-made fiber socks!]
Source: US government International Trade Administration.
The situation is grim for Fort Payne, Alabama, the "sock capital of the world", says NPR:
There's no question that globalization has been really bad for the sock industry of Fort Payne, Ala. Just a few years ago, the town called itself the sock capital of the world, and with good reason: Most of the town worked in the sock business.
There were more than 150 sock factories, churning out a big chunk of the socks worn in the U.S. But lately, there has been a flood of cheaper socks coming in from China, Pakistan and Honduras. It has devastated Fort Payne. Two-thirds of the town's sock mills have closed...
Jimmy Durham, the county economic development officer, shows just how grim things have been for the sock business here.
On street after street, he points to buildings that used to house sock mills, most of which are now gone.
Terrible, right? Well...
With all these businesses shuttered, you might think [county economic development officer] Durham is in despair about the future of Fort Payne. He isn't.
Those closed sock factories are reopening as new businesses.
He points to Steadfast, which makes bridges; Ferguson, a major plumbing supply company; a distribution center for Children's Place; two new metal tube manufacturers; a high-tech label maker. For a town of only 13,000 people, this is a lot of new, good-paying employment. These jobs pay more than sock-making jobs.
In fact, most of 4,000 recently laid-off sock workers quickly found new jobs...
Durham says there has been a high-tech revolution in Alabama. Mercedes-Benz, Toyota and Honda have all opened plants in the state. And that means a huge influx of parts suppliers. BAE Systems, a major U.K. aviation company, opened an engineering office in Alabama.
Durham says there are now more high-paying, high-skill jobs in the state than there are people qualified to take them...
The unemployment rate has stayed the same, even as the population has increased. In other words, the number of jobs has gone up, even as thousands of sock-making jobs have gone away.
So why on Earth would the US government put a protectionist tariff on Honduran socks now -- particularly when Honduras is a fellow participant in CAFTA, the Central American Free Trade Agreement?
There's only one reason: a deal President Bush struck late one night in July 2005.
That July night, Bush met with Fort Payne's congressman, Robert Aderholt, to talk about tariffs and the sock business.
That meeting was, most likely, the moment Aderholt had more power than at any other time in his life. The House was voting on CAFTA, the Central America Free Trade Agreement. The vote was an exact tie. Aderholt was the holdout. And President Bush very much wanted CAFTA to pass. So, Aderholt offered the president a deal: He could get his big free-trade deal only if he rolled back free trade on one industry, the sock industry.
"I told him this was what I needed," Aderholt said. "This was the one thing I had great concerns about."
That night, President Bush agreed to Aderholt's deal. CAFTA passed. And the White House gave itself a self-imposed deadline of Dec.19, 2007, to put back tariffs on sock exports from Honduras [which they missed by about a month].
Globalization can be tough on those in jobs and industries that can be done easily, anywhere. I'm sure if my job or function was outsourced within a year to someone in India or China, it would be a challenge for me to reassess my situation, pick up what I have left, and keep moving forward. But, adaptation is critical to my survival and is an intrinsic element of a globalizing world. If I sit on my haunches, I'm done for.
The bright side is, like many workers in Fort Payne, I may find myself in a better position. Trading out low-skilled/low-paying jobs for higher skilled/higher-paying jobs can be advantageous if tackled head on. I have to extend kudos to an entire town that seems to be on their way to accomplishing this. They're changing with the times and finding a better future for themselves, rather than throwing up their hands and saying "no fair". The Honduran sock makers may have a better claim to "no fair", who are also honest, hard working people who want to provide for their families. They are unable to compete to their full capability, not because of economic forces, but political wheeling and dealing on the part of our politicians. Hopefully, they're just as resourceful as their Fort Payne counterparts.
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