Insurgent Notes

Should I hate people for the shade of their skin
Or the shape of their eyes or the shape I’m in.
Should I hate ’em for having our jobs today
No I hate the men sent the jobs away.

—James McMurtry, “We Can’t Make It Here Anymore”

This is not at first glance a likely book for an Insurgent Notes review. Its central figure is a small-town capitalist, John Bassett III of Bassett, Virginia, who decides to buck globalization, save the family furniture company, Bassett Furniture Industries and, in the process, also saves some hundreds of working-class jobs. (Factory Man has been made all the more timely since its appearance in 2014 by new attention in the United States electoral season to the millions of small-town and rural workers passed over in the retooling of the globalized high-tech economy.) Macy’s book is not chauvinist or even particularly protectionist nor, apparently, are many of the workers she interviews, who came from independent mountain folk with speech filled with colorful metaphors.

In the 1950s, three-fourths of all United States furniture was produced by three family-run firms in North Carolina and Virginia. In the background of their decline is a sense of inevitability: North Carolina and Virginia had themselves, in the nineteenth century, wiped out the furniture town of Grand Rapids, Michigan, which in turn had, decades before, crippled the furniture industry in England. As Macy tells it, the virtual elimination of United States furniture production by Chinese imports was just one further step in the process, and as certain anti-dumping measures threw up barriers, some of the Chinese firms themselves moved to Vietnam where labor costs were, in turn, 50 percent lower, and from Vietnam to Indonesia. In short, the famous race to the bottom.

John Bassett III (JB III in much of the narrative, grandson of the company founder) did not have to deal with unions. Black workers are second-tier in his factories, though historically small-town furniture production was one of the few sectors in the area that hired blacks at all. Macy does not dwell on the paternalism in Bassett’s management style (“Union? Tell the workers to talk to me if there’s a problem!”), a Southern particularity unforgettably presented in W.J. Cash’s classic Mind of the South.

Speaking of classics, Factory Man often reads like a Faulkner or Thomas Mann novel, with an almost anthropological account of the rise and fall of furniture in the mid-Atlantic states, intertwined with family histories and feuds and marriages going back to the eighteenth century, as well as portraits of workers’ lives. Macy takes a long time—a bit too long, in this reviewer’s opinion—to bring the story to the 1990s, when it was still possible to walk out of one factory job in the morning and have another one by the afternoon, and when Asian imports first began to undermine Bassett’s world. As early as the 1980s, it was clear that production costs in Taiwan and South Korea—above all plentiful cheap labor just off the farm, and cheap lumber—combined with ever-larger container ships, could produce and deliver furniture at a cost no American firm could match. At the time, Bassett industries was the world’s largest wooden furniture company, with 1981 sales of $301 million and $25.1 million in profits. The company was of course no charity; six infants died in Bassett cribs from a design flaw, leading to huge payouts, fines and nationwide bad publicity.

Three Taiwanese, educated in the United States, headed by Wharton School graduate Larry Moh, started the Asian import surge in the mid-1970s, beginning in free-trade, low-wage Hong Kong, where workers earned $0.76 an hour compared to $6.76 in the United States. By the 1980s, their company, Universal Furniture, had factories in Hong Kong, Singapore and Taiwan. By 1986, 17 American furniture companies had closed. Some fought back with “lean” manufacturing. Bassett Industry made the Fortune 500 in 1987 but the tide had already turned. Northern venture capitalists bought up a lot of the Southern factories going broke but as one interviewee put it: “They didn’t have sawdust in their veins, they had sawdust in their brains.” Not much came of their acquisitions. As another local put it, talking about how homegrown managers got swept up in big-time consolidation but neglected strategies for modernizing and retooling production, “they forgot who brung ’em to the dance.” JB III had fallen out with managers in the company he was born to manage, headed by his brother-in-law, and set himself up in a little, stagnating factory named Vaughan-Bassett in the foothills in Galax, Virginia. He sweated the workforce while also raising wages. He tried to bring in more competent managers, filching them and their best workers from other companies in the area. He aimed at the low end of the furniture market, embracing Henry Ford’s maxim “Sell to the classes, eat with the masses. Sell to the masses, eat with the classes.” He bought up newer factories that he, unlike the Northern interlopers, knew how to run. Bassett described the experience: “This wasn’t some hypothetical case at Harvard Business School. My feet were in the stirrups!” He phoned managers to bark orders on a 24/7 basis. He threatened to close the plant if the workers unionized, again invoking the paternalist tradition of the region. “We can help you better than some union organizer who lives off in Timbuktu.” The factory turned around.

In 1993, Bill Clinton signed the North American Free Trade Agreement (NAFTA) into law. The corporate media and talking heads played down the negative impact on US workers, and debate has continued ever since in the fine print of academic and trade journals, with the general consensus that NAFTA probably cost American workers hundreds of thousands of jobs, while it also, with cheap US agricultural exports, destroyed the Mexican cooperative farm, the ejido, forcing hundreds of thousands more into migration to low-wage jobs in el Norte, and still others into the arms of the narcotraficantes. (This was followed by CAFTA, with Central America, and a failed George W. Bush initiative for a free-trade zone throughout the Americas; by the time Barack Obama floated his anti-China forty-nation Trans-Pacific Partnership (TPP) and his proposed free trade area with Europe (both still pending), no worker in America believed that these deals would benefit anyone except the corporate elites. Free trade deals, starting with NAFTA, are more like corporate mergers where two managements consolidate and redundant staffs in both companies are downsized. American unions, led by the Teamsters and later the United Steel Workers (USW), opposed NAFTA and subsequent free trade proposals with nationalist, protectionist and anti-Chinese rhetoric about “American” jobs.)

NAFTA was preceded by the 1989–92 recession, which forced Bassett to lay off forty workers. “By 1998,” writes Macy, “furniture imports accounted for a third of all wood furniture sold in the United States, up from 21 percent five years earlier.” The company adopted a strategy of selling to middle and upper-middle income customers. It began pulling back from the small-town mom-and-pop furniture stores that had sustained it. Laid-off workers signed up for Trade Adjustment Assistance (TAA), for ostensible “retraining.” One woman had been laid off six times in eighteen years. According to Macy, half of the workers who went through the TAA program wound up earning a fraction of their former pay, and cannot find work in the fields they have retrained for.

Tension rose in 2001 when Bassett learned of a Louis Philippe bedroom suite coming from Dalian, China, near Siberia, that was selling at half ($400) the cheapest price that Vaughan-Bassett could manage. Sales declined. China joined the World Trade Organization in the same year. One sales rep summed up the mood:

You already had friends whose plants were shutting down. It was a house of cards, one plant closing at a time. And it was like a whole culture was being wiped out, people who had known each other and their families for three, four generations.

Furniture imports from China jumped 121 percent from 2000 to 2002, taking 50 percent of the United States market: “by 2003, seventy-three thousand jobs had already evaporated” in furniture factories.

Vaughan-Bassett adopted a seven-day factory-to-store delivery model, whereas the furniture coming out of Dalian took six weeks to arrive. Inventory was expanded so it never ran low. As late as 2012, Bassett had spent $40 million on new equipment, while letting attrition, instead of layoffs, reduce staffing. (On online check shows that Vaughan-Bassett is still in business.)

Bassett sent representatives, including a Taiwanese woman, to Dalian to find the competitor that was killing his company. They found it is the small nearby rundown city of Zhuanghe. The workers lived ten to a room in a dormitory and even earned 20 percent less than wages in Guangdong province in southern China. Nearby was a huge new factory called American Furniture Industrial Park, slated to ship 100,000 bedroom suites to the United States every month, “more than the top four or five United States producers combined.” In fact, between 2000 and 2002, sixty-nine bedroom furniture plants had closed.

Bassett then turned to the United States Department of Commerce. Under the WTO, companies or workers could request an investigation of other countries for dumping. “The practice of selling exported goods at artificially low prices designed to drive domestic producers out of business, dumping can also occur when exporters sell products cheaper in foreign countries than in their own.” Under WTO rules, companies have to show that dumping has led to factory closings and higher rates of unemployment to win a case. Legal fees were high for such an action, which would require “at least 51 percent of (Bassett’s) industry” to pursue a case against China. This was problematic since many companies were already importing heavily and directly, without intermediaries, and were reluctant to alienate the Chinese government.

Bassett accompanied his two colleagues on another trip to Dalian, ostensibly to see furniture samples they might order, but in reality to case out the production process. There he met a Communist Party official who told him calmly how the Dalian firm was going to become the world’s biggest furniture maker, and suggested that Bassett close his factories and turn the business over to him.

Bassett founded the American Furniture Manufacturers Committee for Legal Trade. He gambled on the “Byrd Amendment,” the Continued Dumping and Subsidy Offset Act (CDSOA) of 2000, which provided for compensation to companies hurt by dumping. The act was denounced by most economists, “globalist” politicians, and by the trading companies already established in Asia by American firms. The main beneficiaries to date had been “makers of ball bearings, candles, and electronics, and the United States steel industry.” Lobbyists and lawyers from fifty-three firms formed the Furniture Retailers of America with companies ranging from J.C. Penney to Crate and Barrel to oppose Bassett, the companies which “had already gone to a pure import model.” It was the most contentious case ever brought before the International Trade Commission up to that time. Thirty-one firms signed on with Bassett, calculating that they stood to gain prohibitive tariffs ranging from 158 to 440 percent. Bassett’s opponents, such as Sam Walton, argued the party line that cheap imports would benefit far more people than they would hurt; the workers and towns hit by dumping were roughly 8 percent of the United States population. Bassett’s high-powered Washington attorney, Joe Dorn, had already won anti-dumping cases involving paintbrushes, cookware and apple-juice concentrate. Bassett played the card of patriotism (not to use stronger terms), placing a giant American flag behind him when he spoke publicly. He argued that if the Federal government had cracked down on tax-evading Appalachian moonshine, it could damn well crack down on dumping. Fifty-seven percent of the bedroom furniture industry joined Bassett’s coalition. By fall 2003, when the coalition’s petition was filed with the ITC, 28 percent of the domestic furniture workforce had been laid off in the previous two years. Factory closings had become so common that a trade journal likened them covering “a murder in New York City.” The ultimate legal source for Bassett’s case came from the (notorious) Tariff Act of 1930. Matters were further complicated by the lack of “transparency” in China itself, making impossible a precise determination of profits, with “no SEC (Securities Exchange Commission), no public reporting or disclosure rules, or financial statements” for the public. By projections made in 2003, China’s biggest export to the United States by 2006 would be furniture.

The confrontation over furniture imports before the United States International Trade Commission, between Bassett’s coalition and the Chinese companies and American retailers resisting it, was one of the most heated ever. With top Washington lawyers on both sides, legal fees in the case overall were estimated at between $5 and $7 million. The first ITC ruling in 2004 supported Bassett and his allies, but the duties slapped on the Chinese imports were only 14 percent. The first round of duties was dispersed in 2006, but as one CEO said “I felt like the horse was already out of the barn by the time they arrived.” John Bassett III poured most of the $21 million he received into new equipment. Retailers angered by his case dropped Vaughan-Bassett entirely. Layoffs continued around the country. Bedroom imports from Vietnam tripled in early 2004. Many retailers and former producers who imported directly from China mounted a PR campaign against Bassett. Both Milton Friedman and Thomas L. “The World Is Flat” Friedman were invoked on their side; Bassett underscored the part the Friedmans ignored: “the thousands of displaced workers who were too broke to benefit from globalization’s consumer deals.” The infamous right-wing Cato Institute said the case was “the poster child for anti-dumping reform.”

“Between 2001 and 2012,” wrote Macy, “63,300 American factories closed their doors and five million American [sic] factory jobs went away. During the same time, China’s manufacturing base ballooned to the tune of 14.1 million new jobs.” The media were bored by the story and the laws on trade were so complicated “that most reporters don’t really understand it, but it’s hugely important,” according to Richard McCormack, author and editor of the trade publication Manufacturing and Technology News. “Or they write about outsourcing one time and think they’ve covered it.” Wall Street and retail advertisers “allowed the narrative of globalization to be hijacked by multinational corporations and mainstream economists…these people have stayed on their theoretical high horse while the country’s gone completely bankrupt because we make so little here of what we actually purchase.” Macy continues: “[S]mall-town stories rarely made their way into the New YorkTimes or the Washington Post…smaller media never had the authority or the scope, to say nothing of the resources, to follow what happens at the WTO.” By the time she arrived in the Virginia–North Carolina region to research this book, half a century after Henry County (the main factory center) had had 1 percent unemployment and a labor shortage, “the region that had once boasted 42,560 jobs now had just 24,733. Nearly half the workforce had been axed by globalization. While most of the vanished jobs had been related to furniture or textiles, gone with these factories were dozens of diners, industry suppliers, and mom-and-pop shops. Replacements tended to come in the form of Dollar Trees, Family Dollars, and check-cashing stores. Worse, sometimes there were no replacements at all, just empty storefronts…. One in three families in Martinsville received food stamps…”

Growing numbers are on disability. Half the region’s employed workers drive to jobs outside the area. The ones with money to relocate, those with middle-class skills, had left. “The remaining population is smaller, poorer, grayer and more diverse.” “People seem to disappear, like scrap lumber tossed into a factory hog.” Churches and homes are burgled for copper pipes to support habits in opiates and anti-anxiety drugs. A call center “supposed to reemploy hundreds of the displaced workers” shut down, and moved offshore to the Philippines. Bassett, North Carolina, (where the family saga began before JB III moved to Galax) was still a company town, but “it was no longer a factory town.” Not all workers were as philosophical about what had happened as James McMurtry’s song or some that Macy interviewed. They blamed the “fucking Chi-Comms” as well as “the federal government for not being more like Japan and Germany, with policies that protect industry and encourage jobs.” (In this reviewer’s opinion, the latter statement is somewhat dated, but that would be another article.) Children and grandchildren move away to find work, or join the military.

Five years after the first ITC ruling, results were mixed, and both sides no closer. The suppliers who had lined up with China against Bassett’s coalition pointed out that many companies had taken the awarded money and had closed anyway. They also pointed to the shift to Vietnam and Indonesia as proof of the futility of the anti-dumping suit. They called the ruling “clever shakedowns” and an “extortion racket.” Some Chinese companies wrote seven-figure checks to have their names removed from the list of dumping offenders. Small firms in China that could not pay such sums were also hurt. One admirer of Bassett’s fight who was nonetheless pro-globalization said “all those North Carolina hillbillies just don’t realize that it’s a global world, that free trade helps people, and that isolationism hurts both the country and the consumer.” Such people saw the lawyers as the main beneficiaries of the whole process. One economist drily said: “[W]e shouldn’t be making bedroom furniture anymore in the United States. Shouldn’t we instead be trying to educate these workers’ kids to get them into high-skilled jobs and away from what’s basically an archaic industry?” Another from the notorious right-wing Peterson Institute for International Economics argued that it had cost $800,000 for every factory job saved, with the money paid by the consumer in higher prices and winding up with the company, not the workers. But Macy points out that where the companies use the money to reinvest, it does keep the workers employed. American companies have also lost their ability to make some high-tech products. In 2012, there were 1.75 billion cellphones in the world, none of them made in the United States. Not too many economists trace the cost borne in terms of unemployment benefits, food stamps, and disability. Imports lead to slightly cheaper goods, but “the benefits of trade are shallow and widespread, while the disadvantages are concentrated and long term for those displaced.” Social Security is now a “de facto insurance program for many of the long-term jobless who suffer from hard-to-verify ailments such as back pain and mental-health disorders.” “Although manufacturing had taken the biggest hit in the history of the country, with five million jobs eliminated in a single decade, very few articles connected off-shoring to the decline of the working class. Or to the number of people receiving food stamps—which had tripled between 2000 and 2012.” Meanwhile, the case has generated $50–60 million for lawyers on both sides of the dispute. All in all, the companies had received $292 million in anti-dumping duties. Bassett replied to the economists and Chinese owners:

Our critics have never had to stand in front of five hundred people, like I have, and tell ’em they’re not gonna have a job. And watch women cry because they don’t know what’s gonna happen to their families or how they’re gonna feed their children. This is not like picking up a telephone from your office on Wall Street and saying, “Close factory number thirty-six down in Alabama.” These are people we look in the eye every day!

“Among the displaced thirteen hundred furniture workers in Galax, those in their fifties and sixties had the toughest time recovering from the closings…. [Some] mow grass, clean homes, wash cars, and make crafts and foodstuffs—anything to manage until their Social Security kicks in.” Some are camping out in the woods. “[Forty] percent of Galax residents qualify for food stamps…and nearly a quarter of the population lives in poverty.” All in all, 300,000 American furniture workers lost their jobs to offshoring. After China, and then Vietnam, the jobs migrated to Indonesia.

Conclusion^[1]

It is now time to step back and examine Macy’s book and the story of John Bassett III critically, which means from an internationalist working-class perspective.

The question for us is how workers caught in the “race to the bottom” can respond without, as often occurs, forging alliances with “their” capitalist, “their” government, and “their” country. “Workers have no fatherland,” as Marx wrote long ago. There are no “American” jobs; only jobs in America. The plight of workers such as those at Vaughan-Bassett is no different from workers since the nineteenth century who found themselves “undersold” elsewhere in the capitalist labor market. They themselves recognize that they benefitted from the demise of Grand Rapids, and some workers in China have already seen their jobs migrate to Vietnam, and beyond. As the steel industry in the Mon Valley in northeastern Ohio and western Pennsylvania shut down, there were attempts at “worker buyouts,” as in Weirton, Pennsylvania, where workers in the 1980s took over the aging plants and inherited the debt structures left by their former employers, agreeing to exploit themselves, and then to laying off some of their own number, before ultimately going bankrupt, as a “collective capitalist.” (This was known at the time as the biggest ESOP, or Employee Stock Ownership Plan.)

History since the 1970s provides few meaningful cases of a practical solidarity within a class framework, either within a country (as when US textile production shifted from New England to the South) or internationally, in a legion of examples we might cite.

Efforts like those of John Bassett III, while they might produce an isolated success such as Vaughan-Bassett, could hardly have been applied to American wood furniture as a whole, not to mention on a larger scale. Macy’s book suffers from a lack of attention to this larger context.

There have of course been attempts, since the 1970s, to confront the problem more globally. Movements arose against NAFTA, prior to its final adoption in 1993; there was the 1999 Seattle demonstration against the World Trade Organization, which succeeded for the first time, in a highly visible and militant way, in cutting through the political, business and media chatter about the benefits of free trade for all. Seattle put the anti-globalization movement squarely on the map, and led to further mass mobilizations over the next few years in Quebec City, Genoa (Italy), and elsewhere, and at the Washington headquarters of the IMF (International Monetary Fund). By then, it had become impossible for these “globalist” conferences to take place in or near major cities without further mass confrontations, so they were moved to remote wilderness or desert venues, still protected by ramped up police and military presence. The 9/11 attacks on the United States conveniently (for the capitalists) broke the movement’s momentum. The dot.com crash of 2000 and ensuing larger stock market contraction, then recession of 2000–03, finally deflated the 1990s euphoria about the “new economy” and “surpluses as far as the eye can see” as the sleazy crowd of Bill Clinton, Robert Rubin and Larry Summers quietly left office just before the full bankruptcy of the “roaring 1990s” became apparent.

The unions were hardly better in promoting any practical international solidarity, mobilized as they were behind nationalistic “America First” slogans and lobbying. “International solidarity conferences” by such unions are generally nothing but meetings of top-level bureaucrats with no practical meaning for workers. The notorious Andy Stern of SEIU actually led such a delegation to China, where they met with people from the state-controlled rubber-stamp All China Federation of Trade Unions (ACFTU).

Capitalism was moving into a new stage of global accumulation marked by a newfound flexibility to break up the production process into pieces finding lowest cost solutions in new ways. The transportation and generally “logistics sector” innovations were key. New process technologies that made large assembly lines obsolete came on stream, connected to vastly increased telecommunications and hugely expanded international containerized shipping at a fraction of previous costs. At the same time they created new vulnerabilities for working-class counterattack, as for instance in global logistics, where some of the most interesting struggles of recent decades have taken place.^[2] The “just-in-time” production chains were one example of a new possibility for worker disruption. Attempts to organize Walmart, the major outlet for (above all, Chinese) exports in the United States, have thus far been fiercely resisted, but some attempts to move wage struggles from the workplace to entire cities, as with recent boosts in the minimum wage in Seattle, San Francisco or Los Angeles, have been more successful. Campus movements against the global sweatshop pressured companies such as Nike and some upscale producers of women’s apparel to make pious statements about their outsourced production sites, if little else.

Through all this, capitalism continued its globalist propaganda barrage, with its paid valets in academia for the most part continuing to argue that free trade is largely beneficial but in recent years the growing revulsion against the “Davos” elites by both left-and right-wing populism shows, in country after country, that they have lost the ideological battle, even if their patrons still control the commanding heights. Some small delegations of rank-and-file workers have actually made contact with their counterparts, and not the trade union officials, in other countries, but to my knowledge little or no practical joint action has resulted. Thus, in conclusion, while books like Beth Macy’s present often moving detail about how one sector in the United States, once employing directly or indirectly a million people, was ground down by globalization, they hardly begins to pose the practical problems for those of us who wish to do something about it, beyond any local or national framework, on a class basis.

1. ^[1]I thank Dave Ranney for helpful suggestions in this section; his book Global Decisions, Local Collisions grapples with the same problematic presented here.↩
2. ^[2]See as one example my article on immigrant workers’ struggles against IKEA’s warehouses in Italy.↩