The Betrayal of the American Dream

by Donald L. Barlett

  Three years later, in 2008, Newell dismissed the remaining three hundred workers, closed the plant, and announced that Vise-Grip production would be shifted to China. In an instant, the low-slung sprawling factory that had been the lifeblood of DeWitt for eighty-four years fell silent.

  “What you miss now is the hum—the hum of the factory,” Badman recalled. “You could have your windows open on a summer evening and you’d hear the presses going up and down. And now there’s silence. Nothing.”

  Looking back, Badman believes that Newell had no intention of keeping the plant going and that all its efforts were aimed at strangling it. Why else would they jettison the entire supervisory crew in one day and throw the place into turmoil unless they were planning to shut it down anyway?

  “I think they wanted to squeeze us until they couldn’t,” he said. “Then they went overseas.”

  Badman’s assessment was right on the money. If there were a Fortune 500 for wholesale terminations, Newell would rank near the top of the list. Two decades earlier, in 1987, Newell had purchased the Anchor Hocking Glass Corporation, one of the country’s oldest glass container manufacturers. Within four months of the acquisition, a team of Newell executives swooped down on an Anchor Hocking plant in Clarksburg, West Virginia, where workers produced novelty glasses like the Star Wars and Camp Snoopy collections handed out by McDonald’s during promotional campaigns. As Robert Trent, a personnel supervisor, told us in 1991 about a visit from the corporate owner in the fall of 1987:

  We were really excited about some Newell people coming down and looking at our facility, because we thought we were doing very well. They came in about ten in the morning. We saw them come in. They went to the plant manager’s office . . . and told him they were closing this facility November 1, 1987. And that was it. They were out of here by ten-thirty.

  With certain exceptions, the corporate takeover targets were profitable. They just were not as profitable as corporate raiders and Wall Street wanted. And they certainly were not profitable enough to pay bloated salaries to layers of executives.

  In October 2011—three years after Newell closed the Vise-Grip plant—the hurt and the sense of loss in DeWitt were still palpable. Townspeople spoke longingly of the plant, of the positive influence it had on the town and their lives, and of the loss they continued to feel. DeWitt had lost its only grocery store. The longtime weekly newspaper had folded. Other businesses were pinched. A ready source of work for the town’s young people—either as summer jobs or as careers for those who elected not to pursue higher education—was gone.

  Former plant workers have tried to move on. Some went back to school for training to become home health aides or office workers. Some took jobs in other towns. Others retired early. Randy Badman has had three jobs in manufacturing since Vise-Grip and lost two of them to outsourcing. By late 2011, he was working as a foreman at a Nebraska foundry ninety miles from his home in DeWitt, where he and his wife Marge still live and where Randy serves as the town’s mayor. He drives 180 miles round-trip four days a week to his new job. It’s a grind, but he likes the work and the job provides health insurance for himself and his wife.

  In most cases, former Vise-Grip workers who have been able to find work are earning less, and they’ve learned to live on less. They’ve tried to put the past behind them, but it comes rushing back when they come upon tool displays at a Home Depot or Lowe’s and see the familiar yellow-and-blue packaging touting Vise-Grips as: “The Original. Since 1924.”

  Of course they aren’t the original. The locking pliers are now made in a factory in the heavily industrialized city of Shenzhen, north of Hong Kong. Although they’re produced under tight security in a limited-access industrial park, a former worker from DeWitt obtained an inside view of the Chinese operation after Newell hired him to try to straighten out production problems there.

  A twenty-year veteran of DeWitt, Bruce McDougall arrived in China not long after the Nebraska plant closed to find the new Shenzhen operation in chaos. Components were arriving from multiple suppliers and were hard to track. There was no quality control on the production line. Newly manufactured tools broke or wouldn’t work, he said. From the outside, the factory didn’t look much different from plants in the States, but inside was another story. To McDougall, the place was like a time capsule, a throwback to earlier times when Vise-Grip’s DeWitt plant relied on manual labor to make the tools.

  “It looked more like Vise-Grip in 1950, when everything was made by hand,” McDougall said, rather than like the highly automated plant that Newell had shut down in 2008 to be more “competitive.” He said Newell kept throwing more and more bodies into the mix to increase production. But even with five times the workforce of DeWitt, McDougall said, production still faltered. “We were turning out fifty thousand tools a day at the end in DeWitt,” he said. “Their best day in China was fifteen thousand with five times the number of people.”

  There were other contrasts too. In DeWitt, many Vise-Grip employees lived in neat, well-kept houses on quiet lanes not far from the plant, but in China Newell’s workers were packed into dormitory-like quarters adjacent to the factory. Living conditions mirrored the chaos of the plant floor. As many as twelve workers were stuffed into cramped rooms for sleeping. “The night shift guy would go in and work twelve hours,” McDougall said. “Then he’d go back to the dorm and wake up the day shift guy, who’d go in for twelve hours.” McDougall spent three months in China and couldn’t wait to leave. “The place was off the wall,” he said. Even with the cheap labor, McDougall said it was costing Newell more to make the Vise-Grip in China when he was there than it had cost in DeWitt.

  This was the height of economic insanity. A once-pathbreaking American industrial innovator, whose manufacturing processes had been successfully modernized by a company that was the anchor employer for an entire community, was sold not because greater economic efficiencies could be achieved elsewhere, let alone because quality or distribution could be improved. It was picked off by a rapacious corporation and dumped haphazardly thousands of miles away. A case of a short-term gain for a corporation, but at the expense of a sustainable economic future for a community.

  The loss of the Vise-Grip plant was a betrayal of the people of DeWitt. The village clerk, Linda Schuerman, whose husband worked at the plant for decades, is deeply upset over Washington’s indifference to working people and the impact it is having on communities such as DeWitt:

  I’m not a political person, but something’s wrong with Washington, D.C. They are to blame. They should have kept the companies here. We are nosing our way into all these countries that don’t want us and can’t stand us when we should be helping our own people. All the people out here want to do is make a living and support their families.

  Coming into DeWitt, visitors pass the massive, four-columned brick entry sign on Highway 103 that has welcomed visitors to the town for years: HOME OF THE VISE-GRIP TOOL. The town’s website also pays tribute to the enterprise that brought prosperity and economic well-being to more than three generations, but it has had to adjust to the times. On the website, DeWitt is no longer the “home” of the Vise-Grip Tool, but its “birthplace.” Like so many chapters in the story of American manufacturing, this one is now history.

  THE BIRTH OF APPLE

  Defenders of free trade and the ruthless corporate behavior that often accompanies it contend that the fate of companies such as Vise-Grip, while sad for those who lose their jobs, is merely part of a natural process of the American economy renewing itself. The nation, they say, is constantly being reinvented as old industries and companies give way to new ones. Along the way, old jobs are eliminated or offshored. It’s easy to assume that perhaps older companies such as Vise-Grip did not keep up with the times (though it did) or that its invention was no longer relevant (the Vise-Grip remains a hugely popular tool). But the story must be different for twenty-first-century innovators. Surely current innovations are valued more highly and treated more car
efully so that their benefits can be shared by the communities that supported their creation? If only that were true. Look no further than the story of an iconic American company, Apple Computer.

  The story has been told many times of how Steve Jobs and Steve Wozniak, tinkering with electronic components in the Jobses’ family garage, built the first Apple computer in 1976 and launched the personal computer industry.

  Like William Petersen of Vise-Grip a half-century earlier, Jobs and Wozniak had an idea, and their curiosity and ingenuity enabled them to create a new product from it. And like Vise-Grip, Apple was soon manufacturing its products for sale, first from a building south of San Francisco and then in an assembly plant in Fremont, California, on the other side of the Bay. Soon additional plants in Elk Grove, California, near Sacramento, and Fountain, Colorado, near Colorado Springs, would be turning out Apple computers. For the two new plants, the future looked especially bright.

  Apple’s Elk Grove plant, opened in 1992, became the centerpiece of Sacramento’s campaign to attract high-tech companies. Other computer makers soon followed. By the mid-1990s, the Sacramento area was considered the computer manufacturing capital of the United States. Apple’s Elk Grove plant, which manufactured circuit boards and desktop computers, operated seven days a week and employed 1,500 persons.

  About the same time, the Apple plant in Fountain went into production and soon became the company’s largest manufacturing facility, turning out 1 million PowerBook and desktop computers a year. It was a state-of-the-art facility that helped the Colorado Springs area attract other high-tech companies. The emergence of this new industry was a relief to the area, which had long been dependent on the ups and downs of defense contracts from Washington.

  Apple seemed to be following the classic path of industrial development that Vise-Grip and scores of other domestic manufacturers had taken for years. A creative entrepreneur invents a product, builds plants to make it, and markets it to consumers, all the while employing ever more people to build the product. This is win-win innovation.

  But Apple changed the rules, and the story diverged from the pattern that U.S. manufacturers had followed for decades. Rather than continue to open new plants in other U.S. cities and expand existing operations, the company, following the examples of other computer and electronics makers, moved production offshore, largely to China. Just twelve years after it opened, the Elk Grove plant was closed, “cutting out the core of what used to be one of the brightest stars in the region’s high-tech constellation,” as the Sacramento Bee put it. Apple sold the Fountain plant to an electronics firm in 1996. The new owners continued to manufacture Apple computers under contract for three years until production there also moved abroad. Today the 250,000-square-foot building sits vacant, a painful reminder of what was once a thriving tech industry.

  As recently as 2000, Colorado Springs was riding a high-tech job boom. But since then, with the closure of the former Apple plant and other facilities, the area has lost more than 40 percent of its manufacturing and information technology jobs. More than 15,000 jobs—paying from $55,000 to $80,000 plus benefits—simply vanished, according to local economic development officials, sucking an estimated $500 million out of the local economy. In their place, jobs in call centers for insurance, finance, and cell phones were created—jobs that paid about half of what the IT jobs paid, according to local officials.

  Bill Stamp was one of Apple’s first employees at Fountain. He was twenty-six years old when he joined the company in 1984 at its Fremont assembly plant, recording and keeping track of the myriad parts that went into each personal computer, from hard drives to screws. When the company offered him an opportunity to get in on the ground floor at its new assembly plant in Colorado, he jumped at the chance. His wife-to-be, Christy, also an Apple employee, landed a job at Fountain as well, and later he moved up to a supervisory position in shipping. Gregarious and down to earth, Stamp is the first to tell you he was never a computer geek. He was a “materials guy” whose job was to feed the production line: “My job was to get it to the line and make sure it was a quality product ready for the line to use.”

  Apple instilled in him and his coworkers a quality control ethic that made them want to turn out the best possible product. “There was such a camaraderie,” he said. “When we got off work, all we could talk about was Apple, Apple, Apple. We’ve got to do this or that. And we had the freedom, a process, to bring that up, and these things would then often come about. It was phenomenal, one big family.” It was an exciting time. Stamp said the folks in the factory thought of themselves as responsible for helping to build the company. They were appreciated and well compensated, and they basked in the glow of working for Apple.

  Stamp said that he and Christy moved into a comfortable bilevel house set on five acres near the Black Forest, an area of abundant ponderosa pines and natural beauty north of Colorado Springs. “We were living large,” he said. “We thought it would go on forever.”

  But when earnings fell in 1996 and the moneymen on Wall Street decided Apple was not living up to their expectations, the company was forced to unload assets to raise cash. The Fountain plant was sold, just four years after it had opened. Fountain was profitable and well run, but Wall Street’s relentless focus on short-term earnings demanded results. An Alabama-based electronics vendor and outsourcing specialist, SCI Systems Inc., bought Fountain for $75 million with an agreement to continue manufacturing Apple computers on-site for three years.

  The plant’s ownership wasn’t the only thing that changed. Stamp recalled that the new managers were “arrogant as hell,” dismissive of Apple veterans, and uninterested in feedback from employees. “What a culture shock that was,” he said. After having worked in a collaborative environment that encouraged ideas from the ground up, the essence of a continuously innovative culture, all he ever heard from the Alabama imports were relentless orders to “git ’er done.” When the contract to make Macs expired in 1998, Apple didn’t renew, and the manufacturing shifted offshore.

  Discouraged about Fountain’s future, Stamp left in 2001. He tried his hand in real estate in Colorado and held a series of supervisory jobs at less pay in distribution and warehousing, first in Colorado and then in California. In 2008, when his job was shipped to Singapore, he hit a stone wall. Always before, he had been able at least to secure an interview that often led to a job—if only for a while. Now he would send out résumés listing his lengthy experience and wasn’t even getting a call.

  As the months ticked by, Stamp and his wife drew down their savings and tapped into retirement accounts to fund the fruitless quest for work and to try to hold on to their home. As so often happens, in the end they lost the home. For family reasons, they moved back to California in 2003 and settled in Milpitas, near San Jose, where they rented a two-bedroom apartment. In the summer of 2011—at the age of fifty-three, after he’d been out of work for three years—Stamp found a temporary job working as an inventory control analyst for a company in the Bay Area. It was a step down from supervising, and the job did not come with benefits, but at least he was working again.

  Stamp remembers reading an article years ago, when he was still with Apple, predicting that the average worker in the future would undergo four different career changes and hold as many as ten different jobs. And he had thought: Not me. I’m staying right here. Little did he know that would never be an option.

  That’s because Congress, which writes the rules of employment, and Wall Street, which decides what rules it will permit, had other plans. The jobs that provided a good living for Stamp and thousands of other production workers in Fountain and Elk Grove are now in China. Almost every Apple product—Macs, iPods, iPhones, iPads—is made in China. Unlike in the past when companies manufactured in the United States for decades, Apple shipped its jobs offshore in less than a generation. So much for the benefits of American innovation to America.

  Apple’s move to China came about quietly and was little noticed at the
time because of the way the company went about creating its offshore presence. Rather than build plants that proudly displayed the Apple name, as it did in California and Colorado, the company turned to firms that partnered with the Chinese to establish Apple plants in mainland China that bore the name of their Chinese contractor even though inside they were making Apple products. This convenient buffering arrangement insulated Apple from oversight of its offshore workplaces.

  Apple production workers in Fountain and Elk Grove bought homes, sent their kids to school, shopped locally, saved for their retirement, and, briefly, lived the American dream. That dream, or anything like it, has not been extended to their Chinese replacements.

  In 2011, in a story for the Investigative Reporting Workshop, we told of how Apple’s good-paying manufacturing jobs in the United States had been shifted overseas “to laborers in sweatshops in China.” We contrasted the middle-class lifestyle and working conditions that Bill Stamp and other Apple production workers had enjoyed in the States with the grueling working and living conditions of workers making Apple products in China.

  Prior to our story, reports had periodically surfaced in China about the exploitive and demeaning conditions that suppliers had imposed on these workers at various compounds where Apple products were made. Some of this reporting work was by a courageous Hong Kong–based human rights group called Students and Scholars Against Corporate Misbehavior (SACOM). Then, early in 2012, about two months after our investigation was published, the story went viral when the New York Times published lengthy accounts about worker abuse and harsh conditions.

  The heart of Apple’s production in China is near Shenzhen, a throbbing megalopolis of 10 million, less than an hour north of Hong Kong. Just outside the city is a massive, fortresslike compound surrounded by walls and protected by tight security where guards stop each vehicle at the entrance and check the identities of occupants by using fingerprint-recognition scanners.