The Electrolux refrigerator factory in Greenville, Mich., was closed two years ago. The company sent production to Mexico.
“Globalization has been good
for Holland,” said David J. Spyker, once the plant manager and now vice
president of a Siemens unit with operations around the world.
60 miles to the northeast, such talk provokes contemptuous snickers.
Two years have passed since a Swedish multinational shut down what had
been the largest refrigerator factory in the country, a sprawling
complex along the Flat River in Greenville.
The company, Electrolux, sent production to Mexico, eliminating 2,700 jobs from a town of 8,000 people.
talks about Electrolux around here the way the rest of the country
talks about Katrina,” said Becky Gebhart, manager of a nonprofit
medical clinic that opened last November in Greenville, 30 miles
northeast of Grand Rapids, that serves people with little or no health
As foreign buyers descend upon the United States,
capturing widening swaths of the industrial landscape and putting
millions of Americans to work for new owners, these two cities offer
sharply competing narratives for a nation still uneasy about being on
the selling end of the global economy.
And with the dollar losing
much value in recent years, the pace is picking up again, as some of
the country’s most valuable assets go on the block at bargain-basement
For many communities, like Holland, Mich., the
consequences include new jobs at decent pay, fresh capital to finance
expansion and links to markets around the globe.
others, like Greenville, are suffering from being branded redundant by
huge enterprises with factories around the world.
To travel Michigan today is to experience America’s often ambivalent relationship with the global economy.
capital is putting more American businesses in the control of major
enterprises based in Europe or Asia. It is also creating jobs, some of
them in emerging areas like alternative energy, where prospects for
expansion may be greatest. And it is aiding the growth of American
exports, a source of vigor in an economy hobbled by a collapsing
More than 200,000 Michigan residents worked for subsidiaries of foreign companies as of 2005, according to government data.
in a state that has lost 300,000 manufacturing jobs since 2000, foreign
investment has not been enough to compensate; indeed, it has sometimes
exacerbated the erosion.
Gov. Jennifer M. Granholm, a Democrat, was bitterly disappointed by Electrolux’s decision to abandon Greenville.
had promised to persuade the company to stay, assembling a package of
more than $120 million in state and local tax credits. The city offered
to build a new plant. The local union agreed to give up as much as $33
million a year in wages.
“They said, ‘There is nothing you can do
to compensate for the fact that we are able to pay $1.57 an hour in
Mexico,’ ” Ms. Granholm recalled during a recent interview. “That’s
when I started to say, ‘Nafta and Cafta have given us the shafta,’ ”
she added, using the acronyms for the North American and Central
American free trade agreements.
Electrolux bought the Greenville
factory in 1986 from an American firm. It succeeded for many years, but
two decades later, Electrolux — like a lot of other companies — decided
it could cut labor costs by moving production to another country.
unemployment benefits expire, many of the city’s former workers are
still seeking the next job. Sales at restaurants, hardware stores and
car dealerships have plummeted, prompting them to dismiss workers,
adding to a downward spiral.
Despite the bitterness, Ms. Granholm
has traveled to Japan and Europe in pursuit of expanded trade and
foreign capital. “We don’t want to just be victims of the global
economy,” she said. “Pursuing international investment is one strategy
to get jobs.”
The Economic Trade-off
factors have propelled the surge of foreign money reaching the United
States. The dollar’s weakness against the Japanese yen and European
currencies makes American companies cheap for many foreigners looking
to invest. The United States remains the world’s largest market, and
buying an American company is typically the swiftest way in. And in the
wake of the mortgage crisis, American companies are finding credit
scarce, making many willing to sell assets to raise cash.
least, the United States is living on borrowed money, with the value of
imports exceeding exports by more than $700 billion last year. Selling
companies to foreigners is one step toward squaring the accounts.
It is a business climate that creates all kinds of cross-border deals, like Ford’s sale last month of Jaguar, the pride of Britain, to Tata of India.
the extent that the United States continues to have low levels of
savings, well, the rest of the world, they are not going to give us
that excess for free,” said Matthew J. Slaughter, an economics
professor at Dartmouth. “We have to sell them something. There’s no
metaphorical free lunch for the United States.”
Between 1998 and
2007, foreign companies paid more than $1.7 trillion for major stakes
in American firms or to set up operations in the United States,
according to the Commerce Department. More than five million Americans
work for domestic affiliates of foreign companies.
affiliates of foreign companies reinvested $65.4 billion of what they
earned in the United States, according to a study by Professor
Slaughter underwritten by the Organization for International
Investment, a Washington lobbying firm financed by foreign companies.
They paid more than $335 billion in wages and salaries, for an average
annual compensation of $66,042, nearly a third higher than the average
Three years ago, Congress prevented a
Chinese state-owned energy company from buying Unocal, the California
oil company. The following year, a company based in the United Arab
Emirates failed in a bid to run several American ports. Sovereign wealth funds
— state-controlled pools of investment from China, Russia and the
Middle East — have stoked worries that they could skew markets by
pursuing national interests.
But even as emerging players have
grabbed headlines, more than two-thirds of the foreign capital buying
American companies in 2006 still came from Europe.
part of that wave. Since 2004, the company said, it has sunk more than
$17 billion into buying American firms. That year, it paid $954 million
for a company that made wastewater treatment equipment. And last year,
it paid $3.6 billion for a business management software company, $2.7
billion for a maker of medical diagnostic technology and $7 billion for
another medical testing company.
“A lot of the innovation
remains in the United States,” said George Nolen, president and chief
executive of the Siemens Corporation, the American subsidiary of
Siemens AG, which is based in Munich.
The factory here in Holland, a town of 34,000 with shingled homes on tree-lined streets, was a part of those deals.
Holland is home to major office furniture makers, including Herman Miller.
In the late 1990s, as the technology boom filled office parks from
Silicon Valley to Boston, factories here cashed in by supplying the
chairs. But when the bubble burst, Holland’s furniture plants laid off
thousands. So did local auto parts factories.
The town hit
bottom in 2003, when a Lifesavers candy factory shut down, shifting
production to Canada to escape the high cost of American sugar — an
industry the United States protects with tariffs.
is salvage-minded. When the Baker Furniture factory closed, a developer
turned it into loft-space apartments and offices, with original wood
floors and exposed brick walls lending an air of urban chic. A French
designer of auto interiors set up shop upstairs.
Pfizer, the pharmaceutical giant, is shutting down a factory in Holland but will hand over a laboratory there to Michigan State University, which plans to use it as an incubator for alternative energy businesses.
the newly opened CityFlats Hotel is a monument to natural light, sleek
design and energy efficiency, with “green” certification to prove it.
Furnished with recycled glass tiles and cork floors, it is the
brainchild of Charles Reid, president of Charter House Innovations,
whose local factory makes furniture out of recycled materials.
Reid is planning to franchise his hotel idea into a national chain,
selling the furnishings to generate jobs for his factory, where the
work force has nearly tripled, to 100, over the last five years.
a design company that happens to manufacture,” Mr. Reid said on a
recent evening, presiding over a packed dining room at his penthouse
restaurant. “I’m trying to keep our guys working.”
The German Giant
Into this landscape landed Siemens.
The previous owner of the plant had also been a foreign player: Vivendi,
a French water company that reinvented itself as a media conglomerate
in a strategy that yielded a jumble of ill-fitting parts. Vivendi was
in the business of managing water plants, and it ordered the plant
managers in Holland not to supply Vivendi’s competitors with equipment,
“Our international business collapsed,” said Mr.
Spyker, the longtime plant overseer, who grew to loathe meetings with
his French bosses. “You were called over to get instructions, and all
the orders had been made behind the scenes before you arrived. If I
never have to make another trip to Paris, it’s too soon.”
Now, he would be making trips to Munich.
Spyker worried about Siemens’s reputation for bureaucracy, but he saw
abundant upsides. The company had a presence in 190 countries. He could
tap into this network to lift sales, particularly in fast-growing
markets like China, where relationships with high-level officials are
“Now, we weren’t just dealing with a purchasing agent
who might deign to see us,” Mr. Spyker said. “Now, we’re dealing at the
Revenue has tripled, the company says. The work force has grown to 237 from 105.
“Before, people didn’t see where their next paycheck was coming from,”
said Jeff Whipple, a manufacturing supervisor who has worked at the
plant since 1995. “Morale has definitely improved. People see the
benefit of having a strong parent behind them.”
Greg Costner, a
father of two, was hired as a machine builder in February after being
laid off from his two previous jobs, at a factory that makes forklifts,
then at an auto parts plant.
Mr. Costner, 46, says he now earns
about a third less than he did at the auto parts factory, where he
spent a dozen years. But a paycheck is a paycheck.
world market the way it is, I don’t feel secure that I’ll be here until
I retire,” he said. “I come in, I do the best job I can, and I hope for
a good future.”
When the Benefactor Leaves
Greenville, where Electrolux recently razed its old plant, leaving a
bald patch of gravel, even that modest aspiration seems beyond the
reach of many.
For decades, the refrigerator factory gave thousands of people — most with only a high school diploma — a middle-class life.
had 1,000 folks who hadn’t had to shop for a job in 25 years,” said Don
Pellow, who was in charge of the bargaining committee at the old union
chapter and now runs a state-financed jobs center. “You come to work
every day, you’re a hard worker, but that doesn’t cut it anymore.”
Line, 54, and his wife had both worked at the plant for nearly 32 years
when it closed. “I thought I’d die there,” he said.
They each made just under $16 an hour. It was enough to buy a house and a snowmobile. They took annual vacations to Florida.
Electrolux shut down, Mr. Line has applied for jobs at a lumberyard, as
a dump truck operator and as a sales clerk at home improvement stores.
seems like the minute your toe is in the door,” he said, “they say,
‘We’re not hiring.’ ” His wife is training for a job in a beauty salon.
His unemployment benefits recently ran out. “We’re spending our
savings,” he said.
On Main Street, Huck Huckleberry, owner of a
restaurant that bears his name, has shrunk his staff from to 12 from 32
since Electrolux left.
“It’s heartbreaking,” he said during a
recent lunch shift, as the AC/DC anthem “Highway to Hell” blared
through his mostly empty dining room.
“When people here were
making a living, they bought houses, cars, paid for shoes,” he said.
“On weekends, Mom and Dad would get groceries, then come in and have a
steak and a beer, and life is good. They quit coming.”
businesses on his block have shut down, including a sports bar and an
office supply store. Two tattoo parlors have opened up.
has gained one new industrial operation, United Solar Ovonic, a maker
of solar panels. About a quarter of its 200 workers are former
Electrolux people. Most are earning about $14 an hour — less than they
made at Electrolux, but in an emerging industry and with a
“I consider this my window of opportunity,”
said Hope Conley, a former Electrolux worker, as she inspected freshly
produced solar panels. “Instead of making products that are going in
the landfill, we’re doing something for the world. I mean, the world
needs refrigerators, but we need to get off that fossil fuel, too.”
Greenville’s city manager, George Bosanic, the plant epitomizes the
future he seeks as he courts new investment. A Swedish company may have
broken Greenville’s heart, but he is eager for more foreign capital.
know this is a global economy and companies are going to come and go,”
Mr. Bosanic said. “It’s a matter of taking advantage of what
opportunities there are.”
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