Manufacturing Closures: A Race to the Bottom

By John Anderson

The Sunbeam Corp factory in Palmerston North is closing after over 20 years production in Palmerston North. The seasonal staff will finish their season on June 25^th and the plant will close shortly after. 122 workers are being made redundant and 34 of them are permanent staff.

The plant manager Craig Dias said “We are making products in a competitive open global market and it is uneconomic to continue to make these type of appliances in New Zealand if they aren't aimed at a niche market.”

Craig Dias praised the local media, business, and personnel agencies, “The local business industry has helped with job placement and most of the staff have placements already.”

When asked what the Government could have done to alleviate the company's situation he said “There are only two things that could have been done; one was to use tariffs, the other was tax relief.”

There has been a pattern of closures in the manufacturing industry since the New Zealand government started pursuing a free trade agenda. Click Clack Ltd, another Palmerston North factory, is also ceasing to manufacture goods, although its head office will still be there. It is estimated that over 30 jobs will be lost. Like Sunbeam, the company has been working hard to relocate workers to other plants, and to other jobs in the Manawatu. While there have been a number of Regional Development projects which are expected to provide some jobs in the Manawatu they will not help ease the impact of 150 job losses.

George Larkins from the Manufacturing and Construction Union (Wellington Branch Secretary) who has members in the factory said “The workers are devastated. They aren't in highly paid skilled jobs, they will find it very hard to get work in the Manawatu. The main cause is government policy, which, for example, has allowed the dollar to strengthen beyond what exporters have budgeted for.”

When asked what he would like to say to ministers like Jim Sutton who promote a free trade agenda, Larkins said “It is all very well to be looking at the big picture, but come up here and look at the devastation you are causing these workers, and tell them why you think this is acceptable.”

As Robert Reid from the Clothing Workers Union said “The closure of the Sunbeam factory is one more example of the closures that have been happening since the Rogernomics period of free trade policies that started in 1984.”

There is controversy over the much heralded New Zealand/China Free Trade agreement. The government seeks more access for New Zealand's primary products, essentially farming produce. Rod Donald from the Green Party has criticised Helen Clark directly for not pushing for fair trade and raising the awareness of China's “awful labour and environmental record” when she signed the first document towards the agreement last week.

With the majority of clothing and manufacturing goods coming from China, the New Zealand/China Free Trade Agreement effectively makes any industry tariffs completely redundant.

Craig Dias from Sunbeam did not believe that the Free Trade Agreement was critical to the closing of the plant. However, as ARENA (Action Research Education Network of Aotearoa) researcher Bill Rosenburg said "All these free trade agreements certainly have a racheting down effect on our economy, preventing us from now or in the future ever supporting a New Zealand manufacturing industry, including textiles and clothing. For the Sunbeam factory it might not have been what closed the factory, but it denied hope of any relief in the future."

Political parties like the Alliance Party and Green Party have worked hard to keep tariffs in place, including the placement of a freeze on tariff reductions in the clothing industry from 2000-2005, and to avoid free trade agreements. They propose instead to look to fair trade deals which focus on avoiding exploitation of workers and the environment in all participating countries. However the Labour government seems to have entirely ignored the concerns of the local community and political advocates for caution and restraint.

There are growing concerns that a tiny minority saying that they oppose free trade is fuelling anti-Asian sentiment. Unwelcome newcomers to the free trade debate have been the neo-nazi National Front who are planning a demonstration outside the plant when it closes. A Wellington activist who observed a recent demonstration of skinheads outside the Chinese Embassy said “They say they support workers rights, yet none of them were in a union, instead they spent their time making racist and homophobic comments. The politics of the National Front are entirely based on hate, they were outside the embassy because of their hatred of people who aren’t European, not because of any free trade agreement. Helen Clark's house is just down the road, place the blame where it is due. ”

As Robert Reid from the Clothing Workers Union stated “New Zealand trade negotiators are negotiating away the NZ manufacturing and textiles industry, in order to get access for primary goods. There's no point in blaming the Chinese government, Chinese workers, or fuelling anti-China hysteria, because in the end we're doing it to ourselves.”

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