April 20th, 2019

Guest Commentary: When Multinationals Buy Local

By Anthony Pollina
Vermont Senate – Washington County

We recently got a stark reminder of what can happen when large multinational companies take over local businesses.

Less than three months ago the IBM plant in Essex Junction, Vermont, was taken over by a new owner – the emirate of Abu Dhabi – represented here by an outfit called Global Foundries. We were assured that Vermonters would keep their jobs, would not have to reapply or relocate. The company said, we “refer to it as no one left behind.”

But, in early September the message changed. The new owners from Abu Dhabi announced they would cut the work force, offering retirement incentives to some undetermined number of workers. It was not about Vermont, our taxes, regulations or affordability. It was just part of a companywide cost savings move. A move made with little concern for our Vermont workers or community. It was simply necessary to ensure profits for the new owners.

About seven months ago Gilden Garments bought Comfort Colors, a successful Northfield, VT. company, built by a local entrepreneur. At the time they pointed to the “big synergies” between the two companies that made them a good fit for each other.

But, the new owner is a Canadian company worth about $10 billion with production facilities in Central America and the Caribbean. So, maybe we should not be surprised that just seven months after taking over the local company, the multinational announced the Northfield facility would close, putting 60 Vermonters out of work; moving many of the jobs to Honduras.

Again, it’s nothing personal. It’s not about Vermont; our taxes or affordability. It is just part of streamlining and consolidating the corporation’s operations to improve efficiency and customer service, we are told.

But what makes Honduras more efficient? Is it better infrastructure, faster internet, higher quality education and better trained workers? Not likely.

What makes Honduras more efficient than Northfield or any Vermont community from the multinational’s perspective can be found in the low wages paid to Honduran workers; where the minimum wage earns a worker about $2,000 a year.

Both examples remind us of a significant change in corporate attitudes and behavior, encouraged by so-called free trade and other policies that encourage moving jobs where wages are lowest.

A generation ago corporate owners and managers had more respect for their workers. They knew them and lived in the same community. They knew that directing a reasonable share of profits back to workers in decent wages meant a stronger middle class and a stronger local economy. It also meant those workers had money to spend, buying products and services from other businesses in the community, building a strong economy from the bottom up. Of course workers themselves were more organized, represented by labor unions that ensured they had a place at the table when corporate priorities were set.

Today, the owners and managers can be half way around the world, with no commitment to a particular community. So multinationals can easily abandon workers interests in favor of record shareholder profits and huge CEO salaries. Often at the expense of local jobs.

So, while it’s easy to blame taxes, regulations and “affordability” when jobs are lost, let’s not forget that for many multinationals the priority is low wages…wherever they can find them.

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