Nestled in the orchards of the Shenandoah Valley in Virginia, the city of Winchester has seen its share of economic changes. In October, a confluence of clean-energy regulation and high manufacturing costs forced the closure of General Electric’s Winchester lamp plant with the loss of 200 jobs.
The manufacturing group concluded that US workers were too costly and lacked the necessary skills to make the new, curled energy-efficient light bulbs. Production, like so much of the clean-energy industry, is shifting abroad, notably to China, where GE announced on November 9 a US$2 billion investment to boost innovation and set up joint ventures.
To workers in Winchester, a pre-American revolution frontier town, the incandescent bulb – virtually unchanged in a century – may be outdated but GE’s refusal to equip the factory to make energy-efficient bulbs amounts to a slap in the face.
Political leaders, they say, recite a mantra of hope but they have little to show for their words. “[President Barack] Obama talks about bringing green jobs to America but they’re going to China and it doesn’t seem right,” said Brady Allen, an engineer now working in a retail auto-parts store near the shuttered GE plant. “It’s not new to be losing jobs, but it’s escalating. People don’t realise how bad it is. They’ve worked all their lives and had no idea they would have to go through this.” Blaming China for US trade and employment problems is now an established lexicon of the political and industrial, complaints that risk setting off a trade war.
In October, after the powerful United Steelworkers union complained about China ignoring World Trade Organisation (WTO) rules prohibiting government subsidies on manufacturing of clean-energy products, US trade representatives announced an investigation into official Chinese support for wind turbines, solar panels, energy-efficient vehicles and advanced storage cells.
That provoked a sharp rebuke from Zhang Guobao, head of China’s National Energy Administration. The United States, he warned, “cannot win this trade fight”. If the United States pressed the subsidy issue with the WTO, Zhang said, “the only ones who will be humiliated are themselves” because the Obama administration had proposed subsidies totalling US$60 billion for US clean-energy industries.
But US fears of falling behind China in clean-energy manufacturing are being compounded by a dispute over recent Chinese curbs on the export of rare-earth metals used in clean-energy products. In short, the promise that decades-long job losses from traditional manufacturing might be made up by American-led growth in areas of new technology is coming up empty.
In Winchester, which has an unemployment rate of 7.5 % – below the US national average – the loss of the GE plant is more than a symbolic dislocation. “It was devastating,” confirms mayor Elizabeth Minor, who lists the areas where the picturesque town is still competitive – plastics and hospital systems. “And don’t forget the apples,” she adds.
America has lost 40% of its manufacturing jobs since 1979, dropping from nearly 20 million to 12 million. The promise of clean-energy jobs – Obama said in October he expects the sector to create 800,000 jobs by 2012 – has yet to be fulfilled. The experience of GE’s Winchester workers suggests it may not.
Light-division spokeswoman Janice Fraser explains that regulatory changes are forcing the phasing-out of incandescent bulbs by 2014 – and the company is moving its remaining capacity to Monterrey, Mexico.
“You don’t need a bunch of plants making bulbs people aren’t buying,” she said.
In Virginia — which swung decisively back to the Republican Party in the recent US midterm elections — there is fear that China plays a decisive role in the loss of jobs and wealth. Dan Hayes, a former chef who now supplies edible nuts to the military, says the changes are noticeable even in his industry. The Chinese, he says, “are driving up the price of almonds, pecans and walnuts”.
The loss of the GE plant is a blow to the town. “It’s hard for people. They’ve worked there for 20, 25 years. They supported their families and the community and then — boom! It’s gone. It hurts everything.”
Hayes’s friend John Salisbury goes a step further. The problem lies not with the president but with a congress which, he believes, has conspired with business. “American business doesn’t care about American workers,” he says with some bitterness. “Business and government are one.”
American workers feared their jobs being lost to Mexico and Canada during the Clinton-era free-trade negotiations, but the fear of China is of a higher order, confirms Salisbury: “China is already waging economic war with us. It’s an extreme danger. I have a four-year-old stepson and I’m firmly convinced he’ll be fighting the Chinese in his lifetime.”
Yet the populist fear of China, exaggerated by Tea Party rhetoric, is now being challenged by business and political figures. “It is very dangerous for us as a society – I’m speaking of America – to focus on blaming others, because then you don’t focus on your own practices,” offered New York’s mayor, Michael Bloomberg, on a recent trip to China.
Winchester’s officer for redevelopment, Jim Deskins, is confident that the town, a non-unionised island in a heavily unionised region, can reinvent itself as a high-skill, high-wage centre for the biomedical industry. It’s been a crossroads for trade and will be again. But, he warns, American workers are going have to change, too. “The advances we achieve through technology don’t always make us competitive in manufacturing where handwork is a large part of the process. We’re being kicked in the ass because we’ve lost our creative skills. Reinventing ourselves is what we’ve always done.”
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