Free Trade Is Not Free!

World wide free trade is a wonderful concept.  The theory goes something like this.  If we reduce trade tariffs everyone benefits from lower costs and a rising tide of trade is profitable for everyone.  Unfortunately it does not work so well in the real world.

Superior Industries International is a wheel manufacturer based in Van Nuys, California (a suburb of Los Angeles).  The company has just announced the closing of its manufacturing facility in Van Nuys.  They will be laying off 290 people from March through September as they close the facility.  At its peak at that facility there were over 1,200 employees.  The company does have three manufacturing facilities in Chihuahua, Mexico.

This is not the first company to relocate its manufacturing to Mexico.  Price Pfister, a kitchen and bath faucet manufacturer had a manufacturing facility in Pacoima, California (another suburb of Los Angeles) that employed 1,300 people.  The company’s manufacturing facility was moved to Mexicali, Mexico.

Technicolor had two manufacturing facilities in the United States.  They manufactured compact discs (CDs) and DVDs.  One was located in Camarillo, California and the other in the Charlottesville area of Virginia.  Each employed over 750 people.  Both were closed.  Manufacturing now occurs in Guadalajara, Mexico.

In all three of these situations the manufacturing facilities employed people at wages that paid for their homes, cars, and put food on the table.  The loss of those jobs is just a few examples of the impact of NAFTA and the idea of free trade.  Of course no one meant for this to happen.  Somehow American genius was supposed to devise new jobs for all of those lost to Mexico.

Corporations couldn’t be happier with NAFTA and other free trade agreements.  After all, in their view, it’s the bottom line (net income) that counts.  There is no concern for the welfare of the individual or for the United States well being.  The reason is that it is not corporate America.  The big businesses are world wide.  Borders are meaningless.

Will the new administration in Washington change this?  I doubt it.  I hope I am proved wrong.