Sunday, January 25, 2015

After three decades, American worker loses out to Mexico

Editor's note: The following story ran Oct. 20, 1991, on Day One of the nine-day "America: What went wrong?" series published in the Inquirer.

* * *

Rosa Vasquez and Mollie James share a common interest. Vasquez works for the company that once employed Mollie James.

That's where similarities end, though. James earned $7.90 an hour. Vasquez earns $1.45 an hour.

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  • 1991 SERIES:
    AMERICA: WHAT WENT WRONG?
    DAY 1
  • How game was rigged against middle class
  • After three decades, American worker loses out to Mexico
  • Who - and how many - in America's middle class
  • DAY 2
  • The lucrative business of bankruptcy
  • DAY 3
  • Big business hits the jackpot with billions in tax breaks
  • DAY 4
  • Why the world is closing in on the U.S. economy
  • DAY 5
  • The high cost of deregulation: Joblessness, bankruptcy, debt
  • DAY 6
  • For millions in U.S., a harsh reality: It's not safe to get sick
  • How death came to a once-prosperous discount-store chain
  • DAY 7
  • Raiders work their wizardry on an all-American company
  • DAY 8
  • When you retire, will there be a pension waiting?
  • Workers saving for their retirement lose on junk bonds
  • DAY 9
  • How special-interest groups have their way with Congress
  • James lives in a six-room, two-story house on a paved street in a working- class neighborhood of Paterson, New Jersey. Vasquez lives in a one-room wooden shack in a Mexican shantytown that is reachable only by foot along a dirt path.

    James' house has electricity and indoor plumbing. Vasquez's house has neither.

    When Mollie James wants to watch television, she turns on the set in her living room. When Rosa Vasquez wants to watch television, she connects a car battery to a 13-inch black and white set.

    For 33 years, Mollie James worked for a company that manufactured electrical components for fluorescent lights. Now Rosa Vasquez works for the same company making the same kinds of products at a new plant in Mexico.

    Mollie James' story is the story of many Americans in the 1980s. After decades of working for one employer, they suddenly found themselves out of work--unable to find another job and deprived of benefits they had counted on for their later years.

    Mollie James went to work at the Paterson plant of Universal Manufacturing Co. in 1955. She worked as a laminator, a tester, a machine operator and finally a press operator. "I could do any job in the plant," she said proudly.

    "We were more or less like a family," she said. "The owner would come out and talk to us and would help us in any way that he could. He saw to it that many of us got homes through their help, by speaking to a bank or even making you a personal loan. They were concerned about the welfare of the workers. "

    Universal sought perfection. If something didn't work, James said, the owners wanted to know so they could make adjustments and produce a better product.

    "We were Number 1," she said with pride.

    In 1986, Universal was acquired by MagneTek Inc., of Los Angeles.

    MagneTek had been formed in 1984 by a Los Angeles investment company, The Spectrum Group, headed by Andrew G. Galef, a business consultant who specialized in advising troubled businesses.

    With millions of dollars raised by Michael R. Milken's junk bond machine at Drexel Burnham Lambert Inc., MagneTek embarked on an acquisition program that included the purchase of Universal.

    Galef is MagneTek's chairman and received $272,852 in bonuses from the company in the fiscal year that ended June 30, 1991.

    More important, his Spectrum Group collects an annual fee to provide ''management services" to MagneTek. In 1991, it will total $678,000, according to a report filed with the SEC. The arrangement is similar to those that Spectrum has with other companies that Galef has reorganized.

    Galef and his third wife live in the fashionable Bel Air section of Los Angeles, an exclusive enclave popular with entertainers and movie industry executives. Their house on Copa de Oro (Cup of Gold) Road is valued at $3.9 million by the Los Angeles County assessor.

    The flavor of Galef's lifestyle emerges in court papers filed in 1987 during a divorce action initiated by his second wife, Billie:

    "At Christmas we always had a large dinner party with at least 200 guests ... Travel was also extensive. Last July, we went to Australia, Hong Kong, China and Japan for approximately three weeks. We stayed, as we always do, in first-class hotels, ate at the best restaurants and generally traveled by limousine.

    "In September, we took the Concorde to Paris and London, where we spent a week, again staying at the best hotels and eating in the best restaurants. "

    It was a lifestyle that could afford $125 a week for an exercise coach and $250 a week for a therapist for Billie Galef, which she claimed in court papers was essential after she learned that Galef was having "affairs. "

    While Galef and his wife were jetting about the world, his managers at the Paterson plant where Mollie James worked were assuring employees that nothing would change under MagneTek, the new owner.

     

    "They came through the plant and talked to each worker and told us we wouldn't have anything to worry about because they would always have operations in Paterson," James said. "They gave us the impression that we had great prospects here. They told us they were going to get us new equipment, new machinery."

    But workers noticed that the existing machinery was disappearing from the plant without being replaced.

    "You'd come in the next morning and it would be gone," James said. ''There'd be a bare space on the floor."

    Then one day a notice went up on the plant bulletin board. Effective June 30, 1989, Universal's 38-year-old Paterson plant would be shut.

    "It was very devastating," James said. "People asked, 'What are we going to do now? We just always thought we would have a job. "

    In July 1989, the plant that had once employed 500 people became a distribution center, receiving products made at other MagneTek plants.

    James was offered a job in the shipping department lifting boxes. But at 58, she was unable to do the manual labor required. She was out of work.

    As MagneTek closed the doors in Paterson, the company reached full production at a 125,000-square foot plant in Matamoros, Mexico, a burgeoning border town across the Rio Grande River from Brownsville, Texas.

    The plant was part of Mexico's Maquiladora program, a venture started to attract U.S. companies to establish assembly plants there. The U.S. government encourages such plants by setting a low tarrif on finished goods coming back into the United States from Mexico.

    Rosa Vasquez, 26, one of 1,500 employees--mostly female--at the MagneTek facility, began working the 4:30 p.m. to 1:30 a.m. shift in July 1988, the year the MagneTek plant opened. She earns 179,000 pesos, or about $59, a week.

    In 1989, MagneTek, in a report filed with the U.S. Securities and Exchange Commission, cited the benefits to the company of this low-wage haven:

    "...the Company has consolidated manufacturing and relocated product lines to facilities having lower per-unit labor and overhead costs. For example, the company has established a full-scale manufacturing facility in Mexico where it benefits from lower wage rates. "

    Mollie James doesn't understand. "They (company official) said we were hurt by foreign trade," she said. "But this company has plants in Mexico. Why isn't that foreign trade? "

    Rosa Vasquez understands. For her, there is only enough money to buy essentials. Asked how she spends her earnings, Rosa Vasquez answered: "The children, food, clothing for the children, clothing for us. "

    She lives in one of about 300 primitive dwellings in a colony of poor people called "Vista Hermosa" bordering the MagneTek plant. Meaning ''beautiful view" in Spanish, Vista Hermosa is a collection of ramshackle dwellings, made of various materials, in varying stages of disrepair.

    Wooden outhouses serve as toilets. People illuminate their houses with kerosene lamps. Roosters, chickens and pigs wander about.

    Vasquez and her husband live behind the plant, where the roar of MagneTek's huge air-conditioning system can be heard 24-hours a day.

    She describes her home as a "small wooden house. " It is actually one- room, 12 feet long and 10 feet wide, with a tin, peaked roof. It contains a double bed, two small dressers, a table, a cupboard, clothes hamper, two chairs and a propane stove.

    Vasquez and her husband, Alberto, a carpenter, live at the house during the week while their two children stay nearby with her parents.

    Although she works until 1:30 a.m., she rises early to take her small boys to pre-school each morning, riding 30 minutes by bus each way. She and her husband believe in education.

    The only object on the walls of their modest home is a poster showing a child bent intently over a desk with the slogan above, "Total Principio es Dificil. " An ode to hard work, the expression translates generally to mean 'anything is difficult to start. '

    For entertainment, the family watches television at the house of Rosa Vasquez's parents, using a car battery to power the set. Every two weeks the battery runs down and a brother puts it in an old car and "drives around" to charge it up, said Vasquez's father, Jose Angel Vasquez.

    While Mexico may be a low-wage haven for MagneTek, workers like Rosa Vasquez do not get a break on many living costs. Their wages do not translate into a standard of living comparable to the one her counterpart, Mollie James, long enjoyed in the U.S.

    As a result, many of the material goods that are common features of middle- class American households are beyond the reach of the Vasquezes.

    Like refrigerators.

    Even if Vista Hermosa had electric power, and even if the Vasquezes could afford electricity, they still couldn't afford a refrigerator. In Matamoros refrigerators sell for $450, or about two months wages.

    Even so, Rosa Vasquez feels fortunate. She has a job, which is more than Mollie James can say.

    After the Paterson plant closed in 1989, Mollie James collected unemployment benefits for six months and, at age 58, went back to school.

    She learned how to repair computers, but has yet to find anyone who will hire her.

    "When you are 58 going on 59, it is very hard to get a job," she said. ''Any time you put your age down, they say nicely 'we will contact you. "'

    For 18 months she paid for her own health benefits, but it became too expensive--$114 a month at the end. So now she has no coverage. "I hope for the best," she said.

    Mollie James liked her job and took pride in her work.

    In the 1970s, she had to overcome management's reluctance to allow a woman to operate the large metal stamping machine. But she passed the 30-day tryout and ran the machine until the plant closed.

    "I've seen men lose fingers," she recalled, "but thank God I never lost anything. "

    Except, in the end, her job.

    Donald L. Barlett and James B. Steele INQUIRER STAFF WRITERS
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