Square D's Low Road Strategy

by Tony Palmeri

January 10, 2000

[note: This op-ed appeared in the Oshkosh Northwestern in January of 2000.--TP]

As reported this week, the Square D Company plans to close its Oshkosh plant, lay off 290 workers, and move production work to Mexico. In this essay I wish to make two points: (1) based on Square D's Wisconsin track record, the announcement should not have come as a surprise; (2) such plant closings are in large part the result of failed state and federal policies that encourage transnational corporations to pursue a "low road" profit strategy.

First, Sqare D's track record. In 1971, the company employed 1,700 workers in Milwaukee. Claiming too high taxes and wage rates, Square D in that year fired about 1,000 electrical workers and moved half of its operations out of the city.

In 1990, Square D applied for and received $104,960 in Wisconsin Development Grant funds--taxpayer money--to pay for worker retraining. Yet by 1991 another 235 Milwaukee jobs were lost, this time with the company announcing that most of its operations would be moved to Raleigh, North Carolina. In 1997, Square D closed its last manufacturing plant in Milwaukee, moving the work to Monroe, North Carolina and eliminating another 159 jobs.

Also taking a hit in 1997 was Square D's Huntington, Indiana plant. When the company announced 120 layoffs, Huntington Mayor Bob Koyle said "it's going to make a heck of an impact on the local economy." Huntingtonians may have been pleased to hear that Square D plans to move some of the Oshkosh jobs back to northeastern Indiana, though the company's willingness to pit communities against each other is appalling.

Clearly, Square D's track record displays little loyalty to workers, communities, or Wisconsin taxpayers. Square D and its $8.9 million parent company, Schneider Electric, are bottom-line outfits willing to announce a plant closing without even having the decency to consult first with union or local officials. Yet in response to a question on "what goes into being a high performing organization?" on the company's website, President and CEO Chris Richardson sounds statesmanlike: "I think it starts with core values . . . the most important is the ability to trust and to be trusted - if that bond doesn't exist, you can't move ahead."

By shipping jobs south to Mexico, in spite of the fact that workers at the Oshkosh plant were told that theirs was "the top earning Square D facility in the country," Square D is pursuing a classic low road profit strategy. Some would argue that the situation is simply "the way capitalism works." I believe a more reasonable explanation is that our elected officials and we citizens at large have failed to insist on the creation of public policies that would reward high road companies and make it more difficult for companies like Square D to take the low road.

Based on this week's events and Square D's past performance in Wisconsin, how can Oshkosh residents trust the company to stay even if it were to succeed in attaining tax breaks and worker concessions?

Unfortunately, Square D is but one of a number of multinationals willing to exploit cheaper labor as a profit strategy. According to the nonpartisan Center on Wisconsin Strategy, state and national economic policies do not encourage corporations to take the "high road." A "high road" company is one that features high and rising wages, higher productivity, good management/labor relations, etc. A "low road" company is one that features worker insecurity, bad labor relations, exploitation of cheap labor, etc.

By shipping jobs south to Mexico, in spite of the fact that workers at the Oshkosh plant were told that theirs was "the top earning Square D facility in the country," Square D is pursuing a classic low road profit strategy. Some would argue that the situation is simply "the way capitalism works." I believe a more reasonable explanation is that our elected officials and we citizens at large have failed to insist on the creation of public policies that would reward high road companies and make it more difficult for companies like Square D to take the low road.

In 1944, President Franklin Roosevely put forward a vision of the United States as a high road nation. In that year, he proposed an Economic Bill of Rights. Among those rights were:

  • The right to a useful and remunerative job.
  • The right to earn enough to provide adequate food and clothing and recreation.
  • The right of every family to a decent home.
  • The right to adequate medical care and the opportunity to achieve and enjoy good health.
  • The right to adequate protection from the economic fears of old age, sickness, accident, and unemployment.
  • The right to a good education.

 

President Franklin D. Roosevelt

I think Roosevelt was describing a decent society. Sadly, that vision has been derailed by a counter-vision that cares only about the right to make massive profits by any means necessary. How many more Square D's will we have to experience before we decide--as decent citizen, to demand accountability from our corporate and political elites?

Tony Palmeri welcomes your feedback

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