Deskilling America: Firms shut profitable plants while spurning buyers

[Hannah Bell]

From 2009 but ongoing, e.g. http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389x9227370

“Is it too late? I hope not,” said an exasperated Anthony Fortunato, president of the 260-worker United Steelworkers (USW) Local 2604 at an ArcelorMittal steel mill in Lackawanna, New York, as he and his members watched the mill being systematically taken apart. An eager buyer has been pressing the company— the world’s largest steel firm— for at least two months to sell the mill and thus keep the profitable operation open and the jobs alive. Fortunato is hoping the buyer will remain interested despite ArcelorMittal’s aggressive drive to gut the mill. ArcelorMittal is rushing to dismantle complex, custom-built ovens and other equipment that will take months to replace.

Arcelor’s plans to close the Lackawanna mill are occurring against a backdrop of a widely supported effort by President Barack Obama to stimulate the nation’s flat-lining economy with the $787 billion “American Recovery and Reinvestment Act.” But even as Obama is moving to counter the nation’s economic free-fall, major corporations are moving in the opposite direction when it comes to maintaining employment and consumer demand. A recent survey showed 71% of CEOs expecting more layoffs in the coming six months.

The Lackawanna mill isn’t ArcelorMittal’s only closure. ArcelorMittal is also shutting down its Hennepin, Ill. steel mill, even though other firms have expressed strong interest in buying that mill...The plant has been consistently profitable, earning $48.4 million even in a recessionary year like 2008.... Moreover, ArcelorMittal has rebuffed a proposal by another major steel company to buy the Hennepin mill and keep it running.

And ArcelorMittal’s strategy is not unique. Last fall, the Cerberus private equity group, through its NewPage subsidiary, shut down a highly profitable, technologically advanced paper mill in Kimberly, Wis. Cerberus is headed up by John Snow, former Treasury secretary under George W. Bush; Dan Quayle, former vice president under George H.W. Bush... USW Local 2-9 President Andy Nirschl speculates that Cerberus (the name is derived from the mythological dogs who guard the gates of Hades) essentially wanted to raise paper prices by reducing capacity, regardless of the human cost to 600 workers and their families...Four firms showed interest in buying the plant, but Cerberus and NewPage remained uninterested, frankly admitting that they had no plan at all to market the plant...

http://www.dollarsandsense.org/archives/2009/0509bybee.html


The article is well worth reading & touches on a number of themes:

- The increasing dominance of finance capital:

The US financial sector took $313 billion in profits in 2003, the manufacturing sector just $119 billion. In the 1950s finance took 2% of US corporate profits v. about 40% today.

- The hollowing out of US productive capacity & the deskilling of the US workforce

In terms of the education debate, this corporate tactic makes a mockery of the deformers' claims to care about educating children to compete in a modern economy. The deformers -- financiers, hedge funders -- are the ones sending the US economy back to the 19th century.

- The use of tax dollars to destroy & offshore productive capacity

- The deliberate destruction of local economies by withholding productive assets from the market

This is to me a very provocative point; large corporations can essentially manipulate property values & move populations on a large scale using this tactic & get tax advantages for the mothballed properties at the same time.

I've posted on cases in St. Louis & Detroit where "investors" appear to be doing just this. Creating slums, clearing slums, & profiting on both ends.

[w4rma]

1. Important reading for folks who are interested in helping America. (nt)

[Hannah Bell]

2. kik

[xchrom]

3. Recommend -- what I love is pointing out these places

Were profitable. The counter narrative to the lies
We're always told that America needs to move to
A different economy.

[Karmadillo]

4. Let us work within the system to correct these inustices. Vote! Contribute!

nt

[onethatcares]

5. who are these 71 percent of CEOs?

that are going to strangle the turnip?

More importantly, WHY

[Hannah Bell]

6. kik

[eilen]

7. Nestle did the same thing with the plant in Fulton.

Fulton is a small city in upstate NY in a poor county. I'd venture to guess the town has a very large proportion of its population on the county rolls for relief/TANF/Medicaid. Nestle was one of the good jobs you can get there. Miller used to be there too. The Seneca River flows through the center of town-- it is part of the Erie Canal Network. The riverfront is a pleasant place.

There was a group of chocolate workers that wanted to get a coop going and take over the plant from Nestle and were refused.

[Hannah Bell]

8. thanks for that information. it's seeming like it's not uncommon.

[eilen]

9. Here's some more info from the wiki

When Peter Cailer Kohler began chocolate production in the United States, Fulton became home to the first U.S. chocolate manufacturing facility. Many Swiss, skilled in the art of making chocolate, followed the company to Fulton and settled here. Many of their descendants still live in the area. However, in 2003, after more than 100 years in Fulton, the company closed the factory citing the costs to restore and update the old location were out of reach. Factory employees hung the Nestlé company flag outside the factory upside down the day the closing was announced by company officials.
Subsequent to the closing of the Nestlé plant, investors from Côte d'Ivoire purchased the chocolate factory and attempted to reopen it as 'New York Chocolate and Confections Company'. The company filed for bankruptcy and local Oswego County officials tried to find an appropriate buyer for the property so that it could continue to work toward a reopening. However, on June 30, 2010, an auction was held and the physical plant and any remaining equipment was sold to a company that buys up failing or closed industries and resells the equipment and physical plants. The Oswego County industrial development agency had bid $1 million for the property at the auction but was greatly overbid by the reseller in an amount of $2.5 million. <1>


The Miller Brewing Company operated a plant in the Town of Volney, (just outside of Fulton city limits) from the mid 1970's until its closure in 1994. The former plant was partially retrofitted and was used for a short time as an ethanol production facility. Unfortunately, the retrofit design only permitted limited production. In 2008, the owners of Northeast Biofuels filed for bankruptcy and tried to file appropriate legal documents and other paperwork to reorganize and complete the retrofit. Agricultural supplies on hand were sold to other vendors to prevent spoilage and to maintain the facility. The staff were laid off. In May, 2009, the facility was sold at auction. The successful buyer was the large oil refiner and petrochemical company, Sunoco, Inc. of Philadelphia, PA. Current plans underway call for the retrofit to be completed and return to production of biofuels. The services of ICM Inc., an ethanol engineering firm and ethanol industry leader out of Colwich, KS was hired to complete the retrofit. Production of ethanol resumed at the Fulton ethanol plant on June 21st, 2010. At full production rate (July 2010), the renovated plant is able to produce in excess of 85 million gallons of fuel grade ethanol per year, along with 400 million pounds of animal feed annually.


I wish they still made chocolate there. It was lovely driving through there, the air smelled so good. Chocolate is a mood enhancer and I swear, people were happier.

[blindpig]

10. kick

[Supersedeas]

11. kick