The Seoul government is using factories at its border and busing in low cost North Korean factory workers. If this sounds familiar to readers of the Midlands Business Journal, it’s a concept this writer first proposed for the United States 10 years ago – busing low cost Mexican labor to border factories in Texas, New Mexico, Arizona and California.
by Bob Hoig, Publisher
Midlands Business Journal
In 1996, the Midlands Business Journal proposed a plan for the U.S. to recapture lost industries by building modern new plants on the U.S. side of our southern border and staffing the production lines with Mexican workers commuting from Mexico.
It seems South Korea has started doing just that in its battle to keep its manufacturing base from being wiped out by the Chinese.
According to the current issue of Business Week magazine (Mar. 20, p. 48), buses carrying 6,000 workers from North Korea roll six days a week to 11 South Korean factories, with more to come.
The idea allows South Korea to tap its communist neighbor’s huge labor force to produce shoes, clothing, pots and other low-tech goods at an average hourly rate of 50 percent of what Chinese workers earn and 10 percent of what South Korean workers get.
As a bonus, South Korea stands to get some gleaming new factories and in the process one-up China on manufacturing costs. Beyond just cheap labor, any new South Korean plants will be operating with the latest and most efficient equipment and industrial technology.
The Seoul government is so enthusiastic that it says 28 more factories have signed agreements and another 1,000 companies are considering such a move, Business Week reports.
North Korea benefits by getting its large, under-employed work force into jobs earning what in the North can only be considered dream wages.
Business Week quotes a Bank of Korea official as predicting the North Korean workforce in the South could grow to 725,000 by 2012 and yield $500 million in annual wages to North Korea.
All of the above figures into what for a decade we have argued for the United States:
--Taking back electronics, clothing, textiles, furniture, tool-making – industries that otherwise are lost to us forever.
--Beating the Pacific Rim at its own game, cheap labor.
--Building ultra-modern, efficient new factories to make the U.S. even more competitive in world trade.
--Reversing the certain coming of the day when China, the Pacific Rim and India make all the world’s consumer goods, and coincidentally, make us dependent on them in times of economic crisis or even war.
–Creating a way for Mexico to legally use U.S. jobs as a safety valve for its own under-employed workforce and for the U.S. to welcome legal workers from Mexico. Having a positive legal program with strict monitoring for foreign workers will mean we can slam the door extra tight against illegal immigrants. Fences, more border guards, foolproof identification – whatever it takes.
Of interest to America’s so-called “Rust Belt”, this writer has no doubt that building a wave of new plants at the border will spark a massive U.S. construction boom that will spread inland because of a need for support material and services.
This means, among other things, feeder plants for parts and machinery in the central States and the northeast. Retaking lost American industries will demand more road and interstate highway construction and beefing up of the railroads and barge lines. Inbound ocean shipping will suffer. That could be a plus, implying less reliance on trade rivals for our basic goods.
Some labor leaders snug in their deck chairs on the Titanic will probably object. But they should know that the issue is taking back what was ours. The targeted industries, such as consumer electronics, are gone. The plants that supplied them, gone. The jobs that built them, gone. The taxes they produced from trillions of dollars in sales to help support government, gone too.
All gone.
Also, those labor union leaders who so frighten politicians have to know too that it will be American workers, including union members, who will be building all those projected new factories, highways, railcars and hundreds of spillover projects.
We’d suggest that our border factories pay Hispanic workers bused from Mexico an amount that would be considered an excellent hourly wage in, say, Mexico City.
This ought to prompt no outcries from the Mexican government. If Mexican companies can pay those wages to Mexicans working in Mexico and hold their heads high, why can’t we pay the same to Mexicans living in Mexico and working just across the border in the U.S.? The best Mexican workers at the border should eventually be offered entry into the United States and, if they desire, eventual U.S. citizenship.
In the issues above, U.S. political and business leadership ought to be at least as smart as the South Koreans.
Seoul could have worked it the other way around, as we have with Mexico. The South Koreans, to keep their corporations competitive with China, could have come up with regulations that encouraged, if not forced, their companies to move to North Korea where the cheap labor lives and to build modern factories their.
But what would South Korea have then? A withering manufacturing base, declining tax revenues, more idle buildings, more unemployed South Korean workers and a none-too-friendly North Korea growing strong as an industrial power by making the South’s products. And South Korea would still face a menacing Chinese competitor.
That’s what we have with Mexico. And what have we gotten? A withering manufacturing base, declining tax revenues, idle plants, more unemployed American workers, and a not always friendly Mexico growing stronger as an industrial nation, making our cars and other products. And still, a Chinese competitor more menacing than ever.
Of course, we can always do nothing, as we have been doing. We can watch and wait until the Chinese and other Pacific Rim nations manufacture all the world’s consumer goods.
Or we can get Congress and the business leadership off the dime. We can demand a pilot project with a few hundred factories, empowered by “take-back-our-industries” legislation – call the law the Lost Industries Reclamation Act.
In other words, we are following a principle borrowed from medicine: Extreme illnesses require extreme remedies.
If you agree that something must be done, please e-mail us at editor@mbj.com or e-mail your member of Congress or both.
March 2006
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