American Factory by Steven Bognar and Julia Reichert screened in its New York premiere at Tribeca Film Festival. The documentary is an alarming view of the foreign factory which may presage the downhill slide for American workers as the trend of foreign investment continues. Factories in China and Russia operate differently. And when such investment comes to the U.S., standards of accountability are not what Americans are used to. Foreign ownership dictates process and operation.
The film presents the anatomy of a GM plant closing December 2008 and its rise from the ashes in the form of a refurbished plant bought by Chinese investors. The idea to invest in the U.S. was to establish profitability. For Americans the hope was that the jobs created would bring greenery back to a state which was choking from the massive rust storms its closed industries had caused.
The devastation in industry as a result of the mortgage debacle and Second Great Depression under the Bush Administration was legion throughout the U.S. and globally. Thus, when news of the GM plant’s restoration by Chairman Cao came, there was cause for jubilation. After the dust of the launch settled, expectations shifted and the hard realities revealed themselves.
The filmmakers lay no blame and avoid a political stance. Any reference to politics is my own perspective. The filmmakers present all sides and attempt to be as objective as possible. Because of that attitude they had total access to the factory floor. Using the techniques of cinema verite and acute editing, we see interviews of workers expressing feelings and opinions. In light of the history of the American factory and unions which the film touches upon, what is now happening with foreign investment coming here and opening factories is not the boon politicians would make it out to be. Based upon what the filmmakers discovered and relate through their interviews and portraits of workers at home and on the factory floor, “the handwriting is on the wall.”
A Bit of History
When the Dayton, Ohio GM plant closed in 2008 filmmakers recorded what was a tragedy for blue collar workers. Dayton, the home of the Wright Brothers, had a prodigious history of industry and innovation. At one point it boasted the most patents per capita than any other city in the US. It was the second largest automotive manufacturing city after Detroit at a prosperous time before the Regan administration. Before the Regan years the wealthy were taxed proportionately with the other classes. The corporate tax rate was triple what it is now. The unions protected/advocated for workers and petitioned the government (OSHA) to safeguard their health and well being when there were violations. CEO salaries were not as exponentially wacked in comparison to their workers’ salaries. Workers faced low inflation: by comparison to today, there was little national debt. A single parent wage-earner was able to support a family of four and put kids through college in middle America and the South. Additionally, the medical industrial complex was not profit based.
None of this was socialism! The wealthy were taxed their proportionate fair share. It was good, old-fashioned American citizens paying to support one another’s prosperity, from the wealthy to the poor based on the graduated income tax. The extremes between rich and poor were not galactic. Banks were regulated repositories of citizen funds; they could not invest.
Ronald Regan and a conservative Republican administration exponentially increased corporate socialism otherwise known as corporate welfare. Everything changed in the nation’s economy and social/economic progress among the classes to benefit the wealthiest and slight the poor and middle class (upper middle, middle, lower middle). Republicans increasingly targeted programs for every-day Americans and pushed for more tax breaks for the wealthy. Unions were broken up. Globalism was used as the excuse, but in effect, the 60/40% power balance upended between unions and corporate higher ups to 80/20. Corporates took advantage. Greed blossomed, inequities grew. Corporations closed factories in the U.S. and went overseas, not happy to make a profit, but happier to make a mega profit to pay a hefty CEO salary and benefits to someone more interested in the bottom line than making product. Banking structure continued to change. Banks consolidated, made investments, funded derivatives, subprime mortgages and became “too big to fail.
Surreptitiously, Regan and others that followed had the laws changed to effect this, all to benefit corporates and the wealthy. There was continued downsizing, outsourcing, lower corporate tax rates, higher middle class tax rates, and lower taxes for the wealthy. Factories went overseas and Americans and farmers went bankrupt as the American Dream evaporated. With the mortgage debacle in 2008, it was the apotheosis of the death of the American Dream. Plant closures bankrupted and retrograded the lives of thousands of blue-collar workers in a chain reaction effect on other businesses.
After filmmakers covered the GM plant closing, they did an update of the area. Founder, chairman and CEO of Fuyao Glass Industry Group in a symbolic gesture acquired the old GM factory to establish an American headquarters of multinational Fuyao Glass. For the promise of hiring American workers and having it launched by American officials, he received enormous tax credits from the Ohio Tax Credit Authority. These breaks have increased under the Trump Tax Reform Act, which gives millions of dollars in tax welfare to corporations and billionaires, while making the other, poorer economic classes pay for it in a now swelling $23 trillion dollar deficit, something once considered anathema by conservative Republican tea partyists, now embraced and lauded by Mitch McConnell Republicans.
Documentarians filmed the plant launch and operations of Fuyao Glass which, to Chairman Cao’s consternation, was not immediately profitable as it would have been in China. It was losing money on top of the $500 million invested to open the plant.
Interestingly, Steven Bognar and Julia Reichert examine a cross-section of Chinese and American workers and managers to gauge the cultural differences, language barriers and work approaches. They interview Chairman Cao (a communist party leader hooked in high up to the party through his family). The Chinese workers, used to long hours and little pay are happy. American workers are upset.
The differences between the two cultures are staggering and problematic when the pressure of financial losses increases. Chinese workers, used to 10-14 hour days, find the 8 hour day unrealistic for profitability. US safety regulations established by OSHA are not understood and often ignored imperiling workers. For example Wong He, lead Furnace Engineer in OEM Tempering at Fuyao Glass America in an area where temperatures exceed 1200 F, a 20-plus-year employee of Fuyo, has burn marks all over his arms gotten in China. China’s safety regulations are not like ours. American workers file grievances, something that Chairman Cao doesn’t understand.
The Chinese and American workers try to become friends; there are humorous clips of Americans bringing Chinese workers for barbecue and for entertainment, showing them how to use guns for target practice. The Chinese workers who are away from their families and room together in tiny apartments are shocked that some Americans have to work two jobs (FGA pays $14.00 per hr.) to make ends meet. Clearly, American standards of living are not what Chinese hear about. Filmmakers interviews who lost homes, went bankrupt and live in one room in a relative’s house with few belongings. Thus, FGA seemed a dream come true. There are caveats.
In the past the former jobs at GM paid $28.00 an hour and the inflation rates and cost of living were lower. With their lower salary and higher costs, inflation and the shrinking purchasing power of the dollar, the FGA workers cannot afford to pay for their own education to retool or pay for their children’s college. Some are happy to have a job. But it is longer hours (they are not paid for training) with unsafe working conditions. The Chinese workers are younger and are used to long work hours under stressful conditions. Chinese workers come from a militaristic/communistic approach to company loyalty. They obey all commands without question, even if it means sacrificing their safety. Americans if have been used to a long tradition since unionization of asking “why?” Chairman Cao and the Chinese officials see this approach as disloyalty. They should just obey orders.
As the financial pressures increase, the Chinese attempt to show American company officials how FGA should be operated; they even pay for their visit to China to understand how plants are run. The hand of the Communist Party is all over the company in China; there are songs, banquets and entertainment to praise Fuyo Glass and the Chairman for his goodness. The sessions appear like brainwashing PR advertisements which inculcate the workers to be loyal, obedient employees for the good of the company/communist party. The visit to mainland China is an eye-opener.
Though American managers who visited China attempt to rein in their American workers when they return home, the historical, socio-cultural and economic disparities get in the way. Everything explodes when American workers at FGA attempt to unionize with the help of the U.A.W. Chairman Cao will not brook this assault on his company. He hires American lawyers and lobbyists to thwart unionization and mount an attack campaign against the union so workers will vote it down. The firm he hires, the Labor Relations Institute is paid over one-million for its assistance to provide everything that Chairman Cao and Chinese managers (Chairman Cao brings over new managers to tackle what the American managers can’t) need for the union vote to fail.
Filmmakers catch all of these interactions on camera and edit cogently so we understand the events with voice over explanations by workers. Surveillance of union representatives at FGA is taken. The right of the worker to voice complaint is discouraged; union reps who work at the plant are the equivalent of traitors. The vote fails; FGA has no union. There are promises made to lift the employee wages. Eventually, with no profitability, American management is fired; union reps are fired and anyone who gives “what for” or doesn’t work at the level required of their Chinese counterparts is put on notice. Retribution for asserting the right to speak out will occur, thus workers fear filing grievances with OSHA. At the end of the film’s shooting in December of 2017, a Fuyao employee was accidentally crushed to death. Additionally, to avoid conflicts in the future, the plant is being increasingly automated. Regardless, workers will be out of jobs, even if they prove loyalty.
Is there any way of knowing what injuries are occurring or what violations are happening in a corporation in the US, a foreign run company, which follows Chinese policies and practices? Only whistleblowers could reveal this; but they need their jobs and would be fired if the the identity of the whistleblower was revealed. The law of profitability is supreme, under a system of loyalty to the Chairman and the company which expects its workers to meet its own standards, not American standards.
Since the film the number of OSHA complaints against the company is down-exactly why is not known. The company has been profitable in 2018; but one of the stipulations for tax incentives of $15 million is that the company fulfill its promise to hire 800 employees, generate an annual payroll of $32.5 million and stay at their current facility for at least 18 years. Filmmakers also discovered that in March of 2018 a Fuyao employee was accidentally killed while working. Fifteen years ago in plants across the nation, to avoid citations, OSHA standards were being followed and the press would have publicly shamed the company.
Chairman Cao is spending $16 million to build a new processing center in South Carolina. It’s a new day. Foreign investment is here. It’s been a long time coming. Those in the “know” needed to prime the nation for such a situation with sub prime loans, so workers could go bankrupt, corporations could make more money overseas, the unions could be broken and those pesky regulations could be obviated. All of this happened and happens so that corporations pay little for a desperate, broken-down, poor, workforce, and foreign companies find the US an attractive place to invest, helped by politicians looking to make a little spare change for their states and themselves. But as automation takes over jobs, much of the need to oversee human production will be moot.
How do we handle the coming foreign factories that are populating our American landscape, offering jobs at what cost to Americans?
The situation has exponentially worsened under Trump. Workers are expendable and invisible; the rule of law and regulations are a thing of the past. No one is watching except Chairman Cao, and other foreign corporate chairmen and Trump. They are watching their bottom line at the expense of workers and the American people. But don’t believe what I’ve written here. See the film for yourself. Corporate socialism has everything to do with what is happening to the “American” Factory. Equitable economic, democratic practices and tax structure had everything to do with why the U.S. was thriving up until Regan. Only the .001% are increasing their wealth exponentially. The reset of the nation is treading water or drowning in rust. Automation will exacerbate these problems.
The film is truly a siren call to citizens in the South and in the Rust Belt who are debilitated and hurting economically, despite promises by Trump. Fox News reports which ADVERTISE for the next election, a “booming economy” (yes for billionaires and Wall Street) are great sources of brainwashing to convince Americans that the shrinking purchasing power of the dollar is not happening and their existing paycheck to paycheck is a good thing. Just don’t get sick. The film posits what is happening and I’ve suggested this is no coincidence if you look at the larger picture. The economy is global. Corporations are not bound by nation-states,’ laws. They are free; their CEOS make incredible salaries; workers can’t afford a night out on the town if they have children. And under Citizen’s United, corporations are people; they can donate any amount they like to their preferred political candidates to perpetuate corporate welfare.
An example of foreign investment that is happening as I write this concerns Russian oligarch Oleg Deripaska who is bringing money and jobs to Mitch McConnell’s state of Kentucky after Trump lifted heavy sanctions applied by Obama. against Russia for the Crimean invasion. Oleg Deripaska,Putin’s close friend, is building an aluminium factory in Kentucky. Deripaska has a history of looting, money laundering, corruption, silencing whistleblowers (one woman who shot her mouth off that Deripaska knew about Russian meddling with the U.S. election has been jailed in Russia). Deripaska/Putin have covered up corruption that is the basis of his oligarchic empire which he is making global with the help of Trump and McConnell.
If Deripaska is given carte blanche treatment to “stimulate jobs,” for McConnell’s Kentucky, his company will not ipso facto be subject to former American factory standards, especially if Trump and Mitch McConnell (who has turned a blind eye to Russian meddling in the 2016 election, the Mueller Report’s findings of potential conspiracy and definite obstruction of justice) are in power. If the company pollutes and run roughshod over American workers? Only an aware public and vigilant government can stop any abuse by a company that is processing one of the most toxic substances on this planet, a poison connected to Alzheimer’s and other debilities.
Under Trump, the skies are the limit with foreign investment and foreign companies coming to the US to “create jobs.” There are no regulations worth keeping to improve the profitability of corporations. US tax payers will be subsidizing these corporations and individual states will be subsidizing tax breaks; certainly Mitch McConnell and the Kentucky state tax commission will be offering Oleg Deripaska tax breaks as a condition of hiring American workers. One wonders what else McConnell and others from Kentucky will be offering to “bring jobs” to one of the poorest states in the Union?
If we learn anything from American Factory, we will note that unless guarantees are made with workers, foreign investment will not improve American citizens’ plight and the economy in states that are hurting. Coupled with workers’ inability to easily retool and get an education (they cannot afford it because of bank strangleholds on student loans and interest rates) their options are so limited they are forced to work in such foreign industries for lower pay and questionable safety conditions. The vicious cycle will continue and the divide between rich and poor, the coastal cities and the red States will exponentially worsen. We must ask who does this foreign investment help?
This is a film worth seeing and thinking about. The point is to keep on learning. Ignorance is not a luxury we can afford.