Special report: Jobs in an evolving economy: To the lowest bidder goes the lowest pay – U.S. towns bear the brunt of jobs lost to Mexico and Asia

CELINA, Ohio — On that last day of work, after the city of Celina and the county of Mercer and the state of Ohio had lost bids to keep Huffy Corp.´s bicycle plant from leaving this tidy lakefront town, nearly 1,000 union workers streamed from a dark factory into the sun-drenched day.

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One worker, then another, then dozens and maybe hundreds removed their shoes. They walked in their socks to their cars and trucks and drove off the Huffy property for the last time.

In their wake was a parking lot littered with rows of shoes set neatly on the asphalt.

The message: Try filling these.

Huffy did.

Five years ago, after 44 years amid the cornfields of western Ohio, the world´s largest bicycle plant packed up and moved. It went first to Missouri, where nonunion laborers in Farmington were willing to work for $2.50 less an hour than the $10.50 average in Celina.

Then it left Missouri and farmed its labor out to a factory in poor, dusty Nuevo Laredo in Mexico, just across the Rio Grande from Texas. The workers there earned about half as much as the American workers. Two years ago, Huffy cut its ties to Mexico and began importing its bikes almost entirely from China, where workers earn less than 4 percent of what Huffy paid in Celina.

To the lowest bidder go the bikes. And the Frisbees. And the Levi´s jeans. And the Power Wheels ride-on toys. And the gold-plated American flag lapel pins worn by many lawmakers. Wal-Mart, the world´s largest retailer, no longer bothers touting its American-made merchandise, once a staple of its advertising strategy.

Wal-Mart spokeswoman Melissa Berryhill said the company understands customers would prefer “to buy products made in their own country,” but that´s not always viable.

“Some products are no longer manufactured here in the United States in the volume needed in order to serve the customers we have,” she said. For example, she said, “More than 80 percent of the toys, bikes and Christmas tree ornaments are manufactured in China.” Manufacturing employment grew in November, according to the Arizona-based Institute for Supply Management, but the increase will not raise all boats. Economists say factories that make such items as bikes, toys, clothes and electronics will continue to use foreign labor and imports.

“The pattern that has prevailed over the past 40 years will continue,” said Richard Berner, chief U.S. economist for Morgan Stanley Dean Witter.

Today, a standard fireball-red Huffy bike made in China sells for $40 at Wal-Mart — about 50 percent less than what it cost when Huffy was in Celina. The bikes are assembled in a plant in Sha Jiang Town, Shenzhen, China, where 800 workers live for free in dorms and earn between 25 cents and 41 cents per hour.

“The decision to move was not made by the Huffy people here, it was made by the people at corporate and by the investors,” said Mercer County Commissioner Jerry Laffin, a stocky soybean farmer who negotiated hard to keep Huffy in Celina. “We were fighting the Asian markets.”

Market forces dominate

Celina also was fighting the unspoken collaboration between suppliers, retailers and consumers that drives the trade that closes American factories. Thrifty consumers flock to bargains, which forces suppliers such as Huffy to cut their prices.

“We´re all culpable, perhaps, but America is proud of its cost-cutting,” Syracuse University economist J. David Richardson said. “All the consumer did was rub his hands and buy.”

Officials at Huffy Corp. declined comment on the company´s labor decisions. But in 1998, they said the company needed to cut costs at the Celina plant by 35 percent in order to compete with bicycle imports.

In the four years before Huffy left Celina, foreign-made imports drove down bicycle prices by 25 percent. Prices have remained steady or declined since then, which is why Celina Mayor Paul Arnold was able to buy his great-granddaughter a Huffy for $37 at Kmart this fall.

“I would gladly have paid an extra $20 for an American-made Huffy,” he said, sounding apologetic.

Alas, he sighed, “There are none.”

During its last year in Celina, Huffy posted a net loss of $2.2 million, or 84 cents per share of common stock. The following year, after Huffy moved its Celina jobs to Missouri, the company recorded a net loss of $33.3 million, or $3.13 per share of common stock.

After shifting entirely to bike imports, Huffy Corp. netted $35 million in earnings in 2000 and earned investors $3.39 per share of common stock, an abrupt turnaround from those waning days in Celina. Today, its profits have leveled off, but Huffy still expects to post net earnings of $3 million in 2003. Huffy Bicycle Co., the flagship division of a diverse sporting goods company, was credited in part for the turnaround. And Huffy chief executive Don R. Graber, who was denied a bonus in 1999, received $673,000 in bonuses on top of a $554,000 salary.

The $1.2 million that Graber made in 2000 reflects the expanding divide between what U.S. workers earn and the salaries of their chief executive officers. In the past four decades, CEOs went from earning 26 times more than the average worker to making about 250 times more, according to the Economic Policy Institute, a liberal think tank in Washington.

No more ’Made in America’

Consumers and investors typically profit from multinational deals, said Syracuse University´s Richardson.

“American banks and brokers and financial firms are world leaders. … We are very good at this kind of work, actually, and the jobs are very high-paying and technical,” he said. “Lots of Americans who end up on the New York Stock Exchange floors benefit.”

He is a proponent of free trade for its contributions to economic stability, foreign diplomacy and low-priced retail. But, he acknowledged, “Low-skill labor is getting the shaft.”

Which is exactly how Ruth Schumacher felt as she left Huffy on that last day five years ago. A high school dropout, she had worked at the factory for 28 years and had planned to retire there.

Toward the end of her career at Huffy, Schumacher was so anxious about being laid off that she took nerve pills to calm herself. Her husband, Bob, took a part-time job working as a church janitor in nearby St. Marys.

It was then that her labor union, United Steelworkers of America Local 5369, postponed a vote on whether to accept further pay cuts. The next day, Huffy announced it was leaving Celina.

“Sad thing is that I can remember when we used to put a label on the boxes and on the bikes that said something like, ´Made Proudly in America,´ ” said Larry Stelzer, a former Huffy accountant who now works as Mercer County´s director of economic development.

The American label used to be a powerful marketing tool, he said.

“Now it has just been thrown out the window.”