TempNation: The Face of the New Manufacturing Economy

There is a story, quite possibly apocryphal, about an American auto executive showing a union leader the company's new robots. The auto exec says, 'Try getting them to pay union dues.' To which the union leader replies, 'And try getting them to buy your cars.'

The American manufacturing industry is supposedly enjoying a revival. 'Reshoring' is bringing work back to the US and Europe as transportation costs, quality problems, the need for greater customer responsiveness and technological advances make factory work in the established western democracies more competitive.

But the manufacturers are caught between the need to keep costs down and the equally important need to be mindful of the fact that a consumer-based economy requires consumers who can afford to purchase their products.

Robotics and computerization solve part of the problem on the cost side, though even that is subject to the vagaries of global pricing and local tax policies. But the compromise solution has been to outsource in place. In effect, corporations from Amazon to Dell to Merck to Nissan are contracting the staffing of their manufacturing and logistics operations to third parties.

The new hires may work in a 'Nissan' plant (though even the real estate and the machinery may be leased or owned by other parties), but that is not who pays or supervises them. As the following article explains, the majority of the labor in such facilities is most often contractually employed by a staffing company - usually on temporary status - frequently created specifically to provide employees to that physical entity. Such workers are not paid the same wages nor do they enjoy the same benefits as company employees. They can be hired and fired at will. Should the plant close down or relocate, even the hiring entity can be shuttered at minimal cost in what is truly a disposable economy.

The larger question is whether any job is simply a good enough job in an uncertain global economy. Those who defend the system say that it is, at least, bringing some work back. Critics claim that these arrangements are counter-productive and will almost certainly fail to meet standards because the workforce has neither the training nor the incentive to generate the kinds of sustainable competitive advantages that more holistically integrated facilities can produce. For the time being, the temp advocates hold sway. But changes in economics, technology or fiscal policy - sometimes far from the affected location - may well cause that to change quickly. JL

Lydia DePillis reports in the Washington Post:

Nissan, the first of many foreign automakers to set up shop in Tennessee, is leading a trend. Companies from Amazon to Asurion to Dell have outsourced to the hundreds of staffing agencies that have cropped up.
Chris Young's pain is in his wrists. It started about a year ago — at first a numbness, and then sharp pains, all the way up to his elbow. He'd injured the left wrist in a long-ago motorcycle accident, but it didn't act up again until he spent months moving heavy pieces of metal, again and again, at Nissan's manufacturing plant in Smyrna, Tenn. Managers transferred him off that part of the line. Still, there's no way to make it stop completely.
The month of February had been particularly painful for Young. Nissan was scrambling to fill orders before the end of the fiscal year on March 1, ordering 10-hour shifts on Saturdays and Sundays — that meant getting up at 3 in the morning to drive the 45 miles from his home to the plant, for weeks on end with scarcely a break. A couple years ago, Young had gotten into a car crash, after dozing off at the while during a similarly intense run.
"No one's really worried about the fact that you're so exhausted from working seven days a week, you're dependent on some drug to stay awake, or dependent on some drug to go asleep, or for pain," he says, relaxing after shift on an L-shaped leather couch at the home he rents in Columbia. His 37-year-old body is powerful, built like a football player's, but no longer impervious. "That's the most common thing people are addicted to. And everybody I work with has some type of pain, whether it's hands, fingers, back, feet, something."

Young doesn’t actually work for Nissan — he works for Yates Services, an in-house contractor that's hired thousands of people over the past few years to ramp up production as people started buying vehicles again. It’s a big difference.

Yates is like a company within a company, with separate bulletin boards and rules and procedures. The bona fide Nissan employees are easily recognizable through their logoed shirts, which Yates workers don't receive. And the disparity isn't just symbolic. Yates pays between $10 and $18 an hour, which is about half what Nissan employees make. Plus, the gap in benefits is wide. Back at home, Young pulls out a crumpled sheet of paper from the company that lays out the differences and pokes at the two columns with his finger.

"I build the same Infiniti SUV that Bob does," says Young, referring to a hypothetical Nissan worker. "Bob is able to lease a vehicle, I cannot. Long term disability? Bob gets that, I do not. I can provide this much for my family when I die. Bob can double his base. But Bob and I are on the same line, busting our butts."

More than anything, working for Yates means that Young can't live an adult life: Can't get a mortgage, can't say no to overtime, can't save for retirement, can't take a sick day, can't be confident he'll have a job next week or next month.

And Nissan, the first of many foreign automakers to set up shop in Tennessee, is leading a trend. Companies from Amazon to Asurion to Dell have outsourced their warehouses and call centers to the hundreds of staffing agencies that have cropped up in the region. Tennessee went from having 51,867 temporary workers in 2009 to 80,990 in 2012, according to the Bureau of Labor Statistics — while median wages have stayed flat. That accounts for nearly all of Tennessee's job growth since the recession, and makes up 3.1 percent of all jobs in the state, one of the highest in the nation.*

As a result of Nissan's hiring blitz over the past few years, Rutherford County has an unemployment rate that's the envy of the South. Tennessee's political leadership holds it up as a shining example of success in the global economy — the return of American manufacturing after decades of decline, and the future of work for those left jobless by globalization and technological change.

But in order to stay competitive with Nissan's plants all over the world, that work has come at a deep discount. And the communities it creates will be far from the picket fence idyll of decades past. Young's fiancee has to take care of almost everything for the four children they share from previous relationships, while Young builds cars.

"I don't see how they can make you work seven days a week," says Young's fiancee, quietly, eyes wide, before taking the kids out to pick up fast food for dinner. (She requested anonymity to protect the identity of the children.)

"If you don't want to do it, you clean out your locker and go somewhere else," Young tells her. "It's 'you make it work, so and so did it, so you can do it.' And that's the end of the story."

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To understand what Nissan means to Smyrna, you need to realize that Nissan built Smyrna. It was Tennessee's first major investment by a foreign automaker, and has since attracted a constellation of suppliers that support thousands more jobs. Since the plant opened in 1983, the town has grown from an 8,000-person whistlestop to a sprawling patchwork of parkways and subdivisions and strip malls, population 41,000. And in the plant's first two decades, getting a Nissan job was like winning the lottery.

"Most of the time, if I have a Nissan shirt on, people think I have a new Nissan parked outside," Young says.  "They think you're making good money." (In reality, he drives a 2001 Cavalier with 200,000 miles on it, and lives in a neighborhood of largely subsidized rentals on the other side of a trailer park from the highway.)

Then came Nissan's brush with bankruptcy in 2001 and a turnaround plan that involved new models and much lower production costs. It started introducing temps into front-office functions, and in 2007 and 2008 did two buyouts in quick succession, reducing its permanent workforce by about a third. As demand returned, it started to backfill production jobs with contractors, too — first on the "pick line," where workers run parts up to assembly, and then throughout the plant. The company won't say what proportion of its 7,000-person workforce is supplied by staffing agencies, but multiple reports from current and former employees indicate it's easily a majority.

It's hard to tease out the effect of the new temp employment base from that of the recession generally. But given the low unemployment rate, residents should have more disposable income. Instead, title-loan and check-cashing places have proliferated. It's not hard to see why: On his $32,000 a year salary, Young has to pay for rent, gas, food, and all the things school-age kids need to feel normal — soccer uniforms, dance classes and musical instruments. His fiancee used to help out, but stopped working because daycare cost more than what she was making as a bartender.

Young knows he could earn more doing maintenance at the plant, but that would mean working crazy hours, and never seeing his family — it took him three years to work up to a job on first shift, which starts early and gets out in the afternoon. "First shift, it gives you the opportunity to have a life," Young says. "You get to come home and sleep, you get to come home and put your kids to bed, you get to come home and eat with your family."

"It's like sacrificing watching your children grow up for the extra money just doesn't seem worth it," his fiancee adds.

Young has one hope of a better life at Nissan: The company says it only used the contractors to staff up quickly after the recession and wants to transition more of them into full-fledged Nissan positions once they prove themselves worthy (executives recoil at the word "temp," insisting that even the contract jobs are long term). But the process can seem painfully slow and elusive, requiring near-perfect attendance, a squeaky clean record, and a decent helping of luck. Young figures he may already have ruined his chance, having missed a few days to show up for court dates to fight for custody of his son. When his review came up for a Nissan job, his supervisor warned him the absences wouldn't look good.

"I'm like, 'what am I supposed to do? That's my son,'" Young says. "If he's got to let me go, he's got to let me go. All I got to do is miss that, and it looks like, what type of father am I?"

Besides, even for the few hundred a year that are elevated from Yates to Nissan, it's not the plum job their parents might have known — the benefits are less generous, the top-out pay not as high. That's the automotive standard now, pressured downward by wages in Mexico and even matched by the Detroit car companies whose unions have conceded to a two-tiered wage system, with newcomers starting out at a lower rate.

Perhaps to compensate, Nissan has done more in recent years to sprinkle assistance through Smyrna in other ways, helping to fund things like a stage for a summer concert that draws thousands of people.

Susan Gulley, a former Nissan temp herself who left to start an arts venue and cafe in the two-block-long historic downtown — which gets help from Nissan too — likens the strategy to a family that's cut back on big expenses in favor of smaller, feel-good indulgences.

"Sometimes when you're limited in your budget because of recent changes, you do more family oriented things," she says. "You go on picnics, you spend less money but you spend more quality time together. It's not that expensive to get involved, and they know a little bit of help could go a long way."

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Despite Smyrna's frustration with outsourcing, Nissan workers have twice rejected one thing that might have been able to slow its rise: a labor union.

The United Auto Workers, weakened by the flow of auto jobs to the unorganized South, held elections at the plant in 1989 and 2001. The last one failed by a 2-1 margin, after an intense company campaign against the union, including a personal video message from CEO Carlos Ghosn that beamed out to all workers warning them that the company might invest elsewhere in the future if the plant were to organize.
Ten years later, the UAW started trying again, figuring that the worsening conditions might provide an opening. Unlike with Nissan's plant in Canton, Miss. — where a community group led by local ministers has organized under the slogan "Lead us not into Temp-nation" — the campaign has gained little traction.

To learn why, talk to Republican state representative Mike Sparks. He grew up in town, worked in the Whirlpool and Coca Cola plants nearby, and was thrilled to land a job on the Nissan assembly line, where he stayed for eight years before starting his own used car sales business. He identifies with the working man — "I don't feel a calling to speak up for the person with the country club membership," he likes to say, in a stream of banter studded with biblical references — and thinks using temp labor is a betrayal of Nissan's Kaizen management philosophy of "continuous improvement."

"If you've got somebody and they're not part of the family, part of the team, how do you get things equally yoked?" Sparks asks, after pulling out a book on Kaizen, which Nissan drilled into employees while he worked there. "If you've got two oxen pulling in one direction, you know what's gonna happen, there's a old term my dad used to use, it's called cattywompus. Cattywompus is like crooked, which will adversely affect quality."

What's more, Sparks thinks depressed wages are taking their toll on the local economy. "If we continue on the path we're on, we're going to going to see more apartments, more free and reduced lunch, more title loan businesses," Sparks says.

But a union? Gracious no — Sparks is convinced Nissan would pick up stakes and leave Smyrna altogether, to say nothing of other automakers that might be interested in Tennessee, which is why he also opposed the union's recent failed campaign at the Volkswagen plant in Chattanooga. "If UAW gets a foothold, they'll go to Alabama, they'll go to Georgia, they'll go to Mississippi," he says.

Instead, Sparks wants to make future monetary assistance depend on better behavior — the state built the roads to the plant for Nissan back in the 1980s, and has given the company more than half a billion dollars since 2000 in subsidies and tax incentives, according to the watchdog non-profit Good Jobs First. So, perhaps no more training grants or new state-subsidized infrastructure.

But that's probably a non-starter in a Republican-controlled legislature that just last month threatened to withhold tax incentives from Volkswagen if its plant in Chattanooga went union — the likelihood of any legal curbs on Nissan's outsourcing looks slim. Now, it's just the norm, says Bill Canak, a professor of sociology at Middle Tennessee State University, just down the road in Murfreesboro.

"It sets a standard in the labor market, if employers can say well Nissan's only paying that, and they're a world-class organization."

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There is small corps of union supporters within the plant. Like many in the pro-UAW camp, Chris Young is there because unions are a known quantity. His mother worked for General Motors her whole life, and raised him in upstate New York comfortably on her single salary. Once, he asked in his annual luncheon — one of the few opportunities employees have to ask questions of upper management — why the company's plants are unionized everywhere other than the U.S. "It works there," the answer came. "It's different."

"To myself I'm like, 'we make Nissan vehicles,'" Young remembers. "People make them. It's not different."

Young knows that speaking up about the union is probably the other thing that's already nixed his chance at a Nissan job — but also that the company wouldn't want to make him a martyr by firing him. Still, his fiancee tries to hide his UAW shirt sometimes before he goes to work. "I admire the fact that you won't let them bully you, but at the same time, we depend on that," she says.

And she knows how most Yates workers feel about the idea. While she was bartending in town, where lots of Yates workers have settled for the low cost of living, she would ask workers what they thought of the idea of the union. "They were like, you can't even speak union, they'll walk you to the door," she says.

Sometimes, Young thinks about going to work at the General Motors plant just down the road in Spring Hill, which is unionized. But even there, he’d be starting with no seniority, and probably have to take a shift that would give him even less time with his family. So instead, he’ll stay at Yates, for as long as his body holds up, while the 20-somethings around him flush in and out.

That's what so much of the modern manufacturing economy looks like: Good enough money to live on, but without the other comforts that used to come with a middle-class job, and no reason for an employer to offer them up.