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N.C. job losses tied to China trade
Nearly 80,000 vanished since 2001, it says
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Published: July 30, 2008
Manufacturing, both legacy and high-tech, has borne the brunt of North Carolina's job losses since an open-door trade policy with China began in 2001, according to a report by a nonpartisan research group.
The Economic Policy Institute, in a study released today, said that from 2001 to 2007, North Carolina lost a net total of 79,800 jobs as a result of trade with China, part of an estimated 2.3 million nationwide. The state's job loss was ranked eighth in the nation. About 75 percent of North Carolina's displaced jobs, or 59,867, were in manufacturing, according to the report, titled "Two Million and Counting: Growing China Trade Deficits Mean Job Losses in Every State."
"Trade gaps with China have exacted a heavy toll from working North Carolinians in the form of lost jobs, wages and opportunities," said John Quinterno, a research associate at the N.C. Budget & Tax Center, a nonprofit group based in Raleigh.
"Workers lose when competition destroys jobs in import-competing industries," Quinterno said, "and workers are forced out of the labor force or into lower-paying local industries. Nondisplaced workers also lose when low-wage foreign competition serves to hold down American wages."
China's admission to the World Trade Organization, which took effect in 2001, was backed by the Bush and Clinton administrations.
The admission gave China virtually unfettered access to the U.S. market, making it easy for Americans to buy cheap Chinese products. The agreement also was supposed to give U.S. exports greater access to China that hasn't materialized.
Lower labor costs in China, the pegging of the Chinese yuan to the U.S. dollar, and lax environmental regulations also have helped hasten the decline of domestic manufacturers. There was little surprise, economists said, that apparel and textiles manufacturing were the industry sectors in North Carolina most affected by Chinese trade. Those sectors accounted for 27,013 lost jobs.
Next on the list, however, was computer and electronic products at 8,064 jobs, including 4,589 in computer and peripheral equipment, and 2,394 in semiconductor and other electronic components.
Furniture and fixtures ranked third at 7,781 lost jobs.
"The industrial trends show that China is aggressively moving away from low-wage, low-value-added industries in favor of more advanced technology products," Quinterno said.
"China no longer wants to compete for the textile jobs found in communities like Hickory. It wants to compete for the high-skill jobs in Research Triangle Park."
Jerry Epperson, a furniture analyst at Mann, Armistead & Epperson in Richmond, said he thought that furniture-job losses in the study were probably under-reported. He said that statistics from Hardwood Review Weekly found that 260 residential-furniture plants in the United States have closed since 2000.
"North Carolina lost the most by far -- closing 112 plants," Epperson said. "Also, I would be modestly concerned by the assumption the problem was only China. I would use Asia, not just China."
Economists said that the loss of jobs connected to the North American Free Trade Agreement tends to resonate more with North Carolinians than those lost to China because NAFTA's transfer of apparel and textiles production from the United States has been going on since 1994.
"We certainly know that North Carolina has lost labor-intensive jobs ... to low-cost, offshore areas such as China," said Katherine Neal, a spokeswoman for the N.C. Commerce Department. "The state has vigorously sought support from Washington to ensure appropriate resources to assist displaced workers, and Commerce has worked closely with the N.C. Community College System, the N.C. Employment Security Commission and local work-force boards to get these workers the education, training and other services they need to get re-employed."
Neal said that China "has become a major economic partner for North Carolina businesses and products, both through exports and foreign direct investment."
"Our state exports a variety of goods and services to China, including electrical machinery, machinery, pharmaceutical products and wood products," Neal said.
Officials in the campaigns of Sen. Elizabeth Dole, R-N.C., and Kay Hagan, her Democratic opponent, say they expect U.S. trade policy to be a major issue.
"We hope that trade does become a campaign issue because Sen. Dole's record on fighting for North Carolina industries is exemplary," said Hogan Gidley, Dole's press secretary.
"Even the National Council of Textile Organizations said Dole's action on China safeguards ‘helped preserve more textile jobs in North Carolina than any other action that the senator could have taken.'"
Hagan has criticized Dole for supporting and voting for free-trade agreements despite the effect on North Carolina jobs.
"Time and again, it's clear that Elizabeth Dole's experience in Washington is just another way of doing business that puts special interests ahead of North Carolinians," Hagan said Friday.
■ Richard Craver can be reached at 727-7376 or at rcraver@wsjournal.com.
The China factor
North Carolina's manufacturing sector has taken the biggest hit in jobs in relation to China's surge in global trade.
Industry - Job losses (2001-07)
Textiles and fabrics - 14,338
Apparel and accessories - 11,372
Computer and electronic products - 8,064
Furniture and fixtures - 7,761
Plastics and rubber - 3,840
Electric equipment, appliances and components - 3,681
Administration and support, waste management, and remediation services - 3,617
Professional, scientific and technical services - 3,343
Source: Economic Policy Institute
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