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Saturday, December 6, 2003

Factories move to survive


Huffy's journey from Ohio to China typical of global trend

By Greg Barrett
Gannett News Service

[IMAGE] Mercer County Commissioner Jerry Laffin works on his soybean farm in Celina, Ohio.
(Gannett News Service photo)
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 out.

Dozens, maybe hundreds, removed their shoes. They walked in their socks and drove off the Huffy property for the last time.

Rows of shoes sat neatly on the asphalt. The message: Try filling these.

Huffy did.

Five years ago, after 44 years in 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. The workers there earned about half as much as the American workers. Two years ago, Huffy 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 gold-plated American flag lapel pins worn by many lawmakers. Wal-Mart no longer bothers touting its American-made merchandise.

"More than 80 percent of the toys, bikes and Christmas tree ornaments are manufactured in China," said Wal-Mart spokeswoman Melissa Berryhill.

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.

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, where 800 workers live for free in dorms and earn 25 cents to 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 up against (free trade). We were fighting the Asian markets."

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.

"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. said that in 1998 the company needed to cut costs at the Celina plant by 35 percent in order to compete with 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.

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.

Graber made $1.2 million in 2000.



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