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May 2, 2004
Job losses at two Seacoast manufacturing companies this past week is disheartening news amid reports of a recovering economy. It is also a sign of challenges ahead for the local, regional and national economies.
Economists, politicians and optimists may suggest the closure of the Flextronics International Ltd. plant at Pease International Tradeport, and the cutting of 50 jobs from Apogent Technologies Inc. in Portsmouth, represent the cyclical nature of economy. But there is something far more troubling going on.
Humor columnist Dave Barry, in his column on Page F2 this week, writes about outsourcing and how America went from a manufacturing economy to a service economy, and how the latter is now rapidly losing ground as well. Barry went so far as to suggest, "In a few years, the only industry left in the United States will be ‘reality’ television."
That may be the humor of a rubber sword, but for sure the nation’s economy is and will continue to suffer from outsourcing. The primary impact is the loss of well-paying jobs, but beyond that is the greater challenge of the increasing inability to have a diversified economy of white collar and blue collar jobs within manufacturing and service and retail industries.
The Seacoast is a microcosm of economic trouble.
Flextronics officials said the decision to shut down the Pease plant was part of a "consolidation and integration plan to optimize our operations and footprint." Flextronics, the world’s largest contract manufacturer, operates plants on six continents including significantly lower-cost operations in China, Poland and Mexico. These manufacturing outposts were once limited to building basic products such as the innumerable plastic goods that line our Wal-Marts. Today however, foreign manufacturing plants are adept at manufacturing everything from Sony X-Boxes to cell phones to microchips, routers and switches.
Another fact that undoubtedly contributed to the closure of the Flextronics plant was a lack of manufacturing business from area companies. The vision of a vibrant, self-sustained regional economy of the e-Coast never materialized with the collapse of dot-com companies and now the latest blow to efforts to establish a manufacturing industry at Pease. Remember, Celestica, one of Flextronics’ chief competitors, left Pease entirely in 2002, vacating a 206,000-square-foot building it moved into two years earlier with great fanfare.
Flextronics’ closure will cut some 300 jobs from the area and will also lead to the shifting of manufacturing contracts and their dollars to other parts of the nation and world. Enterasys Networks of Rochester was a primary contractor with Flextronics, and other local companies like Exavera Technologies Incorporated and Pannaway Technologies Incorporated will now lack the option of local manufacturing. This will further damage the Seacoast’s economic engine.
The sky may not be falling because of the latest job losses, but they do suggest a need to analyze the future of our economy, first at the regional level and then at a national level. The boom of the 1990s came as jobs were created across the spectrum of employment. True and lasting prosperity will not be achieved by additional service-industry jobs alone, especially as our cost of living dwarfs the level of pay within such an industry. While we should be ever grateful for the strength of our tourism economy, it is in no way self-sustaining as it relies on the dollars generated outside of it.
Our comparably expensive cost of living contributes to our fading manufacturing sector. We may never be able to compete costwise with third-world manufacturing outposts, which places a tremendous emphasis on developing new technologies and industries, especially those that employ provide long-lasting well-paying jobs to Americans. The reality TV industry can only grow so much.
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