U.S. town pays steep price for free trade

CELINA, TENN. — CELINA, Tenn. - For decades in this once-bustling town, aside from hunting and fishing, one thing was certain: OshKosh B'Gosh.

The clothing factory had employed generation after generation, from high school through old age. But in 1994 came the North American Free Trade Agreement, and soon OshKosh closed its plants here in favor of cheaper operations outside the United States.


Twelve hundred people lost their jobs. The county's unemployment rate shot up to 35 percent (worse than the national rate during the Great Depression.) Charles and Mary Ann Hamilton had to close Hamilton's Department store - a fixture for 34 years - because spending money dried up.

"It killed this town," said Johnny Crowder, whose used car business since then is off 60 percent, the worst it's been in 40 years. "We had all our eggs in one basket and when they left, they took the basket."


The troubles in Celina (pop. 1,493) are repeated throughout the rural South, where apparel and textile towns have been abandoned by their main employers.

While the migration of low-skilled jobs to other countries began decades ago, the problems have been particularly pronounced since the North American Free Trade Agreement (NAFTA) took effect in 1994, giving companies new incentives to move production plants across the border. Since then, nearly a half-million jobs have been lost in the apparel and textile industries alone.

Overall, the trade agreement's effect on the U.S. economy is hard to judge. Advocates and opponents continue to debate the score, each armed with their own statistics on trade, investment and jobs.

Proponents say the agreement has raised the continent's productivity by eliminating trade barriers across borders, and consumers pay less than they otherwise would for certain items because companies followed cheaper labor to Mexico. Critics say the agreement served mostly to boost company profits at the expense of U.S. jobs.

NAFTA was never intended to make everyone a winner, said Matt Murray, head of the economics department at the University of Tennessee at Knoxville, but rather to increase the size of the economic pie, with the three slices belonging to Canada, Mexico and the United States. "What NAFTA is silent on is who gets a bigger and a smaller slice of the pie," he said. "Countries may lose, and, within countries, people may lose as well."

In places such as rural Tennessee, market forces began eating away at the supply of low-skilled jobs long before NAFTA was signed, Murray said; the trade agreement just speeded up the erosion.

Bigger decisions ahead

Whatever role it played, NAFTA and its effects are being viewed by some analysts as a tame preview of what's ahead in a proposal to bring China into the World Trade Organization, scheduled to be considered by Congress this week.


The WTO agreement, which is expected to spur massive investment in China, would open a much greater market - 1.3 billion Chinese - and "will look like NAFTA on steroids," writes Robert Scott, an economist at the Economic Policy Institute, a labor-backed research center.

While the robust national economy has helped many urban areas shift displaced workers into other jobs, it has masked the difficulties still felt in places such as Celina, where low-skilled work forces are further hampered by geographic isolation.

Clay County, population 7,000[scr: : 7,268 ]-NT, where Celina is the county seat, is a pristine spot 97 miles northeast of Nashville on the Kentucky border. The main roads ribbon up and down hills, cross rivers that feed Dale Hollow Lake and wander past clusters of grazing cows. "Home of the finest people in the world," the welcome sign says.

Since it opened its Celina plant in 1953, the Wisconsin-based clothing maker had been the town's economic foundation, employing husbands and wives and later their children. Christmas parties, with their country bands and big Southern meals, had the feel of extended family gatherings. Even the boss, Kenneth Masters, was a hometown kid who worked his way up from bundle boy in 1962 to vice president for manufacturing.

So it was difficult for people here to imagine that OshKosh would desert them, even though the labor-intensive apparel industry had long ago begun its migration in search of cheaper labor - the same thing that brought it to the South from the North in the first place.

"People thought OshKosh would be there forever," said Liz Boles, who worked there for 20 years. "They got fooled."


Then, in 1996, global trade caught up with Celina. Three OshKosh plants in Clay County closed, with production transferred to Honduras and to Mexico, where the company contracted with local manufacturers. While the move probably would have happened at some point anyway, said Masters, NAFTA speeded up the process by making it impossible to compete without cheaper labor.

Two smaller apparel companies folded for similar reasons, wiping out another 230 jobs. The county's unemployment rate, previously so low it was difficult to find replacement workers, soared.

Beulah McClain, 81, remembers the day. Then 77, she had worked "42 years three months two days" for OshKosh, which fed and clothed her nine children. Rumors had been rampant for months. But the night before the announcement, McClain's granddaughter, who lived near the plant, called to say the supervisors, known as "floor ladies," had been kept after work and had emerged crying.

"The whole county went back 40 years - in three weeks. There were no jobs, no money," said Beulah McClain, who misses the people she used to see at work. "You go to town now and there's nobody over there. There's nothing to be over there for."

With the help of federal funds designed to help retrain workers after NAFTA-related job losses, people went back to school for GEDs, cosmetology licenses, machinist degrees. But they couldn't use them in Celina.

Some people moved away. Others began commuting an hour each way to Cookeville, or two hours each way to Nashville. They began to shop where they worked.


Today, 3 1/2 years after OshKosh closed its plants, leaving only a small finishing operation with 150 workers, the county's unemployment rate is 9 percent, more than double the national rate, according to state officials.

The once-jumping main square, anchored by an 1870 brick courthouse made from the land's own clay, is pockmarked with vacant buildings, empty of the hundreds of workers who once filled the streets and shops during their breaks from work.

One after another, businesses went under - dry goods shops, restaurants and finally Hamilton's department store, which had clothed townspeople for 34 years.

"We don't have anything in Celina. If you need something to wear you can forget it," said Gale Eads, a longtime OshKosh worker who now drives 39 miles to work an 11 p.m.-to-7 a.m. shift.

Effect on families

The plant closings meant cataclysmic changes in family life, especially in cases where husband and wife lost jobs. Dale and Jerry Short were out of work for a year while they went back to school - Dale for a GED, Jerry to renew his training as an electrician.


Their 10-year-old son, Dusty, who had been an average pupil, brought home straight F's, which the school psychologist attributed largely to insecurity about his parents' job loss. Homework, completed with his parents' help, sat in his backpack because he couldn't be bothered turning it in. He still hasn't regained his motivation, said his mother, who works as office manager at an apartment building.

"The big shots in Washington, they don't care about small places like this," Dale Short said. "They push for people to get off welfare and then they take the jobs away."

The closings set off alarms for public officials and business leaders here, who realized they had leaned on the apparel industry for decades when they should have diversified. A new industrial board and a group of business, government and civic leaders are working to promote the area for manufacturing and tourism.

Nearby Dale Hollow Lake, with its wooded banks and rustic cabins, draws 2 million tourists a year and boasts the world record smallmouth bass and rainbow trout catches. A few new factories, including one that makes canisters for air bags and another that makes truck bumpers and grilles, have opened with relatively few jobs but plans to expand.

The best spin on the county's prospects comes from Luke Collins, the energetic 30-year-old county executive who wears so many hats that he performs marriage ceremonies. (He's so full of enthusiasm that once, as an inexperienced pilot, he flew to Washington to plead for federal help and caused a panic at Ronald Reagan Washington National Airport when he misinterpreted landing instructions and came close to a couple of jumbo jets.)

In a tiny run-down office in the historic courthouse, surrounded by boxes, a vacuum cleaner and a big board on the wall with a list of goals, he talked about the virtues of Clay County, where his family has lived since before the Civil War. "There's nothing like biscuits and gravy at Granny's," he said.


The days of a 1,000-person plant are probably over, Collins says; the goal is to get 20-to-50-person plants. For the tourists and families, he wants a miniature golf course, bowling alley, playhouse and movie theater.

The crisis has attracted state and federal aid, resulting in economic development plans and the retraining of workers, some of whom earn more now, though the tradeoff is a long commute.

"We're not going to stay down forever," he said, handing a reporter a thick stack of brochures to please pass around in Baltimore. "We're going to fix our unemployment problem and, once that's fixed, our quality of life."

'Canary in the coal mine'

Other parts of the country, including Ohio, Wisconsin and Michigan, have retooled with more success after massive NAFTA-related hits in the auto and electronics industries. They have shifted workers into other jobs (though not necessarily better ones), said Charles McMillion, chief economist at MBG Information Services in Washington. But as with many rural communities, efforts to recover in Clay County have been hindered by geographic isolation and poor highway access.

"These layoffs are the canary in the coal mine," said Patrick Woodall at Economic Policy Institute, the labor-backed think tank. "We have the longest and most prosperous period in American history ... but it's not being shared evenly."Here amid this incredible prosperity you have pockets of urban and rural poverty triggered by the trade deals that encourage CEOs and shareholders and owners to move plants overseas and replace [workers] with labor from overseas."


The question is how to help communities foster development, Murray said. But it may be asking too much in places such as Clay County, 40 miles from the nearest interstate, and where a curvy two-lane highway will deter manufacturers needing to haul products in giant trucks.

A broader question, economists say, is what happens when the economy weakens and can no longer absorb the loss of jobs and investment? What happens when China lures even more foreign investment?

Numbers tell the story, says McMillion of MBG, a NAFTA critic. "Mexico has 100 million people and China has 1.3 billion people. So China is 13 NAFTAs."