As jobs go overseas, a city struggles to reinvent itself
By Kathy Kiely
USA TODAY
READING, Pa. -- The stately stone buildings that line the main street of this city are wan reminders of the days when Reading's textile mills made it the silk stocking capital of the world. Today, their dignified facades hide behind the garish signs of discount shops that occupy almost every storefront.
This is a community that has seen its best efforts to make the transition to a high-tech economy foiled by the harsh realities of the global marketplace. Reading, located in a state whose 21 electoral votes are a prime target for President Bush and his Democratic challenger, John Kerry, is now a symbol of one of the most controversial topics on the campaign trail: the ''outsourcing'' of jobs overseas.
Last year, 3,000 of the best jobs in town disappeared when Agere Systems closed its factory on Reading's north side. It made silicon chips and telecommunications equipment and was the high-tech pride of this old industrial city. Agere officials said the dot-com bust forced their hand. But the jobs won't come back when the economy does: Like many other high-tech companies, Agere is moving production overseas.
Reading is the seat of Berks County, which usually elects Republicans, but not always; Judith Schwank, the county commission chairman, is a Democrat. In 2000, Bush lost Pennsylvania by 5 percentage points, but he won Berks by 12,000 votes. The people here are conservative and hard-working. They don't often complain about the ups and downs of economic cycles, as familiar here as the rise and fall of the surrounding Appalachian Mountains.
Early in the last century, Reading was the silk-stocking capital; then nylon was invented. It used to be a textile-making center; then the mills moved south. It was the nation's outlet-shopping mecca; then the stores that sold the textile mills' ''slightly irregular'' goods migrated to suburban shopping malls.
This year, it's part of an unfolding political battle over jobs and the economy. Bush has visited Pennsylvania 26 times in the past three years, more than any other state except Texas, his home. Earlier this month, on a visit to Allentown, 30 miles northeast of here, Kerry commiserated with one of Agere's laid-off workers.
Unease about the economy could work to Kerry's advantage in Pennsylvania. Even though the state's unemployment rate is lower than the national average (5.3% compared with 5.6% nationwide in January), Terry Madonna, director of the Keystone Poll, says voters rank the economy as the most important issue by historically high margins. It was the top issue for 35% of those responding to his poll in February, compared with 15% for education, the No. 2 issue.
Darryl Boyer, who lost a $50,000-a-year management job when the Agere plant closed, says he recently changed his voter registration from Republican to Democrat. Frank Cerra, who lost a $75,000-a-year engineering job, says he never used to vote. But he says he will this year: ''I'll be registering and voting Democratic.''
Cerra, 44, has two degrees in engineering, including a master's from Rensselaer Polytechnic Institute, and 17 years' experience at high-technology firms. On paper, he looks like a 21st-century success story.
Instead, he's a regular at the Berks County unemployment office. ''I see him more than I see my boss,'' says Pat Marr, who works there. Cerra shows up to check out job and training opportunities. He's willing to move, but he's had no callbacks. ''I try not to get discouraged,'' he says. ''But I've sent out 1,000 résumés, easy.''
No jobs are immune
Outsourcing is a new name for a long-standing phenomenon: the movement of jobs from the USA to countries where wages, benefits and the cost of living are much lower. In the 1970s and 1980s, heavy manufacturing jobs went to other countries by the tens of thousands. The result was cheaper goods for U.S. consumers and less pollution in many of the nation's industrial cities. Economists who backed the trend envisioned a new ''knowledge economy'' in which well-trained Americans would become the world's designers, innovators and administrators. The dirty work would be sent overseas.
But now, some of the jobs that were supposed to be the nation's bridge to a cleaner, brighter, better-paid future are starting to migrate, too. ''Knowledge jobs are the latest example of the trend,'' says James Alberg, an attorney in Washington, D.C. His firm, Shaw Pittman, helped pioneer outsourcing deals for corporate clients. ''It's part of the natural progression.''
Fueling the trend: the opening of previously closed economies such as India's and those of the former Soviet bloc countries; massive reductions in long-distance telephone rates and the explosion of high-speed Internet connections. Now the work of accountants, engineers, architects and radiologists can be moved overseas.
''There are no types of jobs that are immune from global competition,'' says Bruce Mehlman, executive director of the Computer Systems Policy Project, an association of U.S. industry executives.
No official statistics exist on how many U.S. jobs have gone overseas; 1.9 million since 1994 is the estimate of the Economic Policy Institute, a liberal think tank. Forrester Research, a firm that tracks technology, predicts that 3.3 million white-collar jobs will head overseas from 2000 to 2015. Several organizations, including the Institute of Electrical and Electronics Engineers and the AFL-CIO, are urging the government to begin tracking the trend. There are signs that it's beginning to accelerate among white-collar workers.
The phenomenon is being felt nationwide in a range of professions, from low-skill ''call center'' positions in central Florida to top-dollar computer jobs in California. Dwight Dixon, a mainframe programmer outside Los Angeles, says he lost a $110,000-a-year job when it was moved to India. His unemployment benefits ran out last month. ''I'm 54 years old, and I'm virtually starting over,'' he says.
Much high-tech manufacturing is headed to countries where wages are lower. India, where Agere has a design center, is one high-tech jobs magnet. But so are Taiwan and Singapore, where some of Agere's silicon chips are made, as well as Malaysia, South Korea, Vietnam, Russia and former Soviet bloc countries.
Not to take advantage of those countries' pools of highly educated, relatively low-wage workers would be foolish, Agere officials say. ''Our customers are very demanding,'' says John Harris, an engineer and marketing manager at Agere's Allentown headquarters. ''They're under intense pressure to deliver extremely high quality at extremely low cost. That pressure comes right back on us.''
Outsourcing has produced benefits for consumers that few politicians want to take away: lower prices. ''When the manufacture of computers became a global operation, prices fell,'' Mehlman says. That has produced economic benefits for families and small businesses that can now afford them.
'A huge psychological blow'
But in a community like Reading, the pain is far more apparent than the progress. Back when the big telecom factory was owned by Western Electric, not Agere, Sally Quick became its third female technician. ''I loved that job,'' she says. She worked on switching systems for transoceanic phone calls. She knows how to weld with a laser. But today, Quick is training for a job in tourism because she can't find one in telecommunications.
In Muhlenberg Township, where the Agere plant was, the average annual salary has dropped from $42,000 to $31,000 during the past two years, township manager Randall Boone says. The local school board, which is facing the loss of nearly $500,000 a year in property taxes, is suing to keep Agere from having the mothballed plant reassessed. ''I'm not the one who caused the value to go down,'' says school board president Mark Nelson, a former Agere engineer.
Reading's civic leaders did everything they could to nurture their piece of the high-tech economy. In 2001, Agere's production lines were so overburdened that three community colleges won a $250,000 state grant and developed a special curriculum just to train people for Agere jobs.
Today, Reading is trying to recover. Agere's closing was ''a huge psychological blow,'' says Schwank, the county commission chair. Mayor Tom McMahon has commissioned a Harvard University study to help map the city's economic future. Tom McKeon, Berks County's economic development director, touts the area's central location: 139 million East Coast residents live within a 150-mile radius.
Last year, Cabela's, an outdoors outfitter, put a 250,000-square-foot store here that employs nearly 650. And there are home-grown examples of companies that have innovated their way out of obsolescence: Arrow International, a medical-equipment manufacturer that employs 900 in Reading, grew out of a textile company that began refining its needles for surgical use.
But the notion that those companies will make up for the loss of Agere's payroll anytime soon is ''happy talk,'' McMahon says. The Reading mayor, 65, a retired engineer, doesn't indulge in any as he assesses the pros and cons facing communities like his in a global marketplace.
''I don't doubt that the standards of living we've been enjoying, probably at the expense of the rest of the world, will decrease,'' says McMahon, who worked as a Peace Corps volunteer in East Pakistan (now Bangladesh) as a young man. ''We've enjoyed the fruits of cheap labor for so long that we want it both ways: We want good jobs and good wages, and we want everything cheap.''Cover storyCover story |
