Changing Face of U.S. Manufacturing
Contract Workers Do the Same Jobs, but Cost Less Than Company Employees
New vehicles undergo final inspection before rolling off the assembly line at the Nissan manufacturing facility in Smyrna, Tenn., on Jan. 24. Illustrates MANUFACTURING (category f), by Lydia DePillis © 2014, The Washington Post. Moved Friday, March 14, 2014. (MUST CREDIT: Bloomberg News photo by Luke Sharrett)
A line technician grinds down the edges of a metal vehicle frame on the assembly line at the Nissan manufacturing facility in Smyrna, Tenn., on Jan. 24. Both Nissan employees and contract workers work at the plant, a growing trend in manufacturing. Illustrates MANUFACTURING (category f), by Lydia DePillis © 2014, The Washington Post. Moved Friday, March 14, 2014. (MUST CREDIT: Bloomberg News photo by Luke Sharrett)
Smyrna, Tenn. — Chris Young’s pain is in his wrists. It started about a year ago — at first a numbness, and then sharp pains, all the way up to his elbow. He’d injured the left wrist in a long-ago motorcycle accident, but it acted up again after he spent months moving heavy pieces of metal, again and again, at Nissan’s manufacturing plant in Smyrna, Tenn. Managers moved him off that part of the line. Still, the ache persists.
February was a particularly painful month for Young. Nissan added 10-hour shifts on Saturdays and Sundays in its rush to fill orders before the end of the fiscal year on March 1 — that meant getting up at 3 a.m. for a 45-mile commute to the plant, for weeks on end. A couple of years ago, Young crashed his car after dozing off at the wheel during a similarly intense stretch at work.
“You’re so exhausted from working seven days a week, you’re dependent on some drug to stay awake, or dependent on some drug to sleep, or for pain,” he says, on an L-shaped couch at the home he rents in Columbia, Tenn. His 37-year-old body is powerful, built like a football player’s, but no longer impervious. “That’s the most common thing people are addicted to. And everybody I work with has some type of pain, whether it’s hands, fingers, back, feet — something.”
Young doesn’t actually work for Nissan — he works for Yates Services, an in-house contractor that has hired thousands of people during the past few years to ramp up production as U.S. auto sales take off again. It’s a big difference.
Yates is like a company within a company, with separate bulletin boards and rules and procedures. At a plant where workers have resisted unionization, the bona fide Nissan employees are easily recognizable in logoed shirts, which Yates workers don’t receive.
And the disparity isn’t just symbolic. Yates pays $10 to $18 an hour, which is about half what Nissan employees make. Plus, the gap in benefits is wide. At home, Young pulls out a crumpled sheet of paper from the company that lays out the differences.
“I build the same Infiniti SUV that Bob does,” he says, referring to a hypothetical Nissan worker. “Bob is able to lease a vehicle; I cannot. Long-term disability? Bob gets that; I do not. I can provide this much for my family when I die. Bob can double his base. But Bob and I are on the same line, busting our butts.”
On that line, as plant manager Randy Knight sees it: “My managers don’t look at a Nissan person and a contract worker any different. It’s people.”
Working for Yates pays the bills but also puts some hard limits on Young’s life: He can’t get a mortgage, can’t say no to overtime, can’t save for retirement, can’t take a sick day, can’t be confident he’ll have a job next month.
And Nissan, the first of the foreign automakers to set up shop in Tennessee, is leading a trend. Companies such as Amazon, Asurion and Dell have outsourced their warehouses and call centers to hundreds of staffing agencies that have cropped up in the region. Tennessee went from having 51,867 temporary workers in 2009 to 80,990 in 2012, according to the Bureau of Labor Statistics — while median wages have stayed flat. That accounts for nearly all of Tennessee’s job growth since the recession, and makes up 3.1 percent of all jobs in the state, one of the highest levels in the nation.
As a result of Nissan’s hiring blitz over the past few years, Rutherford County’s unemployment rate is the envy of the South. Tennessee’s political leadership holds it up as a shining success in the global economy — the return of American manufacturing after decades of decline, and the future of work for those left jobless by globalization and technological change.
But to stay competitive with Nissan’s plants all over the world, that work has come at a deep discount. And the communities it creates will be far from the picket fence idyll of decades past. Young’s fiancee takes care of almost everything for the four children they share from previous relationships, while Young builds cars. She wonders why he has to work seven days a week.
“If you don’t want to do it, you clean out your locker and go somewhere else,” Young says. “It’s ‘You make it work, so-and-so did it, so you can do it.’ And that’s the end of the story.”
Nissan built Smyrna. It was Tennessee’s first major investment by a foreign automaker, and has since attracted a constellation of suppliers that support thousands more jobs. Since the plant opened in 1983, the town has grown from an 8,000-person whistlestop to a patchwork of parkways and subdivisions and strip malls, population 41,000. In the plant’s first two decades, getting a Nissan job was like winning the lottery.
“Most of the time, if I have a Nissan shirt on, people think I have a new Nissan parked outside,” Young says. “They think you’re making good money.” (He drives a 2001 Cavalier with 200,000 miles on it.)
Then came Nissan’s brush with bankruptcy in 2001 and a turnaround plan that involved new models and much lower production costs. It started introducing temporary workers in front-office functions, and in 2007 and 2008 held two buyouts in quick succession, reducing its permanent workforce by about a third. As demand returned, the company started to backfill production jobs with contractors, too — first on the “pick line,” where workers run parts up to assembly, and then throughout the plant. Nissan won’t say what proportion of its 7,000-person workforce is supplied by staffing agencies, but multiple reports from current and former employees indicate that it’s a majority.
It’s hard to tease out the effect of the new temporary employment base from that of the recession generally. But given the low jobless rate, one would expect residents to have more disposable income. Instead, title-loan and check-cashing places have proliferated. It’s not hard to see why: On his $32,000-a-year salary, Young pays for rent, gas, food and all the things school-age kids need to feel normal — soccer uniforms, dance classes and musical instruments. His fiancee stopped working because day care cost more than what she made as a bartender.
Young knows he could earn more doing maintenance at the plant, but that would mean working odd hours and seeing his family less — it took him three years to work up to a job on first shift, which starts early and ends in the afternoon. “First shift, it gives you the opportunity to have a life,” Young says. “You get to come home and sleep. You get to come home and put your kids to bed. You get to come home and eat with your family.” Young has one hope of a better life at Nissan: The company says it used the contractors only to increase its staff quickly after the recession and wants to transition more of them into full-fledged Nissan positions once they prove themselves worthy (executives recoil at the word “temp,” insisting that even the contract jobs are long-term).
“They don’t understand yet the big picture,” Knight says of community members who are critical of the company. “We don’t go out in the public and say we’re in the process of converting hundreds of people over to Nissan. They don’t know that.”
But the process can seem painfully slow and its promise elusive, requiring near-perfect attendance, a squeaky-clean record and a decent helping of luck. Young figures he may have ruined his chance, having missed work to show up for court dates to fight for custody of his son. When his review came up for a Nissan job, his supervisor warned him that the absences wouldn’t look good. “What am I supposed to do? That’s my son,” Young says. “If he’s got to let me go, he’s got to let me go. All I got to do is miss that, and it looks like, what type of father am I?”
Besides, even for the few hundred a year who are elevated from Yates to Nissan, it’s not the plum job their parents knew — the benefits are less generous, the top-out pay not as high. That’s the automotive standard now, pressured downward by wages in Mexico and even matched by the Detroit car companies whose unions have conceded to a two-tiered wage system, with newcomers starting out at a lower rate.
Perhaps to compensate, Nissan has done more in recent years to benefit Smyrna in other ways, such as funding a stage for a summer concert that draws thousands of people.
Susan Gulley, a former Nissan temp who left to start an arts venue and cafe in the two-block-long historic downtown — which gets help from Nissan, too — likens the strategy to a family that has cut back on big expenses in favor of smaller, feel-good indulgences.
“You go on picnics, you spend less money but you spend more quality time together,” she says. “It’s not that expensive to get involved, and they know a little bit of help could go a long way.”
Despite Smyrna’s frustration with outsourcing, Nissan workers have twice rejected one thing that might have been able to slow its rise: a labor union.
The United Auto Workers, weakened by the flow of auto jobs to the unorganized South, held elections at the plant in 1989 and 2001. The last one failed by a 2-to-1 margin, after an intense company campaign against the union, including a personal video message from chief executive Carlos Ghosn that beamed out to all workers warning them that the company might invest elsewhere if the plant were to organize.
Ten years later, the UAW renewed its efforts. Unlike with Nissan’s plant in Canton, Miss. — where a community group led by local ministers has organized under the slogan “Lead us not into Temp-nation” — the campaign has gained little traction.
To learn why, talk to Republican state Rep. Mike Sparks. He grew up in town, worked in the Whirlpool and Coca-Cola plants nearby, and was thrilled to land a job on the Nissan assembly line, where he stayed for eight years before starting a used-car business. He identifies with the working man — “I don’t feel a calling to speak up for the person with the country-club membership,” he says, in a stream of banter studded with biblical references — and thinks using temp labor is a betrayal of Nissan’s Kaizen management philosophy of “continuous improvement.”
“If you’ve got somebody and they’re not part of the family, part of the team, how do you get things equally yoked?” Sparks asks, after pulling out a book on Kaizen, which Nissan drilled into employees while he worked there.
Sparks says depressed wages are taking their toll on the local economy. “If we continue on the path we’re on,” he says, “we’re going to see more apartments, more free and reduced lunch, more title loan businesses.”
But a union? Gracious no — Sparks is convinced Nissan would pick up stakes and leave, to say nothing of other automakers that might be interested in Tennessee, which is why he also opposed the union’s recent failed campaign at the Volkswagen plant in Chattanooga.
Eric More grew up in a union family and landed at Nissan in 1992, lured by the retirement benefits. A team leader, he has had to soothe tensions over inequality between contractors and Nissan employees. He would not vote for unionization.
“This business has got so competitive, and our costs change daily,” he said. “It would seem if a union came in, we would be constantly battling the cost, and maybe the work, the contracts and things.”
Sparks wants to make monetary assistance depend on better corporate behavior — but that’s probably a non-starter in a Republican-controlled legislature that last month threatened to withhold tax incentives from Volkswagen if its plant in Chattanooga went union.
The likelihood of any legal curbs on Nissan’s outsourcing looks slim. Now it’s just the norm, says Bill Canak, a professor of sociology at Middle Tennessee State University, down the road in Murfreesboro. “It sets a standard in the labor market, if employers can say, ‘Well, Nissan’s only paying that, and they’re a world-class organization,’ “ he says.
Like many in the plant’s small camp of UAW supporters, Chris Young is there because unions are a known quantity. His mother worked for General Motors and raised him in Upstate New York comfortably on her single salary. Once, he asked at an annual luncheon — a rare opportunity employees have to ask questions of upper management — why the company’s plants are unionized everywhere other than the United States. “It works there,” the answer came. “It’s different.”
Young knows that speaking up about the union probably hurts his chance of getting a Nissan job — but also that the company wouldn’t want to make him a martyr by firing him. Still, his fiancee occasionally tries to hide his UAW shirt before he heads to work.
Sometimes, Young thinks about going to work for General Motors at its Spring Hill plant, which is unionized. But he would be starting with no seniority and probably would have to take a shift leaving him less time with his family. So he’ll stay at Yates, for as long as his body holds up, while the 20-somethings around him flush in and out.
That’s what so much of the modern manufacturing economy looks like: good enough money to live on, but without the comforts that used to come with a middle-class job — and no reason for an employer to offer them up.