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“At any street corner, the feeling of absurdity can strike any man in the face.” 

Albert Camus

 

The story that follows isn’t unique to this Rust Belt city.

It has occurred, over and over, across the Rust Belt – across the U.S. – for the past 35 years.

What’s amazing is it is still unfolding.

What’s even more amazing is how complacent everyone has remained.

About the loss of jobs.

About the weak or non-existent development efforts for local economies.

About how the U.S. will sink into serfdom, not by the threats of socialism (as Hayek suggested)…

…but by the reality of our apathy, our denial, or our ignorance.

I simply wanted to commit this story to writing, as a way to preserve it, in case anyone ever asks, “What happened?”

That is, if there is anyone left who cares enough in the future to ask.

No one is asking now. [1]

Globalization’s Mausoleums

The spirits of past General Electric workers reside here.

Bldg Demolition

This is one of the buildings currently under demolition at General Electric’s Broadway campus in Fort Wayne, Indiana. To the right is an opening where another GE building, of similar size, once stood.

Last year, GE closed down a testing lab, the last operation of any kind on the campus. It employed some 28 people at the end.

At its height, General Electric employed over 10,000 employees in Fort Wayne; almost all were well-paying jobs.

“Well-paying jobs” means well above what is commonly referred to today as a “living wage,” which in itself is above the minimum wage, doesn’t allow you to starve, but certainly doesn’t provide enough after the bills are paid to do things like, oh, save for retirement or switch Aunt Martha from a Medicaid-based nursing home.

This is in my hometown, and I grew up not far from the campus, and not far from another General Electric campus just a mile to the west of this location (which is also in the process of being abandoned).

In my youth (the ’60s), I remember the narrow, two-lane streets around the campus jammed with traffic at shift change, and three shifts were running at the height of production. Many workers lived in the neighborhoods surrounding the campus, populated with homes built in the 1920s. In the morning, workers filled the sidewalks, carrying their metal lunch pails, proudly walking to General Electric jobs.

Yes, there was a time when factory workers proclaimed, “I work at GE,” with a tone of pride in their voice.

 

General Electric in Fort Wayne

 

Parking Lot

This GE campus is surrounded by a number of parking lots, once overflowing with cars.

Now they’re littered with sewer pipes.

Electrical manufacturing has had a long history in Fort Wayne. The Fort Wayne Jenney Electric Company started there in 1881, operating at a couple of different sites before moving into a building that had been recently vacated by the Gause Agricultural Works. The location of this building was on Broadway (the same location where these pictures were taken), the move undertaken some 134 years ago.

In centralized capitalism time, that’s ancient history.

From a muddy history written in 1917, I learned this local company ran into financial problems, apparently a casualty of the Panic of 1893. General Electric bought (a?) (the?) plant in 1899 out of receivership – something something – continued (some?) (all?) the operations as Fort Wayne Electric Works, with GE as a partial owner (?) – something something – then merged FWEW with its own operations in 1911, ever since using “General Electric” on the buildings.

That’s clear.

As the campus grew, so too did the neighborhoods surrounding it. No suburb to urban commutes here: The workers lived near the plant, and walked to work.

They were proud to be living in the shadow of a General Electric plant.

And General Electric was an integral part of that neighborhood.

 

General Electric in the Community

 

GE Recreation Club

This used to be the GE Recreation and Bowling Club. The sign is fading from the sun. It hosted numerous activities for employees throughout the year, and occasionally opened its doors to the public. Once, my friends and I rode there on our bikes to attend a fishing show. An older employee, who was very good (and very quick) at tying fishing flies was handing them out to us kids. I still have the fly he made for me, resting in my tackle box, still unused. It holds a special place within my tackle.

As a kid, I remember most families in that neighborhood having only one car. Dads walked to work. They didn’t need the complexity of having more than one car in the family. Most garages were single-car units. Moms stayed at home, watching not only over their own children, but those from the neighborhood. Our “child care” flowed with us wherever we went, as we followed our whims: sandlot baseball, bike-riding excursions, building plastic-brick garages (in the PL, or Pre-Lego, era) for our Matchbox cars, or playing Cowboys and Indians with a circular formation of boulders serving as a fort. We ate lunch at whatever house we were inhabiting at noon.

It was a circumscribed existence, to be sure, and one that wouldn’t be welcomed today. But the roles were accepted then, and the existence was simple. Kids didn’t survive on Ritalin, and parents didn’t survive on Xanax. No one burned their candle at both ends.

There was, of course, the occasional adult who self-medicated from a bottle, but let’s not destroy the nostalgic moment right now.

Then, the neighborhood was solidly middle income, what with the wages the workers made. Now it is lower middle income, and it’s very likely I’m being too generous with that characterization. In fact, most of the families there today tip in and out of poverty, dependent upon the work they can find at any given time.

Right now, the kids haven’t the time for sandlot baseball. They’re dealing, trying to find ways of bringing extra income into the family.

In The Wake of Free Trade

 

Early Bldgs

Some of the oldest buildings (predating World War I) on the campus remain… for now. The iron fences rust, the parking lots slowly devolve into cracks and weeds, the buildings populate with mold.

These are the mausoleums of globalization, graveyards created in the pursuit of “free trade.”

How “free trade” evolved is a rather curious thing. Economic theory tells us it is a necessity. Country A excels at making guns, Country B excels at making butter. They trade, based on their comparative advantages.

But this is a lie. There is no comparative advantage at play in today’s globalized economy or free trade. Low-cost labor markets, such as found in Southeast Asia, hold absolute advantage. That is, they are capable of making everything the U.S. (or Europe) can make, for lower costs.

That’s not comparative advantage, that’s absolute advantage.

Absolute advantage or not, it really never was about trade advantages. When corporations champion “free trade,” they do so in pursuit of one goal: to find the lowest labor costs.

This has nothing to do with trading goods.

And multinational corporations grew quite adept at finding the lowest labor costs. In fact, corporations really didn’t offshore jobs so much as they simply shut down their own manufacturing operations, then contracted out the work overseas.

With such a carefully executed shift in labor practices to avoid detection, it becomes extremely difficult to track the number of jobs lost in the U.S. since 1980. But the elite economists – aiming to please their corporate johns clients – will carefully explain why things have to be this way, based on their mathematically elegant marginal analyses.

But it doesn’t require a damn economist to tell those living in the neighborhoods around the abandoned GE campus in Fort Wayne that this “free trade” horseshit isn’t working for them (2016.11.09 update: This also explains why Donald Trump found his way to the White House.)

In today’s globalized economy, the perfect corporation is seen as a single hallway holding C-suite offices, and a receptionist answering the phone (but not answering the calls of customers; the phone number is handed out to VIPs only). Manufacturing, accounting, engineering, marketing and customer service functions are all outsourced. [4]

But such corporations continue to issue shares of stock.

Stock in a company that leases out a hallway.

What these C-suite pinheads seem unable to comprehend is that as all corporations pursued this idealized business plan in the aggregate, there were fewer and fewer employees/customers remaining who could afford to buy the products of the other, downsizing, corporations. Most of the jobs of those employees/customers were outsourced, or offshored, or simply eliminated.

When one drains the swamp, the ecosystem dies.

To be sure, the ecosystem went on life support for awhile, riding on the back of the household debt that substituted for stagnant or falling incomes. But that joy ride came to an end in 2008 when household debt finally hit the wall, unable to take on more debt with the ever-slimmer incomes still available.

That wreck we now know as the “Global Financial Crisis,” which sounds better than the “Second Great Depression.” Technically, it was an economic depression, but didn’t feel like one since the U.S. Federal Reserve pursued historically unprecedented monetary loosening, a.k.a., “quantitative easing.”

And now the European Common Bank is pursuing the same easing.

Precious little of that money found its way into middle-income households. Most of it was used to drive up stock and commodity prices, i.e., synthetic inflation, which is price inflation that is not backed by real demand, but rather by completely uninhibited speculation activity.

However, the ecosystem will eventually die. It’s not a matter of “if,” but “when.”

Yet, central bankers and C-suite pinheads never had to take a class in ecology or biology. They can’t appreciate the fact that severed from a functional ecosystem – that is, employees needing access to well-paying jobs to become customers again without accumulating more debt – the economic life within dies off.

But the idea of higher wages – or the other side of the same coin, “higher labor costs” – is an affront to corporations and their singular focus on “profit maximization.”

The C-suite pinheads cannot understand that profit maximization is self annihilation.

 

Strong Backs, Weak Minds

GE HR Sign

Behind this barricade resides a building bearing one of the few GE logos still seen on the campus.

This was the human resources office (at the lower right you can still see a sample of the electric motors once made there, still proudly and publicly displayed, with no sense of embarrassment). The gate used to be open to the public, where one walked through to apply for a well-paying job, holding nothing more than a high-school diploma.

This was a diploma that recognized a well-rounded education in math, science, and language, everything a worker needed to intelligently function in a factory. If something was missing from that education, the worker attended company training sessions to acquire the skills for their job.

Free of charge.

Those diploma-wielding applicants from a bygone era even knew how to sign their name, in cursive, on the employment applications.

Ever since Harry Truman was U.S. president, however, we have seen presidential administrations come and go, talking about the need to reform education. [5] Countless state governors have said as much. Over and over, the same mantra:

We need educational reform.

All that “educational reform” provided us with U.S. (a developed economy) high-school students not only testing lower than many developing (formerly known as second-world) nations (e.g., China, Korea… Swaziland? I guess if you consider Tunisia “upper middle income” as the UN does then yes, Swaziland), but even some (formerly known as third-world nations but still as impoverished) “emerging” or “economies in transition” or “least developed” nations (e.g., yes, Swaziland).

We need more educational reform.

So we reformed education, by dumbing down the academic curriculum and lowering the bar so severely that even a chimp would be insulted by the banality that passes for education in these United States.

And pity the poor student who is actually intelligent, but the standardized tests can’t detect as much, so he or she acts out in class to overcome the tedium forced on that student after being thrown into lower-lane classes. Shove Ritalin down the s.o.b.’s throat, just as long as they “behave.”

But I veer off course.

So behind closed doors, political leaders really don’t want educated citizens. That’s dangerous. Educated citizens can actually talk to one another. They can disagree without immediately reaching for hyperbole-riddled arguments. They can make knowledgeable connections between cause and effect.

And an educated citizen can reason why they cannot find a well-paying job.

And become angry.

No, no, that’s dangerous. “Educational reform” has just become another buzz word to pull out of the PR toolbox during political campaign season.

But what political and economic leaders really want are strong backs and weak minds. Strong backs to undertake the menial work that remains in the U.S., and weak minds to hamper the reasoning that would otherwise question why their lives are drifting towards serfdom.

Some people say a man is made outta mud
A poor man’s made outta muscle and blood
Muscle and blood and skin and bones
A mind that’s a-weak and a back that’s strong

You load sixteen tons, what do you get
Another day older and deeper in debt
Saint Peter don’t you call me ’cause I can’t go
I owe my soul to the company store

-“Sixteen Tons,” by Merle Travis

Fort Wayne’s Unrequited Love for Spirits Past

 

Park's New Crossing

The city leaders of Fort Wayne have long lived in denial over the realities settling into their city, nor (after some 35 years when the first of the big closures, International Harvester, took place) do they seem to know how to address these realities.

Here, I’d normally suggest looking at case studies such as Austin, Texas or the Golden Triangle area in Mississippi, or learning how to build core competencies in a city that holds precious few. But that would require reading and research rather than sitting in a bar after hours, pulling ideas out of dark crevices after the onset of a good bourbon buzz.

International Harvester (now Navistar) used to employ over 12,000 employees at its height, all well-paying jobs. Then there were the well-paying jobs that could be found at Phelps Dodge, Zollner Pistons, Magnavox, Central Soya, Essex, Tokheim Pump. The list goes on and on.

And all cease to exist.

And no credible response has ever been mounted. But the city does host a downtown baseball park, and a shiny convention center, and two downtown hotels that have to be subsidized by the city in order to stay in operation.

Take that to the bank.

Above is a picture of McCulloch Park, adjacent to General Electric’s abandoned Broadway campus. There was a time bands would play in the pagoda seen in the background. The admission was free, the performance paid for by GE. Crowds would fill the park for an evening of entertainment.

Long gone are those days. Now, the park hosts a small playground for neighborhood kids. But the playground sits gathering black grit from the atmosphere, largely unused. The park is cut off from the neighborhoods to the west, as there is no longer a traffic light with a pedestrian crosswalk, where children can safely pass from one side of the street to the other.

The City of Fort Wayne’s denial has led to some rather curious things, such as seen in the microcosm that is McCulloch Park. In the foreground of the picture above, one can see a relatively new section of sidewalk installed, equipped to accommodate the handicapped. It leads to an empty side street. On the other side of the street sits an empty GE parking lot. The sidewalk ramp was constructed as the park and the parking lot fell into disuse.

It is a ramp that leads to nowhere. It is filled with the crumbling concrete of the park’s older sidewalks, washed off by torrential rains, making it very difficult for the wheelchair-bound to cross the street and reach the abandoned parking lot on the other side.

Yet, there it is, an enhancement to a park whose better days are long past.

But the city’s leaders can be forgiven for the confusion, as GE has sent mixed signals for decades. General Electric itself seems unsure how to discretely approach the very public dismantling of their unwanted campus. GE retirees report there were rumors about the company’s desire to shut down its Fort Wayne operations as far back as the ’70s. GE kept scraping together increasingly smaller operations there as a way of tactfully winding down its presence.

And as a way to divert attention from the inevitable, installing memorials that hold no meaning (see below).

While GE management wasn’t in denial, it seemed they have been very concerned about ways to save their corporate face in a community in which they have no interest remaining, thus preventing them from doing what they should have had the balls to do years ago:

Line up the bulldozers, mow down the campus in one massive sweep, and go home.

As a result of this hesitancy, now Fort Wayne finds itself mired in silly debates such as what the city should do with a large illuminated General Electric sign that rests on top of another GE building that will soon, no doubt, be demolished.

This wouldn’t have occurred had GE pursued the tactical plan of bulldozing the campus flat. Being such an in-your-face move, hopefully the city’s leaders would have shown GE management that they had balls and proceeded to tell GE to simply piss off…

…that they possessed the sense to stop clinging to the past and the know-how to develop for the future.

This would have prevented the Great Sign Debate with a company that doesn’t have manufacturing in a city that wants to memorialize a company that no longer manufactures in the city.

That, of course, would have been too sudden, a shock if you will. We certainly don’t want to upset the civic sensibilities of the community now, do we?

Please, look past the absurdity of it all.

But the sign doesn’t belong to the city anyway. It still belongs to General Electric. And GE has discussed moving it to their appliance-assembly operations in Louisville, Kentucky. [2]

Notice I said  “assembly operations,” not “manufacturing operations.” That’s because most of the parts used in GE appliances are made on foreign soil, then bolted together in Louisville so GE can claim they make the appliances here in the U.S.

I go too far afield.

Back to the sign.

Even if the city gains possession of the sign, what purpose does it serve? To remind all the serfs workers in Fort Wayne that their grandfathers once had well paying jobs there? I think the tower marking the entrance at the former International Harvester complex does a great job as that kind of reminder.

Do we need two scoops of salt to pour into our civic wounds?

Pathetic Irony

 

GE Sm Bigger Memorial

In 1994, the dwindling number of workers at General Electric donated this memorial to the City of Fort Wayne in recognition of the city’s bicentennial. The memorial doesn’t mark General Electric’s Fort Wayne activities, nor its past symbiotic relationship with the city, nor thanks the city for hosting General Electric there for well over half of Fort Wayne’s existence.

No, the memorial simply marks the grave of Indiana’s seventh governor, Samuel Bigger (governor, 1840-1844) resting behind the iron fence. It’s a nicely polished, nicely engraved monument, in an otherwise deteriorating park, positioned not far from the soon-to-be-eradicated GE manufacturing campus.

And why Samuel Bigger, and he alone, is buried at McCulloch Park, I do not know. Nor could I hazard a guess.

Nor can I discern what in the hell any of this has to do with General Electric in Fort Wayne. Samuel Bigger lived before Edison ever invented the light bulb, much less the emergence of General Electric from the primordial capitalist soup.

To be fair, those remaining, few employees – whose pockets were emptied to contribute to this memorial – must have been embarrassed by the whole affair. The declaration of their contribution to the memorial is on the back side, down low and behind the iron fence that protects Governor Bigger’s resting place.

It’s almost as if the employees wanted their contributions to be unseen, or at least buried in an obscure footnote.

I wonder how much Governor Smaller General Electric chipped in to memorialize Governor Bigger.

But once again, I digress.

The last operation of any significance at GE’s Fort Wayne campus – the one employing those dwindling number of workers that helped erect a monument to Samuel Bigger – was actually a re-manufacturing operation. Workers would test the rejected electric motors made at GE’s overseas operations, troubleshoot the problems, then commence to rebuild it to specifications.

American workers cleaning up the messes made by overseas workers who inherited the jobs once performed inside the other abandoned buildings at GE’s Broadway campus.

This isn’t just irony, it’s “pathetic irony.”

Sweet Irony

 

WW I Memorial

Finally, we find an old World War I memorial, located not far from the pagoda in McCulloch Park. On it are the names of General Electric employees who served in the armed services during that conflict. Behind it, one can see the ongoing demolition of General Electric buildings, progressing nicely.

In a single generation, onlookers will ask, “Why did General Electric erect a memorial to its employees here?” unaware of GE ever having a mammoth manufacturing campus nearby.

In two generations, onlookers will ask, “What was General Electric?” [3]

Or, you could also see it as Jeffrey Immelt does: “A simpler, more valuable GE.” [7]

Regardless, you must understand that General Electric has a robust amount of manufacturing underway in China.

But China’s government is wise. It doesn’t allow a foreign corporation access to its labor markets without forming an alliance between it and a Chinese corporation possessing similar core competencies.

By this means, a Chinese electric-motor corporation can learn how to manufacture technologically advanced electric motors (and turbines and generators with militarily sensitive components) in a very short period of time. This allows the Chinese corporation to tap the knowledge base of General Electric, a knowledge base that took GE over a century to accumulate.

At some point, the Chinese will gain the ability to manufacture advanced-technology electric motors and similar products without the help of GE, thanks to a very truncated learning curve, courtesy of GE. China’s government could then leverage its laws, such as anti-monopoly or anti-trust laws, to throw General Electric and all the other foreign multinational corporations out of China. They have recently started to use these laws against foreign multinationals, at this point more of a tactical move of harassment than outright banishment. [6]

Time will tell and if such a time arrives, GE may have nothing to return to except a leased hallway in the U.S., full of C-suite offices.

And a receptionist.

Could GE maintain any legal capacity to issue stock for a hallway?

If not, GE may, like its former Fort Wayne campus, close.

But if the office space is leased, no bulldozers will be required.

Now that?

That right there would be known as “sweet irony.”

Simple Irony

 

GE FWA - Broadway Campus

Above is a satellite image from Google Maps showing most of the 32 acres of General Electric’s Broadway campus in Fort Wayne. The yellow circle shows the location of the building being demolished, as seen in the first photo of this post. The green circle shows the location of the pagoda in McCulloch Park. The red outline provides an idea of the expansiveness of this former manufacturing complex of GE, soon to be one massive empty lot.

The illuminated General Electric sign – the center of the Great Sign Debate – resides on the roof of the inverted-L shaped building seen at the far northeast end of the campus, beaming its light towards downtown Fort Wayne.

If General Electric decides to give the sign to the city of Fort Wayne, perhaps the city can reduce the sign’s maintenance costs by powering it with Chinese-made solar panels.

Chinese-made solar panels are cheap to buy, after all, and Fort Wayne needs “cheap” because it suffers from a dwindling tax base with which to fund its operating budget, to fund a functional school system, to fund infrastructure improvements, or fund core competencies that could be used to build Fort Wayne’s now-depleted local economy for the future.

And that?

That’s just simple irony.

Epilogue

On February 13, 2017, General Electric announced that it had “chosen a Baltimore firm to develop its (Fort Wayne) campus, a project estimated at roughly $284 million,” with much fanfare in the local media.

And the grand vision for this $284 million would be to transition the campus to…

(cue crickets)

Cross Creek Partners said it “wants to learn what types of housing, amenities, offices and educational opportunities people are willing to support.”

That’s an admirable approach, rather than having developers dictate what it wants to foist on the local community. Yet, once the construction activity is over, how many permanent, full-time jobs does this create for Fort Wayne?

Cross Creek threw in an initial estimate of how the space would be divided: 37% residential, 30% “educational,” 16% retail, 15% office, and 1% “amenities” (yes, there’s a rounding error that prevents one reaching 100%).

Well, okay, but setting aside 31% of the space for retail and offices doesn’t create jobs for those spaces, it just allows for their creation. And that creation doesn’t occur unless local economic efforts develop a need for such spaces.

Despite the lack of details, the renderings portray a fantastically cozy campus, but it still leads back to one central question:

How is any of this development activity going to be supported with a local economy that is largely based on workers under 40 laboring as employees of temp agencies, not of the firms for which they work?

So Cross Creek, to answer your inquiry as to what “people are willing to support,” it’s this:

With those $12/hour temp jobs, not much.

A community arrives at such a dreary prognosis when it focuses its economic development efforts on unrealized consumer demand rather than develop for a supply of well-paying household incomes.

It’s as if local leaders believe “build it, and they will come” is an undisputed maxim in life, rather than accept this phrase for what it truly is:

Hollywood fantasy.

Absurdity, indeed.

 

End Notes

[1] 2016.11.09 update: The 2016 election of Donald Trump to the Oval Office came, in part, from the rising anger and desperation emerging in American workers over globalization. It seems, however, that many of Trump’s followers misdirect this anger towards red herring issues, rather than comprehending the substantive core issues at play. Regardless, will these issues be addressed under Trump’s administration? Or did his voters just hand the hen-house key to the fox? We’ll see.

[2] 2016.06.06 update: GE announced it sold its appliance operations to the Chinese appliance manufacturer Haier. Louisville no longer needs the sign, either. Next?

[3] 2016.12.15 update: And the process continues here… and here… and here… and here… and here… and here… and here….

[4] 2017.02.02 update: When I originally wrote this paragraph, I added for balance: “…outsourcing is beginning to come under suspicion, but what does this mean in practical outcomes?” To answer my own question, it turns out to be: “Nothing.”

On February 2, 2017, The Wall Street Journal ran a story – “The End of Employees” – that detailed how companies are increasing their outsourcing. To put an underline on this trend, consider a sentence from this story: “Consulting firm Accenture PLC predicted last year that one of the 2,000 largest companies in the world will have ‘no full-time employees outside of the C-suite’ within 10 years.”

I feared I was exaggerating a bit too much when I penned this paragraph. As it sadly turns out, I wasn’t exaggerating at all.

[5] 2017.02.05 update: The one continuity in all the presidential administrations from Truman to Obama was that they kept up the pretense of appearing to be concerned about the state of public education in the U.S. With the nomination of Betsy DeVos for Secretary of Education, the Trump Administration is signaling that no one at the Federal government level will make the slightest effort to appear concerned about American public education.

Hey, maintaining smoke and mirrors for over 70 years can be so exasperating.

[6] 2017.03.16 update: Hhmmm, as originally predicted in this post two years ago, it seems China has taken a liking to mercantilism.

[7] 2017.07.25 update: It’s unfortunate I’m not a technical analyst. Armed with a number of impressive, scientific-looking tables, graphs and curves, the audience would listen with rapt attention.

But I’m not a technical analyst.

When I wrote of General Electric’s potential disappearance over two years ago, I did so relying on nothing more but my sheer intuition. Any corporation that focuses on two means – 1) merciless labor-cost cutting and 2) quick and massive profit margins – is bound to fail. Are there other corporations on the same path? Oh yes, and my outlook would remain the same for them, and for a society that hosts an assemblage of such corporations.

But if the reader won’t settle for anything less than a technical analysis, consider Seeking Alpha’s report, “Is a Breakup of General Electric Imminent?“. The crunching of GE’s 2Q 2017 numbers will be found within the links in this story.

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