Depending on whether you run an international business or work in a manufacturing plant, your impressions of free trade in Greater Cincinnati might be different.

        Since the elimination of most duties among the United States, Canada and Mexico in 1994, companies have exported more products and generated more profits.

        But at least four Cincinnati-area companies also have moved several hundred jobs to Mexico to take advantage of low-cost labor.

        “We call it the Olympics of business,” said Bob Betz, president of Cognis Corp. in Winton Place, the North American unit of the German conglomerate Henkel Group.

The North American Free Trade Agreement forces U.S. schools and governments to train workers in high-tech skills, says Bob Betz, president of Cognis Corp. in Winton Place. (Tony Jones photo) | ZOOM |

        “We're in a world-class competition, whether we know it or not.”

        Since the North American Free Trade Agreement was implemented seven years ago, the debate over its effectiveness has barely slowed.

        It's sure to heat up again in the next several months as President Bush pushes the Free Trade Area of the Americas, which would extend the free-trade zone throughout the Western Hemisphere.

        Conceived in Quebec City, Canada, two weeks ago, the agreement could take effect in several years if leaders of 34 countries reach a formal agreement.

        The battle lines already are forming, with business leaders insisting the free-trade zone would create export jobs and lower costs throughout all three countries.

        Labor and environmental leaders, meanwhile, argue the new deal would mean more jobs lost to lower-cost markets, such as Brazil or Argentina.

        “I think that's a simplistic view,” Mr. Betz said, “except if it's your job.”        

Simple, in theory

        When President Clinton joined congressional Republicans to push through NAFTA seven years ago, the theory was simple: Companies could use the natural advantages of each market — cheap labor in Mexico, easy access to raw materials in Canada and skilled technology workers in the United States — to lower costs throughout the system.

        Wally Workman, vice president of international affairs at the U.S. Chamber of Commerce in Washington, D.C., said it unquestionably has worked.

        U.S. exports to Mexico have more than doubled since 1993, and by 2010, U.S. exports to Latin America will exceed those to Europe and Japan combined, he predicted.

        The number of jobs lost to Mexico is about the same as the number of jobs created by increased exports, he said.

        “We never tried to bill NAFTA as being a job-creation machine,” Mr. Workman said. “That's not what trade does. Trade is about being more efficient in how you do things.”        

Export boon

        Greater Cincinnati has seen similar export increases. Sales from companies in this region to Canada and Mexico jumped 70 percent to more than $1.2 billion in 1999, the U.S. Department of Commerce says.

        Mr. Betz of Cognis Corp. said his company does more business from its plants in Canada and Mexico but has not reduced its work force of about 900 in Greater Cincinnati.

        Overall, costs have gone down on the $1 billion in North American business done annually by Cognis, he said, although he couldn't estimate by how much.

        What NAFTA does is force U.S. schools and governments to train workers in high-tech skills, he said. If raw materials are produced in Mexico, and Canadian plants provide the fuel costs and currency exchange rates that save money, then U.S. plants will be asked to add value through technology, he said.

        “If our jobs are to become higher-technology, we as workers have to educate ourselves,” Mr. Betz said. “Otherwise, you're going to lose. We have to upgrade ourselves and our work force.”

        But hundreds of workers here and thousands across the country have lost their jobs. Nationally, the job loss is about 336,000, the AFL-CIO says.        

Lost jobs

        Overall, four companies in Greater Cincinnati were certified by the federal government as transferring jobs specifically because of NAFTA.

        Those companies were Plaid Clothing, Lucasvarity and International Paper Co. in Cincinnati, and Clarion Manufacturing Corp. in Walton.

        Clarion closed its plant last spring and moved about 83 jobs to a Mexican plant.

        Company president Larry Maxey quit his job several months later to protest the decision. He said he still thinks the labor costs are about the same, when you count the difficulty that comes with operating a Mexican plant.

        “If you're trying to use Mexico as a platform to just build parts and send them into this country, it doesn't work,” Mr. Maxey said. “I don't think it's created a cost advantage. If I'm managing an operation, it's disruptive. You now have all kinds of things that you can't control.”        

Promises made

        Dennis Cuneo, senior vice president at Toyota Motor Manufacturing North America Inc. in Erlanger, said the company has not put any production operations in Mexico. It operates a plant in Canada and ships products back and forth over that border.

        He said it has not made any permanent decisions about operating in Mexico.

        Companies that move plants to Mexico simply because of lower labor costs probably are not going to reap those savings, he said.

        “While labor is cheaper, there's other parts of doing business there that maybe are more expensive,” he said.

        Greg Woodhead, a senior economist at the AFL-CIO in Washington, said the U.S. trade deficit with Mexico and Canada combined had increased more than $65 billion since NAFTA was passed.

        “There were a lot of promises made to workers,” he said. “Very few have been kept. That's the absolute bottom line.”
       

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