Trade secrets: Global markets spur Toledo's turnaround

Policy Review, May/Jun 1996 by Garcia, Christopher

If we didn't have international trade, we'd lose jobs," says Bob Babcock, a sorter at Sauder Woodworking Co. in Toledo, Ohio. Babcock had been laid off for 18 months before finding uninterrupted employment at Sauder, which exports to 70 countries worldwide.

"If we can't win in the international market, then something is wrong with us," adds Harry Eschedor, an employee at New Mather Metals, Inc., a Japanese-owned firm in Toledo.

Even union leaders agree. "Everybody has to have free trade-it's a global market," says Ron Conrad, United Auto Workers unit chairman at Chrysler's Jeep assembly plant in Toledo. "Our philosophy is not Pat Buchanan's philosophy."

Holy Toledo! Isn't this Ohio city the kind of blue-collar, ethnic town that was supposed to falter in a world of computerization and global competition? Didn't Toledoans watch thousands of auto-parts jobs flee overseas in the late 1970s? Weren't they handed pink slips when OwenIllinois and Owens-Corning downsized in the 1980s? Weren't they jarred by the takeover of glassmaker Libbey-Owens-Ford by Britain's Pilkington? And isn't this the Toledo whose unemployment rate soared to 12.6 percent in 1982? In short, isn't this the kind of Rust Belt community that economic nationalists want to protect with a wall of tariffs and protective barriers? What's going on?

Trade, trade, trade. Refusing to turn its back on the world, Toledo has turned rust to riches by exploiting international trade opportunities. As a result, employment has reached a 25-year high, unemployment has plummeted to 4.8 percent, manufacturing jobs are growing at 7 percent a year, and waiting lists have formed for the 300500 new housing units under construction downtown. Meanwhile, community life is flourishing-from taverns to bowling alleys to Rotary Clubs. Notwithstanding the griping of economic nationalists, Toledoans are proving that exports and imports translate into more than just low prices and expanded consumer choice. They mean good jobs at good wages and vibrant, healthy American communities.

Evidence of Toledo's global efforts can be found everywhere. In 1991, Burlington Air Express located its international hub in this northwest Ohio city. Burlington now employs 1,000 Toledoans and ships two million pounds of air freight a day from Toledo to destinations including Canada, Mexico, Hong Kong, and Taiwan.

In 1993 Toledo created an International Studies Center to teach students and businessmen Arabic, Chinese, French, German, Japanese, Polish, Russian, and Spanish. Says Joe Rutherford, a former assistant superintendent of schools, "Learning foreign languages is part of our economic-development strategy."

At the center of Toledo's comeback stands Chrysler's Jeep plant. Originally built in the 1880s, this factory is the oldest continuously operating auto-assembly plant in the United States-and looks it. An antique brick smoke stack, still belching smoke, bears the name of Willys-Overland, the plant's one-time occupant and long-forgotten jeep inventor.

But the plant's time-worn exterior belies its vitality. Inside, scores of Jeep workers busily inspect Jeep Cherokees under a banner that reads, "The customer is our final inspector." The final inspector for many of these Cherokees will be Japanese. Or Chinese. Or Egyptian. This year the plant will ship 40,000-50,000 Cherokees, or 30 percent of its total production, to 130 inter national destinations. And these figures do not include exports to Canada, whose market is so integrated with our own that it is not measured separately. Nor does it include the completed but disassembled Jeeps the plant will ship to China, Egypt, Venezuela, and Argentina.

The plant almost closed in the mid-1980s. "We had let our guard down a bit," explains Toledo Mayor Carleton Finkbeiner. "We had become comfortable with our market share, but our days of domination were over."

International competitors were beating the overalls off of American automakers, and Chrysler could not afford to operate Jeep factories in both Toledo and Kenosha, Wisconsin.

"Our plant generated more workmen's compensation costs than the rest of the Chrysler assembly plants combined," admits Ron Conrad of the UAW. To boost production, Jeep workers have slashed workmen's comp costs and losttime injuries by 41 percent since 1990, and have cut employees' grievances from 1,665 in 1985 to 30 today. Workers at Jeep have even initiated a Product Quality Improvement (PQI) program in which Jeep employees work in teams (there are now 282) to identify ways to cut costs and generate efficiencies.

Thanks to its higher productivity, this plant survived to become the first American auto plant to produce right-hand-drive vehicles for Japanese and European markets. In 1995, the plant shipped 30,000 right-hand-drive Cherokees overseas, up from 18,000 in 1994. This year it will send 12,000 to Japan, 25,000 to Europe, and thousands more to Australia. Jeep has shaped up to ship out: Exports constitute this plant's fastest-growing market.