Does trade assistance for displaced workers work?

September 21, 2012

Bob Sanders,

Jennylsa Wilson was a month away from her due date when Flo-Pro Inc. told her she had been let go, because — she later learned — the company shifted its manufacturing of car axles from its plant in Bedford to Mexico."I was going crazy," she said. "I didn't know what to do. I was about to have a baby. I didn't have health care, and who was going to hire someone about to give birth?"There were 127 other Flo-Pro workers involved, each facing their own individual economic abyss.But Wilson, then head of human resources for the firm, had been here before — both literally and figuratively. Back in 2005, foreign competition drove the company's much-larger predecessor — Car Coma

"I was going crazy," she said. "I didn't know what to do. I was about to have a baby. I didn't have health care, and who was going to hire someone about to give birth?"

There were 127 other Flo-Pro workers involved, each facing their own individual economic abyss.

But Wilson, then head of human resources for the firm, had been here before — both literally and figuratively. Back in 2005, foreign competition drove the company's much-larger predecessor — Car Component Technologies — into bankruptcy, and many of its 500 workers wound up applying for help through federal Trade Adjustment Assistance Program.

This time around, Wilson said, she heard Flo-Pro's parent company — California-based Motorcar Parts of America — was moving the jobs to Mexico, so despite Flo-Pro's denial, she and her co-worker, Ana Lacayo, applied for TAA assistance. (Motorcar did not respond to NHBR inquiries for comment.)

"It was shooting in the blind. No one in the company was cooperating, but I thought if they were going to investigate, maybe we would have a chance."

Before we come to the end of Wilson and Lacayo's story, let's fill in the background.

The TAA program — through the U.S. Department of Labor — has been around, in various guises, since 2002. It is designed to help workers who have been displaced, either via foreign competition or because a company has moved production out of the country.

The benefits can be pretty substantial: Up to 130 weeks of educational assistance (including the equivalent of an extra two years of unemployment benefits); getting half the wage differential for two years if you are over 50 and are taking a lower-paying job; moving and job search reimbursements of up to $1,200 each; a tax credit of about two-thirds of health insurance premiums.

But many displaced workers don't get these benefits. Although anyone can file a petition to be certified – from the CEO to the lowest-rung worker, from a union to a state agency – not all companies are up-front about the reason they are shutting down.

It's bad publicity these days to say you're cutting American jobs to take advantage of cheaper labor overseas, so unless the employees or state officials are savvy enough, a petition may never be filed.

In addition, the federal government can't always verify that the workers have been displaced. About a quarter of the petitions are denied. Some may not be legitimate claims, but others may be. The corporate veil is sometimes hard to pierce.

The officials who certify eligibility have to complete their investigation in 40 days. In the fourth quarter of fiscal year 2011, the program was happy to report that the average processing time was 61 days — because that was almost half of what it was in the previous year.

That still leaves more than 1,000 certifications issued last year covering nearly 100,000 workers nationwide. In New Hampshire, 10 companies were certified, covering 578 workers. But many of the workers won't take advantage of it. Some simply fall through the cracks of the complicated law's various permutations. Others land another job quickly and don't need the benefits.

"For most people, they can't take off the time for the training while on unemployment. They need to get a living wage right away to feed their families," said Jeri Jewell, state TAA coordinator at the New Hampshire Department of Employment Security.

For all that, the state spent about $2.2 million (not including the health care tax credit) of federal money to help the 648 New Hampshire workers who participated in the program (which includes those covered during the last several years). That's roughly an average of $3,400 a worker. Of that, about $667,000 went to training and $859,000 went to wage supports. It costs $452,000 to administer the program.

"It is one of best programs for those that do partake of it," said Jewell. "I love the idea that it gives people the opportunity to change their occupation if it's no longer viable for them."

Customers overseas

In the past, it has been the companies, not the workers, that have filed the most petitions — 50 of the 80 or so examined by NHBR. And even when the petition did come from workers or a union, the company cooperated.

But filing the petition was the least that Vice President of Finance John Arico said he could do when ElectroCraft shut down its Dover manufacturing operations in 2008, throwing 70 people out of work.

The union's language on the petition was stark: "Moving to China or Taiwan due to price pressure and customer demand."

But the decision was a lot tougher to reach, said Arico, who still runs his company — with 17 management employees — out of New Hampshire, even though production work is gone.

"Our customers ended up going overseas," he said. "And if you wanted to be a supplier, you had to follow them."

At the time, the company had three manufacturing facilities, and one of them had to go for the company to survive, he said. New Hampshire simply couldn't compete with the tax breaks of other states.

"The amount of assistance in Arkansas was awesome — far superior to New Hampshire. Here we rob Peter to pay Paul," said Arico.

In addition, New Hampshire was the only unionized plant, though he said the decision was based on overall operational costs.

Still, the decision was not an easy one, Arico said. "I was the one who had to talk and let these guys know. I had to let go of my friends. It was tough getting to sleep, tough waking up in the morning and coming into that eerie silence. It was by no means an easy decision."

Stacy Surprenant, ElectroCraft's former human resources manager, who characterized the application as a joint petition with the union, was one of those friends who Arico let go, but she quickly found work with another company. So did others, "before they were out the door," she said.

As for TAA assistance, several simply didn't apply in time. "We tried to reinforce that you have to jump through all these hoops," she said. "If you missed a deadline, it wasn't going to happen."

But there were a couple of people who did. They "switched gears entirely — one who became a nursing assistant used to wind wire for us."

'A little disappointed'

That sounds like Mary Henry, but Henry had been working for Thermal Dynamics Corp. (then known as Thermadyne, now renamed Victor Technologies) in Lebanon for 37 years.

The company had been increasingly sending work to Mexico citing cheaper labor, "but we were told at the production end that material was too expensive to ship down there and there was nothing to worry about," Henry said.

In August 2011, however, Thermadyne said it was shutting down its manufacturing operation, with 105 employees, in order to shift production to Texas and Mexico (it still has research and development operations in Lebanon).

What followed were months of uncertainty. "You never knew what the end was going to be, you didn't know when. We had a mortgage. I was helping raise my two grandchildren. And I was starting all over again."

But she had no intention of going back to manufacturing. Instead, she is getting trained as a nursing assistant. TAA would pay for her education, but she still had severance, and she thought it would be a better deal to pay for the training herself and take the wage differential. That would be half of the difference between the $26 an hour she made at Thermadyne and what she would bring in as a nursing assistant.

"It's a challenge," she said. "It's the opposite of what I've done in the past. There is a lot to remember and a lot to do, but it's working out."

Still, she is more bitter than pleased.

"I'm a little disappointed that the companies are so greedy. They only thing they care about is what they can make. They care nothing about their employees anymore," Henry said.

Henry's sentiment was echoed by Andrea Raymond, who worked at Thermadyne for a quarter of century.

"The thing was, our plant was not losing money. The company just could make more money if it went out of the country," she said. Still she added, "It's not the first company that's doing it, it won't be the last."

George Dunning, senior vice president of global engineering for Victor Technologies, declined comment, referring to the company's public announcements about the closure. But the firm's former human resources director, Anita Porter — who filed the TAA petition — praised the company's efforts to help workers get training.

She also said that all workers qualified, even though some of the jobs were going to Texas. "As long as we had the Mexican piece, they covered them all."

Raymond had thought her days were numbered after the company went through a complicated merger and financial restructuring in 2010. "They brought in the bankers — you knew what was going to happen," she said.

So Raymond went to school at night to retrain as a pharmacy technician. She started at Dartmouth-Hitchcock Medical Center the day after she was laid off at Thermadyne, but instead of making $20.30 an hour, she was getting paid $15.50.

"Not everybody was that lucky. Some people lost significantly more," Raymond said. Still, she applied for the TAA program for the wage differential, which should be retroactive.

Mixed feelings

That brings us back to Ana Lacayo and Jennylsa Wilson, at Flo-Pro. Wilson — "shooting in the blind," as she said — found her mark. The federal government certified that she and her 127 co-workers did lose their jobs to Mexico.

But the 29-year-old Lacayo, single and now in data entry, said that she did not get any benefits from the TAA program. She was already in school, and the program only covered those who were entering school. She also wasn't old enough for the wage differential, and found a job too early to get much help.

For Wilson, however, TAA enabled her to spend two years earning a bachelor's degree in elementary education at Southern New Hampshire University. TAA will not only pay for weekly benefits — equivalent to what she would get on unemployment during the whole time, "they are also paying for my tuition, my books, my laptop, transportation. They put everything in front of me to succeed in this program."

The whole thing leaves her with mixed feelings. "I worked for these people. The least they could do is have some loyalty for their employees and be honest why they were letting us go," said Wilson.

On the other hand, she added: "Now I am working getting a school degree in something I know will be in demand. They are paying for my school, which makes me happy."

ponent Technologies — into bankruptcy, and many of its 500 workers wound up applying for help through federal Trade Adjustment Assistance Program.This time around, Wilson said, she heard Flo-Pro's parent company — California-based Motorcar Parts of America — was moving the jobs to Mexico, so despite Flo-Pro's denial, she and her co-worker, Ana Lacayo, applied for TAA assistance. (Motorcar did not respond to NHBR inquiries for comment.)"It was shooting in the blind. No one in the company was cooperating, but I thought if they were going to investigate, maybe we would have a chance."Before we come to the end of Wilson and Lacayo's story, let's fill in the background.The TAA program — through the U.S. Department of Labor — has been around, in various guises, since 2002. It is designed to help workers who have been displaced, either via foreign competition or because a company has moved production out of the country.The benefits can be pretty substantial: Up to 130 weeks of educational assistance (including the equivalent of an extra two years of unemployment benefits); getting half the wage differential for two years if you are over 50 and are taking a lower-paying job; moving and job search reimbursements of up to $1,200 each; a tax credit of about two-thirds of health insurance premiums.But many displaced workers don't get these benefits. Although anyone can file a petition to be certified – from the CEO to the lowest-rung worker, from a union to a state agency – not all companies are up-front about the reason they are shutting down.It's bad publicity these days to say you're cutting American jobs to take advantage of cheaper labor overseas, so unless the employees or state officials are savvy enough, a petition may never be filed.In addition, the federal government can't always verify that the workers have been displaced. About a quarter of the petitions are denied. Some may not be legitimate claims, but others may be. The corporate veil is sometimes hard to pierce.The officials who certify eligibility have to complete their investigation in 40 days. In the fourth quarter of fiscal year 2011, the program was happy to report that the average processing time was 61 days — because that was almost half of what it was in the previous year.That still leaves more than 1,000 certifications issued last year covering nearly 100,000 workers nationwide. In New Hampshire, 10 companies were certified, covering 578 workers. But many of the workers won't take advantage of it. Some simply fall through the cracks of the complicated law's various permutations. Others land another job quickly and don't need the benefits."For most people, they can't take off the time for the training while on unemployment. They need to get a living wage right away to feed their families," said Jeri Jewell, state TAA coordinator at the New Hampshire Department of Employment Security.For all that, the state spent about $2.2 million (not including the health care tax credit) of federal money to help the 648 New Hampshire workers who participated in the program (which includes those covered during the last several years). That's roughly an average of $3,400 a worker. Of that, about $667,000 went to training and $859,000 went to wage supports. It costs $452,000 to administer the program."It is one of best programs for those that do partake of it," said Jewell. "I love the idea that it gives people the opportunity to change their occupation if it's no longer viable for them."Customers overseasIn the past, it has been the companies, not the workers, that have filed the most petitions — 50 of the 80 or so examined by NHBR. And even when the petition did come from workers or a union, the company cooperated.But filing the petition was the least that Vice President of Finance John Arico said he could do when ElectroCraft shut down its Dover manufacturing operations in 2008, throwing 70 people out of work.The union's language on the petition was stark: "Moving to China or Taiwan due to price pressure and customer demand."But the decision was a lot tougher to reach, said Arico, who still runs his company — with 17 management employees — out of New Hampshire, even though production work is gone."Our customers ended up going overseas," he said. "And if you wanted to be a supplier, you had to follow them."At the time, the company had three manufacturing facilities, and one of them had to go for the company to survive, he said. New Hampshire simply couldn't compete with the tax breaks of other states."The amount of assistance in Arkansas was awesome — far superior to New Hampshire. Here we rob Peter to pay Paul," said Arico.In addition, New Hampshire was the only unionized plant, though he said the decision was based on overall operational costs.Still, the decision was not an easy one, Arico said. "I was the one who had to talk and let these guys know. I had to let go of my friends. It was tough getting to sleep, tough waking up in the morning and coming into that eerie silence. It was by no means an easy decision."Stacy Surprenant, ElectroCraft's former human resources manager, who characterized the application as a joint petition with the union, was one of those friends who Arico let go, but she quickly found work with another company. So did others, "before they were out the door," she said.As for TAA assistance, several simply didn't apply in time. "We tried to reinforce that you have to jump through all these hoops," she said. "If you missed a deadline, it wasn't going to happen."But there were a couple of people who did. They "switched gears entirely — one who became a nursing assistant used to wind wire for us."'A little disappointed'That sounds like Mary Henry, but Henry had been working for Thermal Dynamics Corp. (then known as Thermadyne, now renamed Victor Technologies) in Lebanon for 37 years.The company had been increasingly sending work to Mexico citing cheaper labor, "but we were told at the production end that material was too expensive to ship down there and there was nothing to worry about," Henry said.In August 2011, however, Thermadyne said it was shutting down its manufacturing operation, with 105 employees, in order to shift production to Texas and Mexico (it still has research and development operations in Lebanon).What followed were months of uncertainty. "You never knew what the end was going to be, you didn't know when. We had a mortgage. I was helping raise my two grandchildren. And I was starting all over again."But she had no intention of going back to manufacturing. Instead, she is getting trained as a nursing assistant. TAA would pay for her education, but she still had severance, and she thought it would be a better deal to pay for the training herself and take the wage differential. That would be half of the difference between the $26 an hour she made at Thermadyne and what she would bring in as a nursing assistant."It's a challenge," she said. "It's the opposite of what I've done in the past. There is a lot to remember and a lot to do, but it's working out."Still, she is more bitter than pleased."I'm a little disappointed that the companies are so greedy. They only thing they care about is what they can make. They care nothing about their employees anymore," Henry said.Henry's sentiment was echoed by Andrea Raymond, who worked at Thermadyne for a quarter of century."The thing was, our plant was not losing money. The company just could make more money if it went out of the country," she said. Still she added, "It's not the first company that's doing it, it won't be the last."George Dunning, senior vice president of global engineering for Victor Technologies, declined comment, referring to the company's public announcements about the closure. But the firm's former human resources director, Anita Porter — who filed the TAA petition — praised the company's efforts to help workers get training.She also said that all workers qualified, even though some of the jobs were going to Texas. "As long as we had the Mexican piece, they covered them all."Raymond had thought her days were numbered after the company went through a complicated merger and financial restructuring in 2010. "They brought in the bankers — you knew what was going to happen," she said.So Raymond went to school at night to retrain as a pharmacy technician. She started at Dartmouth-Hitchcock Medical Center the day after she was laid off at Thermadyne, but instead of making $20.30 an hour, she was getting paid $15.50."Not everybody was that lucky. Some people lost significantly more," Raymond said. Still, she applied for the TAA program for the wage differential, which should be retroactive.Mixed feelingsThat brings us back to Ana Lacayo and Jennylsa Wilson, at Flo-Pro. Wilson — "shooting in the blind," as she said — found her mark. The federal government certified that she and her 127 co-workers did lose their jobs to Mexico.But the 29-year-old Lacayo, single and now in data entry, said that she did not get any benefits from the TAA program. She was already in school, and the program only covered those who were entering school. She also wasn't old enough for the wage differential, and found a job too early to get much help.For Wilson, however, TAA enabled her to spend two years earning a bachelor's degree in elementary education at Southern New Hampshire University. TAA will not only pay for weekly benefits — equivalent to what she would get on unemployment during the whole time, "they are also paying for my tuition, my books, my laptop, transportation. They put everything in front of me to succeed in this program."The whole thing leaves her with mixed feelings. "I worked for these people. The least they could do is have some loyalty for their employees and be honest why they were letting us go," said Wilson.On the other hand, she added: "Now I am working getting a school degree in something I know will be in demand. They are paying for my school, which makes me happy."