August 9, 1978

Three Cheers For Profit

Governor Jim Rhodes is fond of saying that "profit isn't a dirty word in Ohio," but he will have to find a new slogan if the proposed Community Adjustment Act is adopted by the Ohio legislature.

The bill was inspired by the closing of steel mills recently in Youngstown, throwing 5,000 workers into the unemployment rolls.  The closing of Akron rubber plants further aggravates the state's industrial health.

In both cities, the principal industry prepares to move to efficient new plants in other states.  It is cheaper to move and build new factories than to renovate.  In addition, Sun Belt states offer cheaper labor, tax breaks, and less fuel costs.  The combination is hard to beat.

The Community Adjustment Act, in effect, accepts defeat as inevitable and would lock up the industry we now have.  It would attempt to legalize industrial slavery – to force a company to stay in one place against its will and continue to operate with competitive handicaps.

Required under the proposed law would be a two-year notice of intention to move outside Ohio, a large financial payment to the state, and severance payments to individual employees substantially larger than already part of labor contracts.

There is no question that the legislation is unconstitutional - violating the "involuntary servitude" article.  Thus the bill would be struck down by the courts should it be rammed through the assembly.

The very fact that such a restrictive law has been proposed has already done great damage to industrial expansion in Ohio.

We are losing industry - and the jobs and taxes it provides - to southern and western states.  Ohio's relative population is declining apace.  We certainly are going to lose one Congressman after the 1980 census, perhaps two.

I am involved in trying to persuade a small industry already located in Arkansas to expand into northeast Ohio near its principal market.  Management seemed pretty much sold until they heard of the Community Adjustment Act.

"A move to Ohio would be a gamble under the best of circumstances," declared the chief executive.  "We are young and growing.  We might or might not be successful in developing our Ohio market enough to produce a profit.  The risk is considerable without a possible added penalty if things don't work out.  There is less risk in expanding in Arkansas and paying a small shipping premium, than in losing everything in your state."

I'm hoping that the legislature will kill this preposterous bill quickly and with sufficient voting emphasis to demonstrate to prospective new industry we mean business - not monkey business - in Ohio.

If the bill languishes too long in the Assembly, its threat may push over those industries in Ohio flirting with the idea of closing down or moving.  Holding on and trying to save a marginal business may entail unacceptable penalties.

The AFL-CIO met last week in Chicago to assess its program of labor legislation which is moving badly through Congress.  Some militant labor leaders advocate "war on big business" if their proposals fail to pass.

Profits are large and companies resist union demands, say labor leaders.  "They're trying to kill the labor movement," declares William Winpisinger, head of the militant International Association of Machinists.  "They want us out of the picture altogether."

An aide to Labor Secretary Ray Marshall said he expects "things will become a lot more acrimonious."

A member of the National Labor Relations Board said recently that "all hell may break loose."

Labor leaders are getting up tight because their membership is sliding downward as union workers question policies that dig deeper into their paychecks and kill jobs.  Only 25 percent of private sector workers now are unionized.  Public employment - in government bureaus, teaching and the post office - is booming.

The class warfare of the 30's is obsolete.  The old bugaboo of "they" and "us" is toothless.  "War" against employers no longer churns the juices of employees.  The new generation of workers sense their secure, well-paying job depends as much on management as on their unions.

Large profits mean the company will stick around one more contract, and the stockholders who put up an average of $30,000 per employee for productive machinery will do it again.  A good profit company is an easier touch for pay hikes next go around.

Unions should pass around champagne and do cart wheels down the assembly line when their company comes out ahead on the balance sheet.  If sales slump, or a local expansion would be helpful, unions ought to be knocking on the executive suite offering to step up production and hold the line on costs.  Deck hands drown just as fast as the captain when the ship sinks.

One thing Ohio's ship of state doesn't need is more ballast.  The Community Adjustment Act builds in failure.

What everyone needs is less law, and a cheering section for profit.

Author: Lindsey Williams