Why Creating Jobs is So Tough in America

AB Electrolux, the world’s largest supplier of household appliances, just announced it will close another U.S. plant. This time, the casualty will be 1,000 jobs lost in Texas. The jobs will move to Mexico because labor costs are simply cheaper there.

Earlier in the year, the Swedish company announced the closing of its refrigerator plant in Michigan. Electrolux slashed 2,700 jobs there, also lost to Mexico.

Hans Straberg, Electrolux’s CEO said the company is facing problems at its U.S. floor-care division too, as product prices have fallen by 10% in the second quarter alone. He blamed declining prices on cheap, non-branded imports from China that are flooding the U.S. market. Electrolux attempted to secure higher prices from American consumers by offering premium brands, but failed as consumers have been less willing to select high-end products.

To quote an Electrolux spokesman, “What we are seeing here is like the pattern in the consumer electronics industry, where prices can fall by 20% a year. In appliances we are used to (seeing prices fall) around 3% a year.”

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You many remember Electrolux’s U.S. rival, Maytag, who makes “Hoover,” announced only last month the elimination of 1,000 jobs.

Is it any wonder our job machine just can’t get going?

Is it any wonder China just reported GDP of 9.6% in the second quarter-despite the government’s attempt to cool the world’s fast-growing economy with government lending curbs?

A study of the U.S. Labor Department job reports over the past couple of years shows a constant theme: in the U.S., we are creating only low-end (often retail) jobs while our manufacturing workforce continues to shrink. It’s ironic that we are adding jobs to flog Chinese made goods while losing manufacturing jobs to all kinds of foreign countries; Mexico and China to name only two.

My real fear lies in what will happen when we start to lose construction jobs, as the new-home building industry starts cooling. It will be another not so pretty sight.