The Rostrum
By BRUCE A. PETSCHE President, Peerless Metal Industries, Inc.

Business rebuttal

IN THE July 1980 Illinois Issues I read "Unrestrained corporate power" by Roberta Lynch, who is briefly described as "active in the New American Movement" and who has worked in "local independent politics in Chicago." As a lifelong Chicago area resident, it is comforting to hear that there is such a thing in Chicago as "local independent politics."

Nonetheless, it seems Ms. Lynch's knowledge of economics is limited to decrying corporate putdowns of OSHA. She alleges that plant closings "are made without the slightest input from employees, their unions, or local or national governments."

This statement is so naive, it reveals total ignorance of how jobs are created, why companies locate where they do, the entire scheme of profit and loss, and why one state's economic climate causes industry to wither, decay, and move to where it is wanted. Ms. Lynch is a typical do-gooder who is no doubt well-intentioned. She throws some nifty rocks at businessmen in the greenhouse, but has never gotten involved in trying to put all the panes in place when the greenhouse was built.

The last week of June rocked the meat packing world as Swift & Co. (division of Esmark) ticketed several large fresh meat processing plants for closing. The basic reason for this is simple. Swift can't make any money in Illinois due to long-standing wage contracts that are as much as double the scale in competing (non-union) meat packing plants. For years the union has known that Swift was in trouble, but they never thought Swift would close the plants. They were wrong.

Why is this relevant to Ms. Lynch? Because she, along with many other value and price-conscious American shoppers, will not pay more for a product than they have to. Maybe Swift bacon will command a penny or two more than some competing brands, but not enough to make up for a wage differential of $14 to $7 for competing packing plants!

In the Swift case, which happens to be one of many convenient examples, there must have been dozens of discussions with union officials, shop stewards, even individual members: warnings to mitigate the cost of new wage contracts. Result? Too little. Union officials are politically motivated. They don't get reelected unless they can show their membership "what they've done for them lately."

Ask the people at Rochelle if they'd rather have Swift stay or leave. Whose fault is it that Swift is leaving? Management? Labor? The typical American consumer who will not pay any more for Swift meat than any other brand? That's as it should be. Competition, free enterprise, Iowa Beef be praised.

"You asked for it. You got it," says Toyota.

By the way, Ms. Lynch, who created Youngstown, Ohio? Wasn't it American consumers who bought Japanese cars instead of American cars — the same Japanese cars that are made in factories without OSHA and EPA restrictions?

OSHA regulations, I am told, have not cut down on the number of deaths or serious injuries per man-hour since the day they were implemented. EPA regulations have forced who knows how many American foundries, forging shops, and castings manufacturers out of business — and chased these businesses overseas where citizens appreciate that some smoke out of a stack creates some pollution, but also jobs.

The bottom line is that plants are closed here in America — and in Illinois — because it is simply not profitable to keep them operating. OSHA, EPA, the environmentalists, and, yes, even the consumerists — Ralph Nader included — put a lot of Americans out of work. Nader successfully put the Corvair auto into the Smithsonian museum when the Volkswagen, with equally dangerous skid and crash potential, was allowed on the street. I drove a Corvair 85,000 miles and loved it. I am sorry we stopped GM from making it. It might have helped prevent widespread unemployment in the automotive business in the USA.

Get into the real world, Ms. Lynch. Stop throwing rocks at the "Corporate Bully." Your column about "Unrestrained Corporate Power" is a classic study in economic illiteracy. If you want all manufacturing plants to stay right where they are, perhaps your "New American Movement" can be redefined as socialism. But, I am not ready to accept that. I hope a majority of readers of Illinois Issues are not ready for socialism either. Obviously, neither are many millions of British subjects who, disillusioned by ineffectiveness of government bureaucracy over the last 30 years, have given Maggie Thatcher a mandate to "Turn It Around."

In the 23 years that I have been involved in my family business, we have grown from six employees in 1958 to 118 in 1980. That is not General Motors, but it has taken a lot of work and struggle to create that many jobs. Our jobs are based on doing business with Illinois manufacturers. I don't want them to leave the state, either! But the way to keep those jobs right here is to provide an economic climate in Illinois that will give them reasons to stay. That could very well be the topic for Ms. Lynch to research. See just why it is that plants close, and Ms. Lynch will discover how out of place her statement is: "These moves are invariably effected without the slightest input from employees, their unions, or local or national governments." I suggest you write Donald Kelly, chairman of Esmark.

October 1980/Illinois Issues/39