SEPTEMBER 1996 · VOLUME 17 · NUMBER 9
B E H I N D T H E L I N E S
"CHAINSAW" AL DUNLAP IS BACK, and Wall Street is applauding wildly.
In August, the former chair of Scott 0Paper was named chair and chief executive officer of the Sunbeam Corporation, a Fort Lauderdale, Florida-based maker of consumer products ranging from toasters to barbecues to heating pads.
The stock market responded ecstatically to the announcement of Dunlap's hiring, driving up the value of the company's stock 49 percent in a single day's trading, thereby increasing the paper value of the company by $495 million.
Dunlap became famous at Scott Paper, where he fired 10,500 workers, more than one third of the entire company workforce. After slashing the workforce, Dunlap put the company up for sale, selling it to Kimberly Clark for a share price 224 percent higher than when he took the top job at Scott. Dunlap made more than $100 million in the transaction.
Dunlap's performance at Scott earned him a place on Newsweek's famous "Corporate Killers" cover.
But Dunlap stridently defends his modus operandi. A former factory worker himself, he says he understands the pain he has inflicted on workers at Scott and the more than half dozen other companies he has headed, but that his sole duty is to increase shareholder wealth.
Dunlap expounds on these views in a forthcoming book entitled Mean Business: How I Save Bad Companies and Make Good Companies Great.
Sunbeam has a reputation as a poorly managed company with excess staffing. Wall Street analysts expect Dunlap to quickly apply his chainsaw to Sunbeam.
That Sucking Sound
APPROXIMATELY 400,000 U.S. JOBS have been lost due to the North American Free Trade Agreement (NAFTA) in the past two years, concludes a new report from the Washington, D.C.-based Economic Policy Institute (EPI).
The U.S. merchandise trade balance with Mexico and Canada has plunged by $25.5 billion since NAFTA went into effect. This translates into a 392,000 job loss in the United States. A different measure, change in net exports, shows NAFTA to have eliminated 484,000 jobs.
Using the higher figure, the report finds that nearly 284,000 jobs were lost to Mexico, and 200,000 to Canada.
Industries registering heavy job losses due to trade with Mexico include motor vehicles and parts (the hardest hit with 69,000 lost jobs), television sets, communication equipment and computers. U.S. job losses due to trade with Canada were most pronounced in the paper products sector, where more than 48,000 jobs were lost.
"It makes little sense to consider only the employment-creating effects of exports while ignoring the employment-displacing effects of imports as NAFTA supporters have tried to argue," says Robert Scott, author of the report and an EPI research associate and assistant professor at the University of Maryland.
Scott emphasizes that most U.S. exports to Mexico are capital goods and component parts of products which were formerly made in the United States. "Exports to these plants do not create new jobs, and a trade balance measure is therefore the most accurate basis for estimating the employment effects of changing trade patterns."
The report also notes that, by giving employers an enhanced ability to threaten to shift production to Mexico, NAFTA has had a significant effect on U.S. wage and benefit levels. The "reduction in [workers'] bargaining power seems, in retrospect, to be one of the most important and least understood consequences of NAFTA," the report states.
Fed Up With Corporations
DESPITE DECADES OF ANTI-GOVERNMENT political rhetoric, U.S. citizens are angry enough at corporations that they are ready to support an increase in direct government action to make corporations act more responsibly, according to a nationwide opinion poll.
Most U.S. citizens are at least as angry at corporations as they are at government, the poll found.
The poll of 800 registered voters was commissioned by the Preamble Center for Public Policy, a new Washington, D.C.-based research group, and conducted by Ethel Klein of EDK Associates and Guy Molyneux of Peter D. Hart Research.
The poll found that:
"With Americans increasingly recognizing corporate behavior as a central economic problem, political leaders are going to feel pressed to demonstrate their concern for average working people by demanding accountability from large corporations," Molyneux says.
-- Robert Weissman and Russell Mokhiber