How angry voters were made on factory floors

IN 1989, a few months before the Berlin Wall fell, I visited a frozen-food factory in Grimsby, on the northeast coast of England. It was run by Birds Eye Wall’s, then owned by Unilever, and it had just won an award for industrial harmony.

The workers had agreed to job cuts and to work in teams, retraining and raising productivity in return for higher wages. Employees of Birds Eye in Kirkby, Merseyside, had rejected the same challenge, and their factory was being shut.

Grimsby’s escape did not last. Unilever finally declared the factory too small and inefficient, and closed it in 2005; the abandoned building later caught fire.

Unilever went on to sell Birds Eye to Permira, a private equity group, which merged it with other European frozen-food businesses.

I thought of that ruined factory in June when the citizens of Grimsby voted by one of the highest majorities for Britain to leave the EU, and again last week as Donald Trump was elected. Its experience has been repeated in many places since 1989 with the loosening of barriers to trade and migration, and the unleashing of globalisation.

Among them are the former steel towns of western Pennsylvania, which rejected Hillary Clinton. T

ake Johnstown in Cambria County, east of Pittsburgh, where there was once a Bethlehem Steel plant making railroad carriages. More than 12 000 people worked there in the late 1970s, but when it closed in 2007 only 390 were left.

Pittsburgh, which voted for Clinton, is an example of how a cosmopolitan city can recover from the loss of manufacturing. But small-town Pennsylvania still hurts, and Trump won Cambria County easily.

Trump voters had many motives, from hostility to immigration, to anger at wage stagnation, to rejection of social liberalism. Most were not poor. But much of their resentment, and others’ enthusiasm for Brexit, seems to originate on the factory floor, especially manufacturing plants in places such as Johnstown and Grimsby that are now gone. It speaks to the loss not only of jobs but agency: the control that mid-tier employees used to have over their working lives.

They once had greater bargaining power: it was harder for companies to impose changes in how they worked when many factories were unionised and moving production to other places was difficult. When the walls came down, capital became more powerful and more mobile.

The experience of those two factories was typical: a steady intensification of managers’ demands on workers with limited or obsolescent skills, with the threat of work being taken to a greenfield site, or the far side of the world. If they could not get what they wanted, private equity restructuring loomed.

The world split into those for whom mobility was a threat and those for whom it was an opportunity. Birds Eye is now owned by Nomad Foods Europe. Its executives are elite nomads of various nationalities.

People not educated at business schools or trained to run global supply chains have had a tougher time, losing jobs and having benefits stripped. Their losses have torn through communities, making them receptive to Trump’s fierce gospel of social conservatism and economic restoration.

There are many holes in his signature plan to build a border wall, but it has a brute symbolism.

Most economists would say that “taking back control” by

Creation of jobs for locals is lost in the rush to globalise

building walls and ending international trade deals will not have the intended effect. It will not return steelmaking to Pennsylvania or food processing to Grimsby.

But part of Trump’s message made sense, and companies would be foolish to ignore it.

Capital and labour mobility have produced big benefits for consumers, and for citizens in low-income economies, in the past three decades. They have given less to non-elite workers in wealthy economies, and have sapped their sense of security.

Building walls is a bad idea, but making capital work more productively for those in abandoned places is a good one.

The creation of decent jobs for local citizens is a founding purpose of business, lost in the rush to globalise.

How companies and communities achieve it is the hard part. Intelligent rules and incentives are needed to generate and to keep productive work, not to wall it off. But it is dangerous that many employers no longer consider this their role. Until they do, expect more Trumps. —© The Financial Times

Ron Derby is away