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CORPORATE RIGHTS AND RESPONSIBILITIES

WEDNESDAY, JUNE 23, 1976

U.S. SENATE,
COMMITTEE ON COMMERCE,

Washington, D.C. The committee met at 10 a.m. in room 6202, Dirksen Senate Office Building, Hon. Vance Hartke presiding.

Senator HARTKE. The committee will come to order. The first witness this morning is Jake Clayman, of the Industrial Union Department, AFL-CIO.

I might announce, just for the benefit of all concerned, that in the policy committee meeting yesterday, it was decided that in order to expedite the remaining business on the calendar, that no committee hearings would be permitted except for extraordinary emergencies beginning Monday of next week, and except for the purpose of consideration of nominees.

So that these hearings will be terminated, or all hearings will be terminated at the end of this week in this session of Congress.

I don't know if that announcement has been made public, but it is not a secret.

All right, Mr. Clayman. STATEMENT OF JACOB CLAYMAN, SECRETARY-TREASURER, IN

DUSTRIAL UNION DEPARTMENT, AFL-CIO; ACCOMPANIED BY RICHARD PROSTEN, DIRECTOR OF RESEARCH

Mr. CLAYMAN. Mr. Chairman, I have with me Richard Prosten, the director of research for the industrial union department.

I will not read my testimony, but would ask that it be placed in the record, and, hopefully along with it, one of the issues of Viewpoint, an IUD publication, which makes many of the points that we make in our basic testimony, but with greater itemization.

So let me proceed. I want to this morning simply itemize a few cases, a few situations, which indicate to us a relatively mammoth disregard for workers in the community on the part of many of our American corporations.

These situations indicate that there is a need for restraining some of these practices and not to continue to permit unbridled action on the part of some of our corporations and the need for more Federal regulatory action.

The remedies, in our judgment, are perceivable; some of them already are known to the chairman.

(395)

Indeed, the chairman has given voice to some of these remedies, so far without success except to raise the visibility of the issues mightily, both in Congress and in the country.

And insofar as this has happened, it offers some hope that ultimately we may be able to obtain the kind of solutions that we think are necessary.

Example: Every time I go to New England, as I suspect has happened to you, Senator, and I see the deserted factory buildings that once sustained workers and their communities, and have gone off to other climates, like the South, without any regard to the consequences to the workers, the population, to the community, I get another signal of man's inhumanity to man.

And of course this mass exodus has taken place in our time; while it has done something, of course, for the people of the communities that they went to, it has distorted and made shambles of the economy and the lives of tens of thousands, perhaps hundreds of thousands of people, by going to the South for low wages, and so-called tractable labor, with concessions made by the State and the communities to which they migrated—tax concessions, free buildings funded by the communities taxpayers' moneys, and many other inducements, without even an apology to the great masses of people affected in New England and in upper New York State, in Pennsylvania, and elsewhere.

And I offer this, Mr. Chairman, as one general example of the kind of disregard for the human condition which is accepted as a matter of course in our country.

In some democratic countries this doesn't happen as readily. In some democratic countries, Western Europe, the Scandinavian countries, and others, there is some restraint on this unbridled permit to travel wherever they see fit without concern for what happens in the community they left.

As I say, it is one of the sad commentaries on our situation in the United States and I feel kind of melancholy every time I go through a New England town where this is the unhappy fact.

Example: I am thinking now of the little town of Owensboro, Ky., not very far from the border of your State, Senator. I remember being there a couple of years ago, invited to a meeting they were having, and there I learned something that otherwise I might not have known about, obviously the public doesn't know about it, the Senate, I suspect, does not know about it, this committee doesn't know about it. GE simply took lock, stock, and barrel most of the machinery from the factory, making parts for TV's, called TV mounts, television mounts, and sent it to Singapore. Two thousand workers in that relatively small community-I am sure you have been there, Senator—were out of work, many of them had spent half a lifetime there, middleaged folks, the average age of the working community was relatively high. No jobs in the community for them to go to. The whole business of retraining was senseless, useless. Retraining for what in that community?

And the question obviously for this committee, for the Senate, indeed for the people of the United States is-should a company be permitted to do this with complete impunity because its operation is more profitable in Singapore?

Of course I need not tell you what has happened—this is simply one example of it—what has happened to the television industry. I think we now have about 4 or 5 percent of the black and white TV industry left in the United States. It has all gone abroad, taken abroad by American multinational corporations, simply by their own fiat. No one passed judgment on it except the corporations, I assume except its managers, rather than its stockholders.

The color TV is going the same way. In the course of a few years the penetration from abroad of color TV has gone from 2 percent to 26 percent. Every likelihood is that in a few more years we will have no color TV, and there are thousands, tens of thousands of workers in that industry. What becomes of them? What becomes of our own necessity for some kind of commitment in terms of national defense and otherwise?

Example: Royal Typewriters, Litton Industries, one of the bright new guys on the block, multinational corporation, conglomerate. They had a bit of a labor dispute in Springfield, Mo., and they used the labor dispute as an excuse—when in fact they made their policy, long before the labor dispute—to ship out lock, stock, and barrel the entire machinery from the Springfield plant to Portugal. And now Litton makes its typewriters, bearing the Royal name, there.

What arrangements there are between Litton and the Portugese industrialists who manufacture them there I don't know. But we do know that the workers stranded in Springfield haven't yet had their vacation pay settled, and the plant closing happened years ago, and haven't had their pension rights clarified yet.

Example: J. P. Stevens has become one of the famous cases in point or infamous, depending on your point of view. This is a situation again where the results have been the product of corporation domination of the communities in which they manufactured, right-towork laws, quiescent worker population, full of fear—and this is remarkable in our country, where we prize ourselves on our ability to stand up and talk to each other.

Twelve years ago—and I recite some of these facts in our written testimony—12 years ago both the Industrial Union Department, for whom I work, and represent here today, and the Textile Workers Union, started the process of trying to organize J. P. Stevens down south, a big corporation, about 40,000 employees.

Now let me give you the litany of woe. J. P. Stevens was cited 15 times by the National Labor Relations Board for violation of U.S. law, labor-management laws. Almost all of these cases, perhaps with one exception, were upheld by the U.S. Court of Appeals, because the company automatically appeals every case. The Supreme Court refused writ of certiorari about three times. The company was required to pay $1.3 million to workers because they were wrongfully fired, illegally fired. They had to pay $50,000 in a settlement because of wiretapping, a wiretapping case and the wiretapping being the company people.

But, you see, Mr. Chairman, this was a cheap price to pay, $1.3 million and $50,000, and I don't know what their attorneys' fees might be, but they are probably astronomical, but it was a cheap price because for 10 or 11 years they have been able to thwart unionization, and for 10 or 11 years they have been paying substandard wages, and

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for 10 or 11 years they have been able to prevent the payment of decent trade union wages. So they are making money by thwarting the law, by being a scolilaw. They are no different than the fellow who gets 15 or 20 or 40 citations for illegal parking, for speeding, and all of the rest. Scofilaw. And yet they are able to go on their merry scofflaw way with relative impunity.

Indeed every single year they get DOD contracts. Scofflaw. Apparently there is no onus attached to it. It depends upon the nature of the crime.

Now, Mr. Chairman, there is a picture of a situation—it could be this company, it could be another company—a situation where the laws do not yet in our country, the labor-management laws in this specific case, do not prevent and so far can not prevent on the part of a determined employer the kind of activity, the kind of violation of the law, over and over and over again that I described to you.

What do we do about it? Well, obviously the first thing it seems to me is that you reform the law. You change the labor-management law, which obviously hasn't worked in situations like this. Or, as some are now suggesting, and I don't feel expert enough to comment intelligently on it, Federal chartering of corporations.

Well, there are more direct ways of approaching it, I suspect, and one is simply the business of liberalizing our existing laws to make it possible for Government, which has recognized the right to organize by workers, to make it possible to eliminate this kind of antiunion practice.

Just parenthetically again I repeat this, because it irks me no end, it irks trade unionists no end, for this kind of behavior, the Government not withstanding awards them with contracts every year. And there are dozens and dozens of large corporations in this area that can provide the same kind of services, produce and sell the same kind of product as J. P. Stevens, but the scofllaw corporation gets special treatment.

Finally, I want to talk about what we consider our very special problem, and that is the unbridled activities of American multinational corporations.

I suspect I am not saying anything that the chairman is not fully aware of, indeed may be more so aware than I am.

Since the late 1950's, just in this very short span of years, the most phenomenal industrial growth in the world have been that of the American multinationals abroad.

If historians write about this period in terms of economics, I think they will single out this fact. In our judgment multination corporations have been behaving omnipotently with powers greater than many nations.

The last figures I saw, and they could be off some, because the statistics are horrendous in this area—and I will talk about that soonAmerican multinationals were producing abroad in the neighborhood of $400 billion worth of goods.

If you want to get a sense of perspective on this, the total American exports is roughly in the area of $100 billion a year. Recently I noticed in one very short span it nudged close to $120 billion, but that can go up or down. It has been roughly $100 billion, our total export, as

against roughly $400 billion of product produced abroad by American corporations.

We have been making the point, and I make it again, I must confess to you I do it in every and any forum, because we don't yet fully comprehend, in our judgment, the recklessness of our lack of public policy in relation to American multinational corporations.

We export technology, export capital, export jobs.

TECHNOLOGY

I am sure, Mr. Chairman, both of us were raised on the truism, not a misconception, a truism, that our one defense, our one shield, our one advantage, our one ace in the hole, in terms of competition in the world was that we had a big technological edge. We were bright, we knew how to invent, we knew how to handle the industrial process, and so what if Singapore paid 12 cents, or Taiwan paid 22 cents, or Korea paid 11 cents, or whatever, we knew how to invent and we know how to produce.

I think this is true. We have been inventive, we have been ingenious. But willy-nilly we are shipping out that advantage, our technology.

I know that statistics are dull, but I will tell you, these statistics are the stuff out of which our future will be made, and is being made now.

Of all of the world technology, of all of the technology exported in the world, the United States exports from 50 to 60 percent of it. And of the 50 to 60 percent of all export of technology in the world, American multinationals export 88 percent of that.

So it is almost exclusively the export of technology by American multinational corporations are that we are concerned with.

If you want to get again the relationship, the British, who are No. 2 in exportation of technology, they export only 12 percent. And I know now why the Japanese are so ingenious, they import 23 times more technology than they export. And that tells me something about their capacity to survive in the competitive world, without any raw materials of their own of any consequence whatsoever, in a tight little island, overpopulated, but they have learned the tricks of competition.

CAPITAL

How many times have you heard, Mr. Chairman, that we have got to give more tax concessions to the multinational corporations because they dont have enough capital?

I suspect there are some industries that can make that point validly, namely, the shortage of capital. But I find it difficult to lend a listening ear when we know that from $25 to $30 billion every year is sent out and invested by American multinationals abroad.

And you can't cry for special tax concessions in one breath, and in the next breath, or out of the other pocket, to mix a metaphor, send out that vast amount of capital.

Much of it, incidentally, will be in competition with American corporations that remain in America.

Another fact, roughly 542 million workers are retained by American multinational corporations abroad. I don't say that all of those could be transferred to the United States. That is not realistic. But I tell you,

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