60 Minutes Does Ohio, Tearfully

posted by
on March 7, 2008

Last Sunday, two days before Ohio Democrats voted in the Buckeye state’s March 4 presidential primary, 60 Minutes broadcast a very compelling story from Chillicothe, a town of some 22,000 about an hour’s drive south of Columbus. Presenter Steve Kroft interviewed a sad-eyed worker who cried softly as he related his despair that he will lose his job in a paper mill this November. Mr. Kroft also interviewed an equally sad-eyed executive from another local paper company, Glatfelter Co., who said he didn’t know how he could continue to compete when he pays American workers some $20-per-hour and his Chinese competitors pay their workers a small fraction of that. We need tariffs to level the playing field, the businessman told Mr. Kroft, who then earnestly asked Democrats Hillary Clinton and Barack Obama if they agreed that protectionist tariffs were the answer to the woes of American manufacturing. It was powerful television.

Not to spoil a great story, or to deprive anyone of an opportunity for a good cry. But perhaps more than a few viewers might have refrained from reaching for their hankies if they had known a few basic economic facts that 60 Minutes didn’t tell them. Consider first the executive from Glatfelter’s Chillicothe paper plant with the fearful look in his eyes as he talked about China. Glatfelter is headquartered in York, Pa., and its Chillicothe operation is one of several in Ohio and Pennsylvania. But there’s more. Glatfelter employs more than 3,800 people worldwide, including Germany, the United Kingdom, and the Philippines — plus an office in…China. Last year, Glatfelter reported record profits. And it turns out that the soon-to-be unemployed Ohio paper worker’s job is indeed moving — but to Wisconsin, not China.

The awkward thing about facts is that they can get in the way of a great story.

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Of course, a great television reporter like Mr. Kroft would have no way of knowing such things. First, he would have had to consult Glatfelter’s website. That’s asking a lot. And who would think of checking clips from Wisconsin newspapers in a story that focuses on Ohio? Moreover, to better understand the health of the domestic paper industry, Mr. Kroft would have had to dig into the files of a recently failed anti-dumping case called Coated Free Sheet Paper from China, Indonesia, and Korea. Everyone knows that such low-level, grubby research is beneath the dignity of any television correspondent who looks so good in trench coats.

In this case, for example, if Mr. Kroft had known that Glatfelter Co. has a pulp mill in the Philippines, he might have asked the soulful-looking Ohio-based executive if his company pays its Filipino workers $20-per-hour. And what’s this about China? Mr. Kroft might have asked.

Talk about awkward. 60 Minutes had an important news hole to fill, just a few days before an important presidential primary vote. It costs money to send producers, researchers, camera crews, and high-priced on-air talent to Chillicothe, Ohio. Probably anyone on the 60 Minutes staff who would have started bringing up facts like those reported in this article would have been as popular as, say, a mid-level CIA analyst before the U.S. invasion of Iraq who might have dared to question whether the agency was really sure where those weapons of mass destruction were. Besides, is it the business of 60 Minutes to go about confusing American voters — particularly in certain parts of Ohio that are, dare we say, a tad insular — who are increasingly of the opinion that international trade is bad for them? This is television, people.

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Not knowing that he was speaking to an Ohio executive who worked for a sophisticated global paper company, correspondent Kroft asked John Blind, a Glatfelter paper company vice president, about his “problems specifically with foreign competition in the paper business.” Mr. Blind, responded by saying this of China: “They’re paying their employees about 1/40 of what we pay our employees. They do not have environmental regulations to deal with.” Mr.Blind said that it would take “some courage” for the next U.S. president to help companies like his compete. When Mr. Kroft asked him to say what sort of courage he was talking about, the Glatfelter executive declared, “I think there needs to be some form of tariff to level that playing field.”

Mr. Kroft then asked Senators Obama and Clinton to respond to Mr. Blind’s complaints each of them were “sort of nibbling around the edges trying to make improvements, when to do all the things you’re talking about there needs to be stronger action, bolder action, a more protectionist policy, tariffs.” He was asking the candidates to pledge to make a major shift in U.S. trade policy — one that would have a major effect upon the health of the American economy, which would then be headed back to the 1930s.

Because words uttered on television often seem to slip away into the ether, let’s record how each candidate — one of whom might be the next occupant of the Oval Office — responded:
Mrs. Clinton took the bait: “We have to have a time out on trade, which is what I’ve said I would do as president. We need to step back and say, ‘Look. During the 19th century we had tariffs when we were growing our economy. During the 20th century, open markets were to our advantage, because we were by far more productive.’ Well, now we got a new set of problems. I’m all for trade. But I don’t want to be a patsy.”

Mr. Obama was more nuanced: “I don’t think we can draw a moat around our economy. But what we do have to say is, ‘We’re gonna drive a tough bargain. If you want access to our markets, you’re gonna have to open up yours.’ Now, is that gonna solve all our problems? No. But it’s a good place to start.”

Asked if he agreed with Mrs. Clinton that this might be a good time to revert to U.S. history of having a “protectionist policy,” and that we need a “time out” on trade,” Mr. Obama responded: “The problem with the time-out is, the rest (of) the world’s not takin’ a time out. I don’t think we should be afraid of competition with the world. I think what we have to do is to be smart about competition in the world.”

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There will be plenty of time as the campaign progresses, and long after that, to analyze what each candidate really meant, or how much of the rhetoric was other than simply trying to get on the good side of American voters who fear they can no longer compete.

For now, merely note the irony that the 60 Minutes questions that suggested that the next U.S. president might want to put tariffs back at the heart of American trade policy were prompted by an American corporate executive whose company operates globally and is currently enjoying record profits.

On Feb. 20, 2008 paper manufacturer Glatfelter reported “a record sales year in 2007, including an 81 percent jump in its specialty paper business between the fourth quarter of last year and the fourth quarter of 2006.” Those record 2007 sales were $1.1 billion, with earnings in the fourth quarter up more than 30 percent from the previous year. The company attributed its growth in profits to “ongoing improvements to its Chillicothe, Ohio, plant, which has been a drain in recent years on the company’s bottom line.”

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As for the Ohio worker who drew tears when he said his job at another paper plant in Chillicothe would be lost this November, his plight indeed deserves sympathy. “Paper makin’s all I know for 27 years. That’s what my dad did for 41 years,” said Kenny Schoenholtz.. In certain parts of the country — auto workers in Michigan, textile workers in the Carolinas, shrimpers in Louisiana, and inward-looking parts of Ohio — American workers have been encouraged by their leaders in government and the unions to believe they deserve lifetime job security, with no need for further education and training. Such people need far more help than tariffs can ever provide — but who will tell them? Certainly, candidates for office who dare to challenge ingrained cultural beliefs risk losing much-needed votes, as John McCain learned in this year’s Republican primary in Michigan.

So who got Mr. Schoenholtz’ vote in the Democratic primary in Ohio? He told 60 Minutes that he was wavering between Mrs. Clinton and Mr. Obama, but was worried that Mr. Obama was a Muslim who “doesn’t even know the National Anthem” and “wouldn’t use the Holy Bible.” At least, this was one false fact that Mr. Kroft shot down, informing a surprised Mr. Schoenholtz that the suggestion that Mr. Obama was an unpatriotic Muslim was simply “not true.”

It also isn’t true that Mr. Schoenholtz is losing his job because of China. The short version of this part of the story that 60 Minutes missed is that the Ohio-based NewPage paper manufacturer, is indeed going to close a paper converting operation in Chillicothe. But the jobs aren’t going to China. NewPage has recently spent some $2.5 billion to buy some facilities in Wisconsin that employ more than 2,300 Wisconsin workers. Some equipment from NewPage’s Chillicothe, Ohio paper converting operation will be moved to Wisconsin — adding some jobs in some operations there, cutting them in others. The company has said that it will offer new employment opportunities first to workers who have been displaced from other mills. Sounds more like a story of business efficiencies than jobs being stolen by “unfair” foreign trading practices.

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NewPage, however, like Glatfelter and other American paper manufacturers, also has been quick to blame foreigners for perceived competition problems. Last year, NewPage took the domestic paper industry’s lead in pressing U.S. anti-dumping officials to throw up punitive tariffs on allegedly “dumped” coated free sheet paper from China, Indonesia, and Korea. It is very rare that American petitioners lose such cases, as the trade laws are written to give them the home-court advantage.
But in December 2007 — just weeks before the Ohio primary — the U.S. International Trade Commission threw out the case, on grounds that the American paper industry could not show that it had been hurt by foreign competitors. A few numbers the ITC published as part of its lengthy analysis of the case tell the story in terms that even a television audience could grasp: While the American paper makers lost 533 jobs between 2005 and 2006, the ITC said that a “modest” increase in the Asian imports had not significantly depressed domestic prices enough to threaten the health of the domestic paper makers. The U.S. industry’s operating income was a healthy $76 million in 2005, and $167 million in 2006. The ITC also noticed that NewPage could afford to buy more plants in Wisconsin at the same time it was petitioning the U.S. government to help it fend off foreign competitors.

But such stories are not ready-made for television news, which is increasingly a business focused on market share and ratings. Above all, the smartest television journalists strive to keep story lines simple. Tears sell. Fears sell. Stories that require a measure of economic literacy, don’t.