LAT on the U.S. As Low-Wage Offshoring Destination

Where does Ikea build a plant when it wants to offshore work to pay poverty wages, bust unions, force mandatory overtime, and generally slave-drive their workers?

The quote of the day goes to Bill Street, a union organizer in Danville, Virginia, on that:

“It’s ironic that Ikea looks on the U.S. and Danville the way that most people in the U.S. look at Mexico,” Street said.

The Los Angeles Times has a great piece by Nathaniel Popper looking at how the Swedish giant treats its American workers like dirt (emphasis mine) at its Swedwood manufacturing subsidiary:

Laborers in Swedwood plants in Sweden produce bookcases and tables similar to those manufactured in Danville. The big difference is that the Europeans enjoy a minimum wage of about $19 an hour and a government-mandated five weeks of paid vacation. Full-time employees in Danville start at $8 an hour with 12 vacation days — eight of them on dates determined by the company.

What’s more, as many as one-third of the workers at the Danville plant have been drawn from local temporary-staffing agencies. These workers receive even lower wages and no benefits, employees said.

Swedwood’s Steen said the company is reducing the number of temps, but she acknowledged the pay gap between factories in Europe and the U.S. “That is related to the standard of living and general conditions in the different countries,” Steen said.

True! I believe Virginia is what you call a “pro-business state.” It’s so pro-business that it’s paying Ikea $12 million in incentives to give it those 335 crappy, low-paying jobs. I don’t know what the average wage is at the Danville Ikea plant, but just as an exercise, that $12 million is more than twice what the entire labor force there earns in a year on an average wage of $8 an hour.

Hey, silver lining: American business will be able to keep all those jobs they offshore closer to home, as the gap between labor costs here and in China narrows sharply.

There also seems to be a racial discrimination problem at the plant, and Popper and the LAT throw in the media angle, too:

The dust-up has garnered little attention in the U.S. But it’s front-page news in Sweden, where much of the labor force is unionized and Ikea is a cherished institution.

You know things are probably not good when workers in the South try to organize:

Some of the Virginia plant’s 335 workers are trying to form a union. The International Assn. of Machinists and Aerospace Workers said a majority of eligible employees had signed cards expressing interest.

In response, the factory — part of Ikea’s manufacturing subsidiary, Swedwood — hired the law firm Jackson Lewis, which has made its reputation keeping unions out of companies. Workers said Swedwood officials required employees to attend meetings at which management discouraged union membership.

Things are so different from how Ikea treats its Swedish employees that the head of its Swedish union is baffled by how bad it’s acting in the U.S.

“Ikea is a very strong brand and they lean on some kind of good Swedishness in their business profile. That becomes a complication when they act like they do in the United States,” said Sjoo. “For us, it’s a huge problem.”

This is terrific labor reporting by the LA Times.

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Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at Follow him on Twitter at @ryanchittum. Tags: , , , ,