Jobs In Asia Getting Decimated As Exports Crash

Discussion in 'Economics' started by ByLoSellHi, Jan 22, 2009.

  1. Jobs Vanish as Exports Fall in Asia


    Published: January 21, 2009

    KARAWANG, Indonesia —
    At a three-story factory here that used to make television remote controls, most of the fluorescent lights have been turned off. The hallways are nearly silent, and three-quarters of the workers have been laid off.

    A pencil factory down the road closed last September, laying off 100 workers. Another nearby factory that turned out carved and painted wooden window frames shut down and laid off 800 workers. And two Toyota factories, one here in Karawang and another in a nearby city, have not renewed the contracts of 277 temporary workers.

    “In our 11 years here, this is the worst situation with so many layoffs — not even in 1998 was it this bad,” said Abraham Sauate, the manager of the TV remote factory, comparing today with the Asian financial crisis in 1997 and 1998. “The problem now is we don’t know where to go, and we don’t know how long it will last.”

    On Thursday, Japan said exports fell 35 percent in December from a year earlier as the crisis hurt its main markets. China and Japan draw the most attention, but the global slump in manufacturing is spreading across Asia.

    A former worker outside an empty building that once housed a garment factory in Bekasi, near Jakarta in Indonesia.

    Industrial production is dropping in South Korea at the fastest pace since record keeping began in 1975. Taiwanese exports dived 40 percent in December compared with a year earlier. And ports from Indonesia to Thailand are handling ever fewer shipping containers.

    “There’s not a country in the region that is not slowing sharply or in outright recession,” said Stephen S. Roach, the chairman of Morgan Stanley Asia.

    During the last crisis, investors took their money out of country after country. Asian leaders thought they had found a solution — increases in exports to the West, particularly of electronics. But that dependence on exports fed this crisis. Now American and European buyers are pulling their import orders from country after country. And while governments have short-term economic stimulus plans, long-term answers seem more elusive.

    Hard times in factory towns are especially troubling in Asia, where countries depend on manufacturing for a far greater share of economic output than Western countries do, as much as 40 percent in the case of China and other big exporters.

    That is triple the current 13 percent in the United States, and much higher even than the American peak of 28 percent in 1953.

    While all of Asia is suffering, some economies are feeling the effects of the global downturn less than others.

    Many of these countries are latecomers to the world market. They have even lower wages than China and were just starting to benefit from the arrival of businesses seeking to avoid increases in wages and other costs in China from 2003 through last summer.

    For example, Bangladesh’s exports are dominated by the sale of low-cost garments to mass-market retailers like Wal-Mart that have fared well as consumers have begun shifting toward thriftier purchases. Garment workers in Bangladesh still earn $40 to $50 a month, barely half the minimum wage in export-oriented coastal cities in China.

    Economic difficulties in the West “will have an impact on Bangladesh in terms of our growth rate, but I’m not concerned it will eat into our share” of the global garment market, said Mustafizur Rahman, the executive director of the Center for Policy Dialogue, a nonpartisan research group in Dhaka that specializes in trade and other economic issues.

    The numbers bear that out. While overall American imports dropped 12 percent in November compared with a year earlier, imports rose from Bangladesh and from Vietnam. Each country shipped more knit apparel to the United States, and Vietnam also shipped more furniture.

    Few countries were hit harder in the Asian financial crisis than Indonesia. Much of the banking system collapsed, economic output plunged, riots ensued and the government fell.

    But Indonesia is often described as one of the less vulnerable countries in Asia, because its insular economy relies less on trade than other countries in the region. With the world’s fourth-largest population — after China, India and the United States — Indonesia has long had a domestic market big enough to sustain large industries without the need for foreign markets.

    Yet the difficulties here in Karawang show how far the global downturn now reaches. The factories here have attracted workers from all over Indonesia. More are now losing their jobs, just as tens of thousands of migrant Indonesian workers are coming home after being laid off in neighboring countries like Malaysia and Singapore.

    President Susilo Bambang Yudhoyono, who is expected to seek a second term in elections in July, has already been forced to announce plans for $6.8 billion in extra government spending this year to stimulate the economy.

    The stimulus program will help pay for road construction and neighborhood projects. (Indonesia’s constitution is unusual in requiring that a fifth of government spending be dedicated to education, so the program may have long-term benefits as well.)

    President Obama lived in Jakarta as a boy, and many here hope that he will be able to pull the United States and the rest of the world, including Indonesia, out of its economic slump.

    “When Obama is president, everything will be better — we hope so because there are so many promises from him,” said Mr. Sauate, the manager of the television remote factory.

    Other Indonesians are more cautious. “It’s an illusion that Obama can solve all the problems,” said Khamid Istakhoria, the secretary general of the Indonesian Trade Union Alliance Congress, “because no matter who is president, they will face real economic troubles.”

    Keith Bradsher reported last month from Karawang and Jakarta and added updated information from Hong Kong.