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The Black Belt South: Germany in the World Economy

by Jen Schradie

  Drive south along Interstate 85 through North Carolina, passing textile factories and peach orchards. Soon after you cross the state line into South Carolina, you'll see a big billboard on the west side of the road that says, "The world will soon know South Carolina quality." Can "quality" possibly refer to the state's high infant mortality rate, low unionization level (3%) or deplorable educational opportunities? No! it's a sign for a new BMW plant.  

Since the 19th century, the Black Belt South has been a colony for northern corporations in the United States-from cotton production and other agricultural goods to the industrial revolution slowly forcing more manufacturing jobs to the region.

Since the 1970's US northern capital made super profits by moving higher-paid unionized jobs to the poor, largely unorganized South.

Today, the political wake of the North American Free Trade Agreement (NAFTA)-and other shipments of jobs to even poorer regions of the world-has over-shadowed the continuing role of the US South as a third world colony.

In fact, the Black Belt South is not only a tool for the North American corporate elite, but it is also increasingly a stable colony for German-and other European and Japanese-companies.

In 1978, 170 German companies were doing business in the Southeastern United States. In 1995, 600 German corporations had operations in the South, according to the German American Chamber of Commerce, Southeastern USA.

These companies, with the support from their national governments and the open arms of US federal and local politicians, are exploiting the following factors by locating in the South:

  1. Black Belt South colonial conditions:
    • Low level of unionization and right to work and other anti-worker laws;
    • Largest concentration of African-Americans and highest poverty rate in the US;
    • Weak environmental protections;
    • Rural underdevelopment, including increasing outside, absentee ownership of land, water, forests, jobs and capital;
  2. A national and worldwide trend of a weak union movement;
  3. The North American Free Trade Agreement (NAFTA) allows foreign corporations to sell to the huge Canadian, American and Mexican markets without paying any tarriffs-the US is the largest market in the world;
  4. Advancing technology-easier for transnational companies to operate abroad. And the convenience of the southern region to German ports, making it easier to transport parts and final produced products.
  5. Lower taxes than in their own countries. In fact, foreign-owned companies operating in the US pay less corporate federal income tax than US-owned corporations.

The New German Homeland

The two German companies in the South that have received the most media attention are Mercedes Benz and BMW.

While the annual payroll at the SC BMW plant is only $66 million, South Carolina gave $130 million in handouts to BMW in the form of tax breaks, free training, airport access, new roads, and free land. BMW also pays wages less than 1/3 of what German workers earn while there were 56,000 applications for 2,000 positions, according to The Times (London).

BMW was sited as the nation's single largest economic development project in 1992, but did South Carolina citizens really benefit from this or were local resources expropriated for the benefit of a few?

Many other Germany companies are abandoning unionized workers in their own country to exploit the US South's resources. For instance, Von Grunber Continental General has opened in Charlotte, NC. This German company produces tires for Mercedes Benz and BMW. North Carolina paid $6.8 million in improvements in roads for their operations and funded a worker-training program at Central Piedmont Community College.

Alamance County in North Carolina lost in its bid to land the Mercedes Benz plant. But that didn't stop them from luring the 3C Alliance plant, which opened in the spring of 1996. A local town paid for water expansion. This German company was given 42 acres of land for free valued at $1.8 million, while the promise of 40 acres and a mule never materialized for most African-Americans.

The German Star Linear Systems, which manufactures computerized systems for machine tools, was able to apply for $8.5 million from Mecklenburg County in industrial revenue bonds to finance an expansion.

(How many working class African-Americans are denied loans for just $8500? Just ask black farmers.)

The Hubner Manufacturing Corporation, headquartered in Kassel, Germany, opened a bellows manufacturing plant in Mt. Pleasant, SC. (Bellows are the accordion-like systems that connect trains, buses and airplane gangways).

According to the Post and Courier, of Charleston, SC, "The company imports the rubberized fabric from Germany that it uses to manufacture the bellows. Being in a foreign trade zone, the company doesn't have to pay taxes on the material since it never officially entered the country. They received workforce training, jobs tax credit, and county tax breaks.

Who's on welfare anyway?

Plant spokesperson, Ms. Hubner, commented on yet another reason why they relocated to South Carolina, "There are a lot of Germans in Spartanburg." In fact, 25% of manufacturing companies in South Carolina are foreign-owned.

Recruitment is not by word of mouth alone. "South Carolina is very active in Europe," reports the SC Department of Commerce. The Times also found that Atlanta has hired models to play Rhett, Scarlett and other characters from Gone With the Wind to impress potential foreign investors.

As a Georgian bank president put it, "We'll do whatever it takes." Of course, this includes maintaining racist stereotypes of the South and spending public funds to lure big businesses that take profits away from the people who make them, rather than spending the people's resources on recruiting more teachers or health care providers for rural areas.

According to 1993 figures, Germany has more investments in the United States than in any other country, and most of that is in the South. In fact, the South has a larger pool of foreign investment than any other region of the country. North Carolina alone has 160 German firms.

What's Up At Home?

According to Christoph Sherr, a professor at the Berlin Frei University, just as Pat Buchanan and Ross Perot responded to the crisis of American-owned companies moving to Mexico and other Third World countries, some German leaders are responding to the flight of German companies to the US and elsewhere with ultra-right nationalism. This has led to an increase of violent fascism toward foreign workers in Germany in an economy with unemployment of up to 25% and even higher in some regions, particularly eastern Germany.

Nonetheless, Germany is cutting unemployment, social security, and other benefits in the name of privatizing and creating austerity in order to mirror the market-oriented economy of the US.

According to the Party of Democratic Socialism, or PDS, "Just like the Republicans [and Democrats , eds.] in the US, the German government is dismantling the welfare state, including workers' rights, such as cutting sick leave by 20%." This comes at the heels of a disastrous reunification of the former East Germany with West Germany. More appropriately, however, West Germany gobbled up East Germany. East Germans took the opportunity for more personal freedoms but didn't realize the baby, the soap and the towel would all be thrown out with the bath water.

Gone are the economic gains and security of East German socialism; gone are the rights of comprehensive child care and full reproductive freedom; and gone are equality of housing and access to food. "East" Germans are already begging in front of the new Burger King right across the old border in Berlin.

Of course, the American model of downsizing that German Chancellor Helmut Kohl, along with many European countries, is following includes exploiting poverty and racism at home, as well.

Doris Hall, an organizer for North Carolina's Community Health Collective and member of Black Workers for Justice, recently met with labor and community organizations in Germany. "Just like in the US where African-Americans and other oppressed people are worse off when any budget cuts are made," she observed, "in Germany we saw that Turkish and Vietnamese people were being the targets of an economic and racist war. The bosses of German companies want labor relations like the US has, and we could tell German workers from first-hand experience that this means that companies control the relationship."

The Road Ahead

Hans Kohbrich, a BMW Workers' Council Member who visited North Carolina in 1995 and also met with the delegation in Berlin, noted, "Black Workers for Justice is a very different organization from German groups. We need to learn from them in how to deal with addressing racism issues here in Germany. They connect the organization inside the plant with community organizing."

Despite Germany's economic problems, citizens still have an extremely high standard of living relative to other countries. However, this standard of living has not been maintained by increasing wages along with the cost of living and inflation. Instead, Germans are able to import lower-cost products from poorer nations, including the US South. However, in the long run, all workers suffer because of an increase in unemployment in richer countries and an increase in exploitation in less developed nations.

Meanwhile, North Carolina's Governor Jim Hunt continues to recruit German manufacturing industries to the state-but at what cost? As international capital moves to poorer and poorer reaches of the world, the profits will continue to revert to fewer and fewer international capitalists. This trend is particularly powerful with only a handful of socialist countries left with state power.

This economic strategy must be matched and overtaken by international solidarity of worker organizations-from Germany to the United States to Mexico to anywhere workers are suffering under the vicious movement of capital.

  Jen Schradie is a member of the NC Public Service Workers Organization, and an independent video producer of labor and community videos. She and Doris Hall, of Black Workers for Justice and the Community Health Collective, went on a solidarity trip to Berlin last year to meet and speak with German labor, community and anti-racist organizations.  

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