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The clank of metal and hiss of hydraulicsecho through the cavernous factory at 2600 N. 32nd St. Huge machines suck in straight steel rods, cut and notch them and bend them into shackles for padlocks. Earplug-wearing workers move between work stations, confer with supervisors, wipe grease from their hands.

Where they work once housed four times the number of employees. Many in Milwaukee don’t realize these few – a little more than 300 in all – are even still here in Master Lock’s Milwaukee plant.

Founded and still headquartered in Milwaukee – although executive offices now lie just outside the city limits in Oak Creek – Master Lock was nearly given up for dead five years ago. But while the company is a fraction of its original size in Milwaukee, Master Lock’s product line is bigger than ever. And it is hoping to stay that way – and stay here.

Milwaukee was once the Machine Shop to the World. Big tools, big machines and big-shouldered men built this city of bricks and steel and smoke. It was a lunch pail city, a blue-collar bastion, a place that prided itself on hard work and honest labor.

It was a place where showing up and making things offered the armor of security. Fifty years ago, manufacturing employed 4 out of 10workers in this city. Milwaukee men and women forged metal and built cars. They brewed beer and assembled electrical controls. They turned out sausages and farm tractors, mining shovels and motorcycle engines, forgings, castings, lawnmower engines and machine tools.

And for the men and women who did these things, these jobs – grinding and noisy and smoky and sweaty – paved a path to better lives. They paid wages that purchased tidy suburban homes, cars and boats and college educations for the next generation. They were so plentiful that in the years after World War II, they drew thousands of black men and women from the South into this insular, white, ethnic northern city, and even amid segregation and discrimination helped the descendents of slaves join the children of immigrants on the road to a better life.

And then the Machine Shop to the World began to slip a cog. Then another. Then another. The Machine Shop ground to a halt.

Pittsburgh. Cleveland. Detroit. Toledo. All across the upper Midwest, the old manufacturing cities became The Rust Belt. Milwaukee was just one more notch.

The decline began in 1973 when war in the Mideast sent oil prices skyrocketing. Recession a decade later piled on more misery. Then for a time, things turned around – not on a dime but in lumbering fits and starts. Manufacturing jobs in Milwaukee rose again, first with a slow revival in the 1980s, then with new flourish in the 1990s. Dot-coms may have gotten the ink, but rising productivity, the stability of the post-Cold War economy and economic growth generally helped spur a manufacturing expansion. The city’s factories employed nearly 180,000 by 1998, accounting for one in every five jobs.

It was short-lived. With the turn of the millennium, growth skidded to a halt and plunged into reverse. In four short years – from 1999 to 2003 – the state lost 85,000 manufacturing jobs – enough to populate the entire city of Racine – according to recent data from the Wisconsin Policy Research Institute. Milwaukee alone lost 30,000, almost twice the number of people at a sold-out Bradley Center basketball game.

Some say it was inevitable. “One hundred and 50 years ago, a huge majority of our people were farmers, and now it’s like 2 or 3 percent,” says Donald Nichols, a University of Wisconsin-Madison economist. As times change, so does how we work and what we do, and that doesn’t mean we’re worse off. Fewer people may work in manufacturing today, but their output is as great as it ever was. And the employment statistics don’t always tell the full story, he adds. Take janitors. They once worked directly for factories. Now they’re more likely to work for an outside service. The result: Their jobs were once “manufacturing” jobs; now they’re part of the “service industry.” The brainpower that goes into manufactured products may come from, say, an outside engineering consulting firm whose employees, like those janitors, are counted in the services rather than in manufacturing.

“The numbers have been deflated to a greater extent than the decline in numbers in manufacturing,” says Nichols. “More and more goods are being made out of services.”

The drop in manufacturing jobs reflects a hike in productivity and automation, and also this: What it takes to make something has shifted from the factory to the computer-lined offices where designers and engineers work. We have, says Nichols, moved “away from manual labor to mental work.”

Others aren’t so sanguine. Their concern goes beyond industrial nostalgia and speaks to the distinctive role of manufacturing in the economy and in the larger social ecology. Manufacturing not only built the city, it built a working class with middle-class incomes and aspirations – in Milwaukee and across the nation.

“The traditional blue-collar unionized manufacturing job was a way in which the modestly skilled and educated could attain middle-class status in the United States,” says John Heywood, an economist at the University of Wisconsin-Milwaukee. “The question in the current environment is, to what extent can that persist?”

It is a question much on the minds of Wisconsin and Milwaukee residents, a question that makes itself heard daily in the news and on street corners. The question’s heat singed John Kerry last February, as North Carolina Sen. John Edwards rode a fiery crusade against the loss of manufacturing jobs to a near victory in this state’s Democratic primary, possibly helping him earn Kerry’s nod for the number-two spot on the ticket. It is a question that lingers close to the surface in the presidential race itself between Kerry and Bush, vying with the War on Terror and the invasion of Iraq for a place in the political debate. Can manufacturing survive in Milwaukee?

At Master Lock, company managers, union officials and rank-and-file workers all try to write their own hopeful answer to that question. The company’s tale is, writ small, the tale of manufacturing in Milwaukee – from its storied past to its struggling present to its murky future.

The Making of an Icon

Master Lock, like many success stories, began with one man’s ingenuity. In the lobby of the company’s sleek Oak Creek office building, a display case pays tribute to Harry Soref, inventor of the company’s trademark laminated padlock – layers of -metal riveted together, the lock opened with a key. Soref, it is said, founded the -company in 1921 with a drill press, a punch press and a grinder.

The company grew into an internationally recognized brand. An advertising poster displays that era’s rendition of the global economy, quaint by today’s standards. Printed in front of drawings of people from a half-dozen or more cultures – a Latin American in a sombrero; a Dutchman in wooden shoes; a dark-skinned, nearly naked tribesman carrying a spear; a rifle-toting Arab; and an Asian man with the straw hat of a coolie – is the advertising tagline: “The whole world trusts Master padlocks.”

In 1970, locally owned Master Lock was snapped up by a conglomerate, today known as Fortune Brands. The company prospered in Milwaukee, solidifying its place as an American icon. A few years before Fortune bought Master, it broke new ground in promotion with the famous picture of a pistol having fired a bullet through the laminated metal body. The lock still worked. Pictures from a Johnny Carson “Tonight Show” program depicting the talk show host’s bemused reaction to the stunt adorn the hallways of Master Lock’s office building.

Customer service was an integral part of the company’s image. Locks bore -serial numbers, and when homeowners came across their old combination locks in attics or basements, all they needed to do was to head over to the nearest hardware store, where, with the assistance of the clerk and a few screening questions, the lock’s combination could be instantly retrieved.

For a decade after it was acquired, Master Lock went on its way, the archetype of the city’s manufacturing corridor. Brad Schwanda went to work there in 1979, told of an opening by a relative. His first job was running a key mill – a machine that carved the grooves into keys for locks. He moved into other jobs, becoming a material handler who toted lock components between assembly stations.

Schwanda’s father had been a machine repairman for Coca-Cola, his mother a warehouse employee at JCPenney. “I never really thought about going to college,” he says. And he didn’t expect to stay at Master Lock, either; he admits he was bored at first, and figured he’d move on in six months to a year.

He didn’t. Instead, Schwanda got an apprenticeship and began learning the trade of a tool and die maker. Life got comfortable, with company bowling and softball leagues.

In 1980, the union representing Schwanda and the rest of Master Lock’s factory employees went on strike. The walkout lasted 16 weeks. When it was over and Schwanda returned to work, his interest in the union deepened. He was elected a union steward, the bottom rung on the union’s hierarchy, the guy rank-and-filers turn to when they have a beef with management. He rose through the ranks. A few more years passed and he started a family.

Schwanda’s union activism rose as the company and the union underwent a -quiet revolution. The 1980 strike had ended, as most labor disputes do, with no clear winners. It also ended with a resolution on the part of both sides to do things differently. In the years that followed, the company and its union, United Auto Workers -Local 469, strove to find a better way to resolve their differences.

Earl Stintzi was a veteran of management’s negotiating team. Two years after the strike, he was assigned to lead negotiations for the company. The first thing he did was to take down a peg the management lawyer who had handled talks the last disastrous time around, relegating the attorney to adviser status. He schooled himself in the management techniques of newly emerging Japanese manufacturers whose products were pummeling Detroit. Central to those techniques was a respect for workers and a willingness to hear their ideas. And because those workers were represented by a union, Stintzi decided that making room for the union was critical.

“We sought to create an atmosphere where the union was willing to work with the company to solve problems, rather than create problems,” recalls Stintzi, now retired in Menomonee Falls. “I was determined that I would solve every problem to meet the satisfaction of both sides.”

Trust grew. The union became involved and encouraged its members to do so. In the years that followed, Stintzi opened up his weekly manufacturing management meetings to include the Local 469 president and its chief steward. As the company made changes in how it operated – gaining flexibility and relaxing work restrictions – the union accepted those changes. “When they understand why you’re doing it, they help you sell it rather than fighting you,” says Stintzi. To this day, he strongly believes that when it comes to labor relations, “the company sets the tone. The union only reacts to what the company does.”

In those days, the major threats to Milwaukee jobs came from southern non-union havens, from the emerging Pacific Rim and from Mexico. Master Lock, although it did have a non-union plant in the South making other products, resisted the offshore lure. For management and union alike, says Stintzi, “our common goal was to keep jobs in Milwaukee and -Wisconsin.”

By the early 1990s, though, three storms were gathering, ready to collide: the first, Master Lock’s principal patents, which were set to expire soon; the second, the rise of Wal-Mart; and the third, an emerging industrial base – in China.

Threat From Abroad

Arguably no single force has done more to reshape the nation’s economy over the last two decades than the company that is now its largest employer. Arkansan Sam Walton founded Wal-Mart in 1962 – the same year that rival discounters Target and K-Mart opened their first stores – on the shoulders of a chain of low-price variety stores he operated. The mass-merchandise retailer pitched its wares to the working class in warehouse-size stores. Ceaselessly promoting itself as “the low-price leader,” it pushed down the costs of the goods it sold by harnessing its growing might to produce volume savings.

Social critics complain about Wal-Mart’s role in promoting sprawl and hollowing out the downtown shopping districts of rural America; labor activists about the company’s low wage structure and fervent opposition to unionization. Both complaints, though, overshadow what has become, perhaps, the company’s most powerful influence: As Wal-Mart’s strength has grown in the retail marketplace, so has its clout with the companies whose goods sell on its shelves.

By the early 1990s, Wal-Mart had reached the pinnacle of American retailing, leaping ahead of its discounting rivals and also old-line department stores like JCPenney and Sears. With sales of $244.5 billion in 2002, “Wal-Mart is not just the world’s largest retailer, it’s the world’s largest company,” writes Charles Fishman in Fast Company magazine. Fishman calculates that Wal-Mart “sells in three months what number-two retailer Home Depot sells in a year.”

There are many reasons for Wal-Mart’s success – and not just low labor costs. Wal-Mart pioneered computerized inventory management systems that allowed the retail’s ordering apparatus to communicate directly with suppliers so that when products are sold, suppliers know instantly and can replenish store inventories.

But while such whiz-bang techniques play a role, in the end it was Wal-Mart’s relentless attention to price – and the me-too efforts of its retailing rivals – that not only drove up its fortunes but changed the face of American manufacturing in the 1990s.

For a time, Wal-Mart stressed its efforts to “Buy American,” but union critics who wanted to embarrass the non-union company made a show of pointing out how many foreign-made products were on its shelves. Today, the store seems relatively silent when it comes to the “Buy American” claim, but even a decade ago, it had already begun to aggressively court Asian suppliers, in the process heaping several large sticks on the back of Master Lock’s camel.

“In the early ’90s, China was tooling up to produce a lot of commodity products,” says John Heppner, Master Lock president and chief operating officer. China’s rise coincided, for Master Lock, with the makings of a disaster. Patents on the company’s core product lines – combination locks and key-operated laminated metal padlocks – had expired. And the now-dominant big-box retailers were large enough, wealthy enough and powerful enough to create their own brands and import directly from China. They did so, selling Chinese-made house-brand locks fashioned after Master’s distinctive looks at prices sharply undercutting the original. “Today, the number-one importer from China is Wal-Mart and number two is Home Depot,” Heppner observes.

Master Lock’s market share plummeted. To survive, the company cut prices by 25 percent and extracted concessions from its union. It wasn’t enough. And Master Lock wasn’t alone.

Over the course of the ’90s, Milwaukee added 11,000 new manufacturing jobs, peaking at 178,000 in 1998. From 1999 to 2001, the city lost all it had gained and more, as manufacturing employment hit a low of 164,000. Plants closed or cut workers across the city and the state, those making everything from leather to paper to metal fabrications to automobile frames and parts.

One of those companies was Master Lock. By 1999, the company had concluded it had only one option: To survive in Milwaukee at all, it had to be willing to let Milwaukee go.

Cost Cuts, Job Cuts

Bob Rice grew up in New Berlin, son of a tool-and-die maker who helped build tractors for Caterpillar Inc. Although he set his sights on college and an engineering career early, he didn’t turn his back on his father’s occupation. Far from it. “The -opportunity to work at Caterpillar was something I looked forward to,” says Rice. “I looked forward to working with my dad.”

Graduating with his engineering degree from UWM in 1983, Rice walked into a job market that was turning upside down. Caterpillar closed and his father took early retirement. “He went fishing and I went out to compete with the Japanese.”

Rice wound up at an Illinois metal stamping company, where he rose to general manager. In 1987, he came back to Milwaukee, joining Master Lock as a -senior engineer.

His new employer seemed to be at the top of its game. It built virtually everything it sold in-house (the business-speak for that is “vertically integrated”), its brand name was as bullet-proof as the locks it made, labor relations were good and the -company was pouring money into automation in order to cut labor costs.

But there were problems. Automation may have cut costs, but it imposed barriers of its own that slowed the process of bringing new products to market. “We were building an automated factory to build laminated locks and we were really lacking innovation in the product offering,” Rice recalls.

Rice describes a factory of long assembly lines where workers were assigned to undertake the same routine task day after day, rarely communicating with each other about the quality of the things they made or the processes and procedures they used. He began introducing new processes – cellular manufacturing, quick-change tooling and other innovations – to make the flow of work in the plant smoother and more flexible.

Cellular manufacturing was perhaps the most sweeping change, although it was adopted cautiously at first. Essentially, cellular manufacturing eliminates long assembly lines on which a wide range of products may be produced, replacing them with smaller, focused “cells” – teams of workers assigned to produce specific products. The system doesn’t abandon automation, Rice says, but it does disperse it.

His ideas weren’t popular at first. “Based on our successful past, people couldn’t understand how cellular manufacturing would be better than automation,” says Rice. “We fundamentally changed the kinds of jobs people did, which was really a culture shock. For the last 25 years, [workers were] assigned to do one task over and over. Now we’re being asked to interface as a team and produce a product from start to finish.

“People who worked in close proximity to each other had no idea what was going on with what they produced,” Rice adds. Now they began to get feedback directly from co-workers – to learn how to improve their individual component production in the process.

Master Lock certainly wasn’t the only manufacturer migrating to cellular manufacturing; it was a popular strategy developed in Europe and brought into U.S.factories of all kinds, including many in Milwaukee, in the ’80s and early ’90s. Reception in unionized factories

At Master Lock, Rice was grateful for the groundwork that had already been laid in labor-management cooperation. “The union had quite a bit of leverage at that time in helping to manage the business,” he says. “They were very receptive to changes that would keep them competitive. It was definitely a joint effort.”

Indeed, Master Lock’s cooperative culture was the subject of occasional feature stories. It had earned the company kudos from Mayor John Norquist and recognition as one of Milwaukee’s best workplaces in a -Milwaukee Magazine feature. Norquist and others particularly praised the company for providing solid-paying jobs that increasingly were taken by residents of Milwaukee’s central city, helping to anchor the 32nd Street neighborhood where the factory stood. Employment was close to 1,300 at its peak.

Inside that factory, though, storm clouds were brewing. In 1993, Rice, by then plant manager, reached a personal turning point. Rising pressure from imported locks and his own gaze into the future made it clear to him that Master Lock was in for something close to revolution. “We had to take costs out dramatically. The change was absolutely inevitable. It needed to happen. I had to decide, is this something I want to go through? Do I want to be in an organization that has to go through that amount of change?”

He decided to stay. “I realized this process would happen with or without me,” says Rice. He saw himself as someone who had continued to cultivate the strong relationship with the union and its members that senior managers had built in the 1980s. If he stayed, he hoped the rank and file would remember that and that union members would “look to me as someone who went to bat to keep the jobs here.”

The nascent cellular manufacturing program now was accelerated. Senior management turned over.

But the hoofbeats of offshore competition grew louder. In 1997, Master Lock began downsizing. The union made wage and benefit concessions. Then, in 1998, Fortune Brands installed a new chief operating officer and president at Master Lock, David Campbell. A year after his appointment, Campbell and Master Lock -managers stunned the UAWand the community with news that was as dire as it was unexpected: After three-quarters of a century of making locks in Milwaukee, Master Lock was moving.

To Mexico.

Not moving everything – just final assembly of locks to a new factory on the Mexico-Arizona border in Nogales.

Final assembly of a Master padlock is delicate, complicated work – and you can’t do it with a machine. Not yet anyway. Almost everything else – riveting together the laminated metal lock bodies, inserting the locking cylinders into those bodies, forging and bending the U-shaped hardened metal shackles – can be done by huge machines, complex devices worthy of Rube Goldberg that tirelessly take in crude metal and shoot out finished parts with the precision of a crack drill team. For, technically speaking, it’s not the workerswho make many of the things at Master Lock’s Milwaukee plant – it’s the machines. It’s the workers’ job to operate the machines, to monitor when things are going right and when they are going awry, to set the machines up to make new things and to fix machines that break down.

Machines can do the final assembly of Master Lock’s ubiquitous combination lock, even to the point of randomly assigning combination numbers and then stamping that information on the sticker to be packed with each lock. And they do so, turning out 3.5 million locks a year that consumers buy to lock gym lockers, bicycle cables, sheds and countless other things.

But not the signature laminated padlock. So when Master Lock announced it would move final assembly of those 3.5 million units to Nogales, it also sought to reassure workers and the community that lock components would continue to be made in Milwaukee.

But this is how astounding the global economy has become: For Master Lock, it was cheaper to take those components, put them in boxes and ship them some 1,500 miles and across the border to put them together, then ship them about the same distance back to its distribution warehouse in Kentucky – cheaper to do all that than to take those same components and send them a few feet away to the Milwaukee employees who once did the job of -final assembly.

John Heppner doesn’t break out the numbers that informed that decision. But he doesn’t deny the math. The Master Lock president nods: “Yes, it’s cheaper.”

Offshore Alternatives

Moving the padlock assembly to -Mexico shocked, angered and disheartened the community and the workers. They had seen it elsewhere – layoffs and cutbacks when factories closed or downsized, companies like Allis-Chalmers, A.O.Smith, Milwaukee’s breweries, Johnson Controls and Briggs & Stratton. Some went out of business, some sold out to new owners, some cut back in Milwaukee, fleeing for southern plants or offshore factories. They didn’t realize it could happen to them.

“Everything was happening around us, but it never hit home,” says Alvin Harris, who worked at Master Lock for more than 20 years before taking a voluntary separation in 2000 and who now helps other dislocated workers as a job counselor at The Milwaukee HIRECenter.

It wasn’t easy for anyone, least of all the nearly 800 who lost jobs. Master Lock and the UAW negotiated severance packages that awarded workers continuing health benefits for a limited period and $1,000 a year for every year of service. But a severance package isn’t the same as what workers thought they had – a job for life.

Many of the workers who left did find other jobs. The Milwaukee HIRECenter, a joint venture of the Private Industry Council, the United Way and the AFL-CIO, counseled nearly 400 of them, says -Roger Hinkle, the center’s manager. Of those, two-thirds went to work outside manufacturing. The median wage of workers when they lost jobs at Master Lock was $11.96 an hour. The median wage of those who got new jobs was $11. Lower, yes, says Hinkle, but much closer to their original pay than some other groups with which the agency has worked.

Others didn’t fare as well. Pat Arms and her husband made a combined $100,000 a year some years, thanks to their jobs – hers at Master Lock, his at A.O.Smith and its successor, Tower Automotive. “When I left, I was making $14 an hour,” says Arms. Two years ago, she got a new job for half that. It’s at Wal-Mart. She makes about $9 an hour now.

At Master Lock, union relations grew strained. At one point, Earl Stintzi, who had retired in 1993, came back to -mediate a tense contract negotiation between the company and the union.

Yet even during the downsizing, union official Brad Schwanda says, workers’ dedication didn’t flag. He recalls one worker’s last night on the factory floor: “He came up to his supervisor. He had a problem with his machine, and he said, ‘I need you to get this fixed as soon as possible. If you get this problem solved, we’ll still be able to make the numbers today.’ This was a guy who was losing his job! He was concerned about making sure they could make production.”

John Heppner says moving final assembly to Mexico was the company’s best alternative. Without moving some work to where it could be done more cheaply, he says, Master Lock might not survive as an American-based icon at all. “We have a very talented skilled labor base in Milwaukee,” he says. “We kept the skilled jobs in Milwaukee. We invested tens of millions in new capital in Milwaukee. We did the things we needed to do to make sure Master Lock is viable in Milwaukee.”

What the company needed to do was innovate once more. “We sat down and said, ‘What are we good at and how do we get better at it?’ ” Heppner recalls. The key to its future was to develop new products, products that could be patented and therefore not knocked off by lower-price competitors. That meant uncovering the genius that had led Harry Soref to found the company in 1921.

“We asked for help everywhere,” says Heppner. So in the aftermath of the 1999 downsizing, Master Lock hired design consultants. It created from scratch a design engineering staff. It branched into new lines of business.

Innovation started slowly and simply. First, it was simply putting a new splash of color on the company’s classic combination locks, making them with blue or red or other color dials instead of just the traditional black. Then there were new lock designs, such as one targeted at kids in which the lock body is a simple sphere split in half – the locking mechanism in the back half, the dial in the front half. Again, Master sold the snazzy new locks in appropriately snazzy new colors.

New-product development accelerated. Master had always made some commercial locks, but starting in 1997, it broke the commercial product line off into a separate division and put Dave Love in charge of it. “We had a very solid commercial business but really no product management or focus or development on that side,” says Love. The product line itself was tired. Just as it did with its retail products, Master beefed up its commercial line, developing new products such as OSHA-required safety locks for industrial use.

And over on the retail side were more new products. Bike locks. Motorcycle locks, including outré ones that looked like beefy handcuffs. Locks for towing hitches. And then spin-off products that weren’t locks themselves but could be sold with locks, like Master’s own line of towing hitches.

Today, says Heppner, “half of our products are new, developed in the last five years. Our goal is that 10 percent of our volume will be in radically new products.”

The “Milwaukee” content in those products, for the most part, isn’t in the making. It’s in the thinking– dreaming them up, drawing them, researching the market, designing the hardware and then, soon enough, contracting for them to be made, primarily in China and other Asian -countries.

“It’s always our goal to bring that work here,” says Brad Schwanda, who today is president of UAW Local 469 at the company. When Heppner tells him about new Master Lock products, “I always ask, ‘Are we going to make it?’ ” Heppner’s answer: What will it take for you to make it competitively?

Bob Rice, who has risen to vice president of global procurement and strategic sourcing, notes that some of the new products have already begun to be made here.

“Milwaukee has excellent quality process controls,” Rice says, so some of the towing products, certain commercial door hardware products – especially those with lock cylinders that require tight tolerances – are coming back. More could be. Still, it’s no wonder Rice carries a business card with one side printed in English and the other entirely in Chinese, except for the bold-letter logo of the company’s name.

As Master Lock started growing again, it courted fresh controversy by relocating its headquarters from the central city neighborhood where its factory still stands to a gleaming office building leased from Honeywell off of Howell Avenue. For Heppner, the move was sensible and obvious: Oak Creek put the global company closer to the airport. It also made the company more accessible to the new crop of workers it was recruiting – engineers, marketing experts and others, many of whom commuted from Illinois. As far as he was concerned, there was hardly any difference between Oak Creek and the city just to its north. “I look at this as all part of greater Milwaukee.” Yet on the day the news broke, Heppner was in San Francisco ready to board a plane when Norquist called him on his cell phone: “John,” he says the mayor told him, “I didn’t know you were leaving -Milwaukee.”

Today, Master Lock is once again showing strength. The company ended its first quarter of 2004 with record sales, Heppner told employees in a company newsletter earlier this year. (Fortune, whose brands are as varied as Moen faucets, Jim Beam bourbon, Titleist golf gear and Swingline staplers, doesn’t break out the company’s individual financial data). Last year, Master Lock bought American Lock, a non-union company based in Illinois, and this year it moved work done there into Milwaukee’s unionized plant, hiring 73 new workers by mid-September. Those new employees are working under a contract that pays them up to $3 an hour less than existing union members. Such two-tier wage agreements often sow discord, and union leaders say their long-term goal is to merge the separate pay scales.

Yet the union has much bigger battles with larger forces. Soaring healthcare costs remain a burden, especially on old-line manufacturers with older work forces. Free trade makes consumers happy by allowing them cheaper products, but the vast gulf between wages in developing countries and the United States virtually guarantees that at least low-skilled jobs are likely to keep pouring offshore.

If that keeps up, entry-level, low-skilled people may lose their already precarious foothold up the ladder of work. “Access to manufacturing jobs is going to be a make-or-break for the working poor,” says John Pawasarat, a UWM economic analyst.

Some counsel an aggressive response. To David Newby, president of the Wisconsin AFL-CIO, what’s going on now isn’t a historical inevitability, it’s the product of willful manipulation of the economy by corporate leaders. “We are in the midst of a monumental experiment, which is unlike any economic change we have ever seen,” he says. “That is, specifically, the combining of first-world technology and capital with second- and third-world wage levels.” The founders of free trade – economists like Adam Smith and David Ricardo – “never envisioned that you would have competition organized the way it is today,” says Newby. “It’s not competition between countries, it’s competition between corporations that are obsessively seeking the cheapest means of production they possibly can.”

There are two other parts to the experiment, Newby adds. One is whether spiraling budget deficits and trade deficits will inevitably force the economy to collapse. Another is this: “In the United States, can you maintain a high standard of living in a nation-state when you don’t [produce] anything?”

Yet restricting foreign trade imposes its own price, says UWM’s John Heywood. “You may save jobs locally, but the products you buy will be more expensive. People have become very used to, for example, cheap electronics. The question you need to ask people is not simply whether we’d like to protect jobs at home but at what cost are we willing to protect jobs at home, and can you do it forever?”

These fears – that someday the United States “won’t make anything” – miss the point, argues economist Don Nichols. We do still make things, just not things you can touch. “We make movies, we make educational things that are used, we make patents and ideas and things that we generate, that people have to buy. Those are things that are made, and they’re made with our brains, not our hands.”

Nichols says he is sorry, truly, for those buffeted by the loss of less-skilled jobs. but to try to stem the tide is foolish. “We’re not going to get them back. This trend is -going to continue,” he says. Instead, society should try to rescue the drowning with trade adjustment assistance to help manufacturing workers who “are being kicked around by forces beyond their control.”

It’s not their fault. “They’re good, hard workers,” says Nichols. “But to link that to bringing back manufacturing jobs so their children can get a leg up and get into the middle class, that is just a fairy tale. You want a leg up, go to college.”

Survival Plan

As befits a management official, Bob Rice speaks enthusiastically about Milwaukee’s future prospects in Master Lock’s overall plan to survive.

“Every day we walk in, we’re going to have an awareness of the competitive and global landscape,” he says. “The initiatives we’re going to put forward are going to keep us in a competitive position, allowing us to bring that work back in on certain products and processes where we compete directly with China.”

Both union and management say they’re trying to restore the sort of trust each once had in the other in a world that is vastly different from the one in which that earlier relationship flourished.

Heppner “has told us he’s committed to Milwaukee,” says union leader Brad Schwanda. “I think they realize now, with some of the things they’re doing, they need Milwaukee.” In 2003, the union and management negotiated a contract extension scheduled to run until January 2008.

As it carries out its plan, Master Lock continues to try to forge new trust with the union and its workers, says Heppner. “We live under a basic philosophy that if it’s good for us, then it’s got to be good for them, and if it’s good for them, it’s got to be good for us.”

Schwanda says that for Milwaukee to survive economically, manufacturing has to survive here. “We can’t all work in the service industry,” he insists. “We can’t all do lawn care or work in a car wash. If we continue to buy imports, where will our children work?”

From the other side of the labor-management table, Rice says the answer to survival isn’t just to try to keep all manufacturing jobs here – it’s just too expensive, and lower-cost competitors will grab market share. “The alternative strategy is understanding what you’re really good at – things you can do that no one else can – and then to invest in all those processes and competencies.”

Yet when it comes to the bottom line, he, too, says Milwaukee can’t survive on services alone. “If you lose manufacturing, you have no economy,” he says. “It’s literally that simple.”

Erik Gunn is a regular contributor to Milwaukee Magazine. His last feature was a profile of attorney Bob Habush, published in July.

it is no wonder that master lock vice president

Bob Rice carries a business card with one side printed in English

and the other in Chinese.

“We can’t all work in the service industry,”says Brad Schwanda, president of uawLocal 469. “We can’t all do lawn care or work in

a car wash. If we continue to buy imports, where will our children work?”

Fifty years ago,manufacturing employed 4 out of 10 workers
in this city. These jobs paid wages that purchased tidy suburban homes,
cars and boats and college educations for the next generation.