Thursday, March 1, 2012

NYC Construction Projects Are Now Made In China

Rebuilding America's crumbling infrastructure is a growing priority, with President Obama highlighting construction jobs as part of his $447 billion jobs plan. Nevertheless, more $400 million in federal funds to renovate the Alexander Hamilton Bridge here in New York has been awarded a Chinese government owned construction company. The company uses U.S. labor but the coveted skilled jobs, such as engineering and design work, are being done in Beijing. The profits will also go overseas.  

However, that is only the tip of the iceberg. China Construction America - a subsidiary of the China State Construction Engineering Corporation - has been awarded $100 million in contracts for the 50th Street Ventilation Facility as part of the Long Island Railroad East Side Access project.  CCA also holds a $65 million contract to build a ventilation building structure on the 7 Line Extension project, as well more than $42 million in current NYC Housing Authority contracts. 

At a time when we do not have enough work to support our own industry, how can our government officials justify giving away the little we do have?  
The Port Authority last year announced it was looking to the private sector to construct the replacement for the aging Goethals -- a project expected to cost $1.5 billion with a slated completion date of 2017. 
The Tappan Zee Bridge, long overdue for an overhaul, is one of 14 projects chosen by the Obama administration for expedited federal review and approval — possibly allowing work on a new $5.2 billion replacement bridge to begin as early as the spring of 2013. China Construction America is already high on the short list for both projects. 

'Savings' don’t tell whole story
Politicians have justified awarding the contract to China Construction based on numerous savings they claimed it would produce. That does not take into account the wages lost by workers who otherwise would have been employed on the project. It does not take into account the taxes those workers would have paid — from state and city income tax to Social Security and unemployment taxes. 

It does not take into account the multiplier effect, all the related benefits derived across the economy from the daily purchases made by people with jobs. It does not count all the state and local taxes that employed workers pay for schools and highways. Nor does it take into account all the tax revenue that New York State and City government will have to expend for unemployment, health care and other costs run up by people who have no jobs. In short, what may look like a "savings" is anything but

      • If people don't have jobs, they don't make money.
      • If people don't make money, they don't buy things.
      • If people don't buy things, there is less demand.
      • If there is less demand, then companies don't produce goods.
      • If companies don't produce goods, they don't need employees. 
      • If people don't have jobs, they don't make money... 

What is clear is that New York has lost an exceptional opportunity to create good-paying jobs at home during a time of high domestic unemployment.

With 25 million Americans unemployed, underemployed, working part time because they cannot find a full-time job, or so discouraged they gave up looking for a job; when millions are out of work for the longest period in our history; when millions are in the process of losing their homes because they were unable to keep up with mortgage payments after corporations eliminated their jobs or they were forced to absorb runaway medical bills, New York is providing work for a Chinese construction company, and shipping more our tax dollars oveseas

by Peter Coyne,

1 comment:

  1. Dear Peter,

    I'm not an US resident or native. I've just come here through LinkeIn because I'm really interested about the subject - China conquering the rest of the world / World is still sleeping.
    First of all, I'd like to remind you that lots of US companies work worldwide, shipping money from those countries to your own. Did you ever care about it? We don't need McDonalds worldwide to eat junk food!
    Second, I believe US is an open/free country, so everyone can invest there - and CCA is also investing. And I'm sure, US is very interested in China's money (I'm from a country where we're about to sell everything to China and Angola - where the money is)
    Third, it's your own companies that transfer production to China (Apple, Nike, etc.). Why? So shareholders can have a bigger profit (I'm a small shareholder of some US companies! - please don't confuse me for a communist follower).
    Concluding, I believe that in some way your thoughts are correct. But not as you're writing - I believe the chinese companies should compete with your own (or European, African, Asian), but with some rules - rules that probably will move away US companies from China.

    Best regards,

    Tiago L. Fernandes