Can America’s Windy City rescue its Big Apple from the perils of globalization?
Last week, just as the New York Stock Exchange (NYSE) appeared to accept a merger deal with the Deutsche Borse Group of Frankfurt, Germany – one that would provide the German stock exchange with 60% majority control over both organizations – rumors swirled through Wall Street that an American white knight might ride to the rescue.
It was Chicago’s CME Group, the world leader in derivatives trading, that was reportedly considering an offer of its own. And the report appeared to be credible; after all, the CME has been operating in New York City since paying $8.3 billion to acquire the New York Mercantile Exchange in 2008. That acquisition occurred barely a year after the CME itself was formed by a merger of the Chicago Mercantile Exchange and the Chicago Board of Trade.
Interestingly, although some Washington politicians voiced concerns about the stock trading sector being controlled by foreign organizations, no such outcries were heard about last year’s fall of a different American industry. But what other industry suffered the same fate as the one that the NYSE is facing today?
Goodbye, American Flatware
It is the venerable flatware industry, manufacturers of spoons, forks, knives, and other types of cutlery. Paul Revere, the great colonial patriot whose famed midnight ride in 1775 sparked the American Revolution, designed and manufactured silver flatware. And in the late 1800s, Walter Scott Lenox founded his namesake china and flatware company in Trenton, New Jersey, a firm that has manufactured White House tableware for Presidents Wilson, Truman, Reagan, Clinton, and Bush.
Although one of the companies founded by Paul Revere is still manufacturing products in the United States, his flatware business only exists today as an Oneida Ltd. brand name. Oneida itself represents a quirky American success story, founded in 1848 by a religious Utopian society in upstate New York. Oneida Ltd. emerged from the society in the late 1880s as a tableware manufacturer; it still markets tableware products throughout the United States today.
However, nobody — not Revere, Lenox, or Oneida — manufactures any flatware in America any longer. In 2005, Oneida spun off an historic factory, located in the Silver City of Sherrill, New York, which represented the last remaining flatware production facility in the United States. Last week, while the New York Times ran major high profile stories about the NYSE transaction, it quietly published a little noticed story about the factory’s closure in the face of relentless Chinese competition.
Farewell, Buttonwood Tree
It’s difficult to attribute the Sherrill closure, and indeed the entire decline of America’s flatware industry, to anything other than a loss of a domestic business to foreign rivals. A Deutsche Bourse takeover of the NYSE, though, represents a more complex tale.
That’s because the NYSE itself has not been solely based in the United States for several years; it boldly purchased a group of European trading exchanges in 2006 for $10 billion, and has been operating throughout Western Europe since that time. In other words, although the NYSE was primarily an American institution from the time of its founding under a buttonwood tree in 1792 through the first half decade of the 21st century, it has expanded aggressively into global markets since then. Ironically, it may now be falling prey to those very markets.
It is, of course, quite possible that the CME may break up the Deutsche Bourse’s takeover bid and preserve American control over the Wall Street icon. Nevertheless, the very forces of globalization that have destroyed America’s flatware industry will undoubtedly continue to pummel its financial services organizations as well.
The Chinese Century?
Many prognosticators believe that the current century will prove to be the Chinese Century, following the dominance of the United States in the 1900s and of Great Britain in the 1800s. Given that China surpassed Japan at the end of last year to become the world’s second largest economy, it would certainly seem reasonable to predict that the mighty Asian colossus may soon overtake the United States.
Nevertheless, with the diverse BRIC nations of Brazil, India, and Russia nipping at China’s heels, and with the emergence of sustained economic growth in Africa, there is no guarantee that the spoils of this century will tilt in any specific nation’s direction. It is even possible that, after the demographic bulge of the twentieth century’s baby boom generations passes away in nations like Italy and Japan, younger and more entrepreneurial generations may emerge and reinvigorate their national economies.
Thus, if we are to bid farewell to any historical certainty, it may be to the assumption that our world will always revolve in a tidy manner around a unipolar or bipolar set of dominant economies. Instead, the same centrifugal forces that have dispersed entire American industries around the globe may well do the same for the economic fortunes of other powerful nations.