This past week, antidumping and countervailing duties imposed by the US International Trade Commission on imported Chinese aluminum extrusions took effect. These duties total at least 40% tacked on to the costs of all aluminum extrusions imported to the US from China, and will remain in effect for 5 years – until May, 2016. Outside of the trade press, this hasn’t made much more than a ripple – particularly in the mainstream media. You’d think this event would’ve been the Bin Laden story that US manufacturing has been waiting for for 10 years. Oh, it was covered alright … but we just haven’t heard this story trumpeted with the same volume and vigor that tire tariffs got. This is a big deal, for many reasons. And it raises some interesting points beyond the obvious benefits to US manufacturing.
- One possible reason for the relatively low volume of coverage is the relatively low number of union members this ruling impacts. While these duties will effect over 1/3 of aluminum extrusions used in automotive and house construction and over $500-million in base product, the number of union members that are attributed to extrusion shops and plants in the US totals about 2,000 – compared to 390,000 total active membership in the UAW. Point – not glamorous enough.
- Another possible cause for the lackluster coverage is that to many in the mainstream media (and outside of industry), custom parts manufacturing is the crazy aunt in the basement. It isn’t sexy, it’s embedded so deeply in the supply chain that it’s easy to overlook, and – although it’s been the backbone of US manufacturing over the last 75 years – small and medium manufacturing absorbed the brunt of the job losses in US manufacturing over the last 20 years. It’s like making sausage – no one likes to watch, but everyone loves to eat it. Lower tier suppliers (especially those of the automotive variety) have rarely gotten any respect. Shocking.
- These duties weren’t exactly fast-tracked. The grievances were originally filed in March 2010, and just took effect last week. Spreading out that message over more than a year from the time it was first reported took away from it’s opportunity to generate mass interest. And that’s a shame.
- Just for a minute, put yourself in the Chinese’s shoes. Nixon comes over in the 70s to open relations (re: trade). Before you know it, every major corporation from the US and the west – and a whole bunch of minor ones – were storming over the wall with cash and investments to establish manufacturing facilities, infrastructure, training and technology improvements. And now, those same investors are becoming detractors, slapping duties on the less-expensive products or parts they set you up to manufacture in the first place. We are schizophrenic, and so are we.
- Xenophobia is dangerous, especially now. We have moved from a Continental manufacturing economy to a Global one. The ability of the US to compete globally is extremely important to our economic recovery and prosperity. No one – certainly not I – would argue that a level playing field isn’t necessary to that competitive environment. But by the same token, we can’t hope to evolve based solely on a policy of currency fluctuations and trade deals. Our ability to out-design, out-innovate, and out-manufacture more efficiently won’t happen based only on those things. We need a comprehensive manufacturing policy that invests, acknowledges the core issues, rebuilds our manufacturing base, and accepts the fact that there will be other countries that will try to do to us what we did to Britain in the 19th century.
- Events like these offer small and medium manufacturers opportunities to seize upon the movement of their prospects and customers, as they investigate their alternative sources for aluminum extrusions closer to home. Add to this the emerging interests in reshoring and manufacturing closer to consumption, and they demand a strategy to market their benefits and values to buyers in flux. But many of them don’t see the correlations, or they believe they can’t. Marketing via the correct messages, at the right time, can help them capitalize.
There are no magic bullets to fix what ails US manufacturing these days. The budget and trade deficits, the housing market reset, credit availability, unemployment, and R&D atrophy have put US manufacturing in a serious pickle.
And it’s good we’re doing something like applying duties, as long as we do so intelligently. But accepting this as the single answer to our woes is whistling in the dark. We do need to seize on these opportunities, but we need the guts and intelligence to create new, meaningful ones, too.
(A VERY special Hat Tip to Alexandria Extrusion Company for the heads up on this.)