To President Donald Trump, the implications of an “America First” trade strategy are clear: Commit to making things here, and jobs will return.
For Georgia manufacturers dealing with the fallout of recent trade-policy uncertainty, the reality is much more nuanced, and the effects vary widely based on industry.
The need for clarity was one of a few things panelists agreed on while tackling the topic at Next Generation Manufacturing’s annual signature event Sept. 28.
During an afternoon session at the association’s wide-ranging, all-day conference, four executives discussed how Trump-era trade tactics are affecting their bottom lines.
For Peachtree City-based NAECO, which provides conductive metal parts for switches in airplanes, tractors and other applications, about a quarter of sales are international, with about half of exports going to Canada and Mexico.
While “America First” has had the positive effect of awakening his French customers to the need to create an “America strategy,” NAECO Chief Executive David Bergmann said head-scratching around NAFTA is stalling expansion plans beyond the border for many American-owned customers producing there.
“Right away, the guys said, ‘Hey look, we’re all for jobs in America, but this really hurts us,’” Mr. Bergmann said, noting that they’re waiting for an outcome on the 23-year-old trade deal’s renegotiation.
“I see our customers in Canada and Mexico as being on the same team. They help us compete against China,” Mr. Bergmann later said.
Clothing companies are similarly torn. They’d love to do more in the U.S., but it’s rarely cost-effective given how the industry has fled south and east.
Shelley Foland of Boxercraft Inc., which makes lifestyle apparel, imports basics from global suppliers and adds value through printing and embroidery at the company’s 180,000-square-foot Mableton, Ga., factory. “Made in America” mandates are all well and good, but in her sector at least, the consumer isn’t willing to pay the resulting higher prices.
“They say they will, but they don’t and they won’t,” Ms. Foland said.
That’s also true of young people enamored with so-called “fast fashion” — cheap, nearly disposable clothing based on trendy looks that change with seasons, she said.
Nowadays, instead of bringing back huge textile hubs, U.S. firms are much more likely to compete based on speed to market, automation and innovation, she said, citing the arrival of factories like the robot-heavy Adidas “smart factory” planned for metro Atlanta.
Suppliers can no longer wait weeks for a container ship to arrive from Asia, and air freight pushes up end-user prices, Ms. Foland said. That’s one reason many American manufacturers have become cheerleaders for Western Hemisphere countries that serve as key partners. Just like NAECO, they see integrated supply chains on this side of the world as integral to staving off low-cost Chinese competition.
YKK Corp. of America, the Japanese zipper manufacturer, has kept its Middle Georgia factories operational by diversifying into many new industries in addition to apparel: automotive, safety, medical, and government contracts. Architectural products like vinyl windows are also big business in its U.S. plants, but YKK also makes zippers and buttons in Mexico and runs factories in El Salvador and Colombia.
Alex Gregory, the company’s CEO, as early as 2005 was lobbying on behalf of the Central American Free Trade Agreement, even though by that time NAFTA had already hurt the South’s textile industry.
“Our hope then was just to try to keep the business in this region. YKK is a global company, and they’re going to be OK if the garments are made in Vietnam or anyplace else. My selfish hope was that we could keep our employees in Macon,” he said.
Ms. Foland and Mr. Bergmann of NAECO took a hopeful approach about the future of trade, saying they believe that cooler heads will prevail, especially with regard to NAFTA.
“I believe that it will stay around; I think it’s going to have to stay around. I do believe that the fight will be a little difficult, but I believe that with some minor tweaks, or maybe some other tweaks, that we can continue somewhat with business as usual,” Ms. Foland said.
They’re also hopeful that policy makers won’t impose tariffs that substantially disrupt supply chains built over two decades.
“It would be unmanageable,” Mr. Bergmann said.
Dee Barnes, meanwhile, has welcomed the change in rhetoric and promises of trade enforcement from the Trump administration. Her third-generation, family-owned manufacturer Evans Metal Stamping Inc. of Conyers, Ga., has been squeezed on multiple sides as borders have opened up, first with NAFTA and later with China’s entry into the World Trade Organization in 2001.
“The level playing field changed and some companies in the mid-size weren’t able to change with it,” Ms. Barnes said.
A combination of China’s alleged dumping of subsidized aluminum on world markets and Mexico’s ability to serve the U.S. market without tariffs has made it nearly impossible to compete, she said.
“The price gap was too big; now that price gap is shrinking,” Ms. Barnes said.
New enforcement actions — or ratcheting up discussion of “fair trade” as she calls it — could help rectify these imbalances, ultimately allowing her to hire more skilled Americans. Die production, she said, is a disappearing skill set in the U.S. that she believes could be revived — but only if the work comes back.
Other speakers were doubtful, however, that the U.S. has the capacity to absorb an influx of returning factory jobs, given the challenge many already face in finding technically skilled workers. A die-making apprentice, for one, needs five to 10 years of on-the-job training.
Still, Ms. Barnes didn’t buy that the U.S. should sacrifice its manufacturing base that easy.
“It’s going to be slow, and we don’t have the infrastructure to take a full load, but we could get there,” she said, noting that manufacturing is vital to the country’s health and defense.
One way to ensure the U.S. continues to have a strong manufacturing sector, Mr. Gregory said, is to continue with so-called “Buy American” rules governing Defense Department procurement.
Provisions like the so-called “Berry Amendment” could be threatened soon as the House Armed Services Committee explores new rules that make the government bidding process more transparent and competitive, with the goal of lowering costs for taxpayers.