A little-known but long-active center helping manufacturers across the South counteract the negative impact of import competition has received $1.2 million from the U.S. Commerce Department to further its mission.
The Atlanta-based Southeastern Trade Adjustment Assistance Center, or SETAAC, was one of 11 such centers around the country to welcome grants from the department’s Economic Development Administration Oct. 26, helping each to maintain operations as the program awaits formal congressional reauthorization.
SETAAC provides assistance to firms in the form of cost-sharing (matching) funds of up to $75,000 for those that can prove they were harmed due to trade competition. A similar (but much more controversial and expensive) federal program offers re-training at the individual worker level.
To qualify for the help, companies must show that they are “realizing decreased sales and employment due to import competition,” says SETAAC Executive Director Tracy Barth.
That comes in the form of a 5 percent drop on both metrics averaged over a recent 12-month period. They also have to prove that U.S. imports of products with their harmonized tariff code have increased over the last 24 months. SETAAC spends much of its time helping firms evaluate whether they can be certified — at no cost to the companies.
Ms. Barth said many are surprised that they can make the numbers work — all SETAAC needs is a spreadsheet with 24 months of sales and employment data to start making the comparisons.
“I always tell firms not to disqualify themselves once they hear about the program,” she said.
To verify that the declines were due to import competition and not simply a lack of market demand, the center must interview at least two of the firm’s customers to validate that their products were undercut on pricing by foreign goods.
“That is really the only way for us to be able to determine if it’s related to import competition,” Ms. Barth said. “If we didn’t have that requirement, we would be like other programs.”
To get the full benefit of the matching funds, qualifying companies must spend $75,000 of their own money on consulting projects that boost their competitiveness. These can focus on anything from streamlining production lines to improving management and installing technology — as long as it the project doesn’t involve purchasing assets or making payroll. Firms have five years to use the funds, with no stipulations from SETAAC how much can be used in a given year.
In recent years, many companies have used the funds for marketing, especially redesigning websites and improving e-commerce operations, Ms. Barth said.
“Everybody has a wishlist of projects they want to do. Even if it’s three or four years down the line, you know you’re going to have to do your website eventually,” she added.
Companies cannot be turned down based on their size, so clients include firms from $500,000 to $500 million in revenues. SETAAC usually welcomes 12-16 new firms per year, balancing rolling disbursements with new certifications. It currently has the means to welcome more companies this year, and even during the trade turmoil of the pandemic, SETAAC has continued qualifying companies.
“Almost every-single firm is import-impacted in some way or another,” Ms. Barth said.
SETAAC has been authorized since 1974 and has been at Georgia Tech since 1978. The Commerce Department grant is being provided to the Georgia Tech Research Corporation, which will route the funding to SETAAC through the Enterprise Innovation Institute. Being housed within EI2, the Midtown-based institute that runs the university’s wide array of economic development programs, has helped SETAAC operate efficiently and network with other state and federal agencies to find leads on companies, Ms. Barth said.
Proposed Changes to TAA for Firms
The fate of the program remains uncertain, but Ms. Barth sees promise in proposed changes. The $1.75 trillion spending bill being entertained in Congress would reauthorize and substantially beef up the program, which enjoys bipartisan support and is a drop in the proverbial budgetary bucket.
At the latest reading, the bill would increase the program’s funding to $50 million from just $13.5 million spread across 11 centers. For firms, that means the per-project matching funds available would double to $150,000, which Ms. Barth views as an overdue move for a program that has not changed its funding allocation in 25 years.
It may also become easier to get certified. Reduced exports would join import competition as a qualifier, and companies would only have to prove declines in sales or employment — but not both. That would help the government avoid penalizing manufacturers that keep staff when their sales fall, either out of loyalty or to maintain their workforce in preparation for a later recovery.
The new policy would also shorten the maximum time from submission to certification, a crucial step if companies are facing acute challenges due to new import competition, though the fate of the spending package still hangs in the balance in the Democrat-led House of Representatives.
SETAAC can qualify firms in eight states — Georgia, Alabama, Kentucky, Tennessee, Mississippi, Florida and the Carolinas.
Where participating firms have been located has largely depended on the industries harmed by imports at various times. Textiles in Alabama and furniture in North Carolina have been pummeled by offshoring, and more recently, high metals prices have driven ever-larger imports that former President Donald Trump tried to counteract through steel and aluminum tariffs. President Joe Biden is only this week trying to unwind through consultations with close trading partners.
Ms. Barth said companies across the Southeast would do well to watch the International Trade Commission’s determinations on unfair import competition, as firms in the affected sectors can be moved to the front of the line for Trade Adjustment Assistance for Firms.