The 7th round table hearing held by the International Trade Commission on Friday focused on anti-dumping, steel tariffs, manufacturers held hostage to geopolitical trade risks, and the economic dead zones from Ohio to Alabama, the Carolinas to California, all blamed on the wonders of “free trade”.
How bad is it in California? One participant from Los Angeles noted that 11% of students in its public colleges are, or were recently homeless.
In Missouri, one professor said drugs and hopelessness have upended the job market as manufacturers left. “Learn to code” and jobs at the Dollar store aren’t going to cut it.
“As a general rule, I’m a big believer in free trade. But the problem is that in order for free trade to work, it cannot be that we reduce tariffs and quotas and a country like China does not,” said David Mitchell, a professor from Missouri State University, adding that subsidies to foreign competitors also lead to an unlevel playing field.
“We have seen a hollowing out of communities here, with population leaving, employment stagnant, and shifts away from manufacturing and into services,” he said, going on to describe the fallout from manufacturers leaving – lower skill sets, lower education skills, lower life skills from people who even know what it means to show up to work on time, and drug abuse.
Bill Padisak from the Mahoning/Trumbull AFL-CIO was a participant in the ITC hearing on Friday. He recalled how his Ohio region started to suffer economically. It is a similar story heard nationwide. For him, it started in the 1970s with the closure of a steel mill as General Motors opted for cheaper steel from Japan to make cars.
“Communities do try to pivot economically. We have a business incubator in Youngstown (Ohio) and have moved to some tech jobs but finding good manufacturing jobs that pay good wages is difficult now,” he said, adding that the closure of GMs Lordstown plant in favor of a battery-powered truck startup called Lordstown Motors did not make up for those job losses as EVs require fewer parts.
On the other hand, he said that he had farmers in the family who lost millions in revenue due to the trade fight with China and had to lay off staff. “These things all have cascading effects that hurt unrelated businesses who suffer as collateral damage,” he said about companies that serve those companies that are impacted most negatively by trade.
CPA Members Get a Voice
CPA Chairman of the Board of Directors, Zach Mottl, also president of Atlas Tool Works, a company that has been in his family for some four generations now, was the first to speak.
Mottl told ITC Commissioner Randolph Stayin that his company had to reinvent itself with the telecommunications equipment business went to Asia. Companies like Nortel Networks and AT&T sent work overseas. He shifted to medical contracts and aerospace and defense but warned that constantly having to reinvent yourself is becoming increasingly difficult under the existing circumstances of Asia-centric globalized supply chains.
“The upward mobility ladder that a manufacturing job provides has kind of disappeared here in my area and that’s the root of a lot of crime you see in Chicago right now.” Mottl said. “People lost a lot of opportunities.”
Fifty percent of Atlas Tool employees are women and minorities.
“If you’re manufacturing in a smaller town and that goes, you are stuck relying on agriculture and services, but that’s not the same entry level income. Baristas are great, but they are not going to build skills to earn more money,” Mottl told Stayin. “Companies like mine are supply chain companies they feed into other networks, like the auto industry or agribusiness like John Deere. We make parts and pieces for them. How many of those manufacturers have gone out of business? Hundreds of them. The pace of closure is 2 to 1, easily. And then you look at the graduation rates in our vocational programs where we used to graduate 800 to 1,000 students per year because you had a job market. All those companies are gone. Now the students are gone, too, and you get maybe 200 new trainees a year for these vocational programs.”
Stayin asked Mottl if he knew about trade relief that Atlas Tool could have used during the layoff years when its telecom business vanished. Stayin also used the time to talk about using anti-dumping laws. The ITC deals with the injury side of unfair trade complaints against foreign rivals.
“I am familiar with all of those things, but small companies have a tough time mustering the resources to make those cases. It’s very hard for a small company like mine to fund and research that,” Mottl said, and even though Stayin remarked that they can pool resources with other companies, this action removes companies from their core business, forcing them to take on additional legal fees and time constraints that can cost upwards of $10 million and take years, with no guarantees the Commerce Department will rule in favor of the U.S. company.
Greg Pallesen, president for the Association of Western Paper and Pulp in Oregon told Stayin that his industry lost two-thirds of its jobs due to unfair trade. The rest was due to automation.
“I can share a lot of stories,” Pallesen said. “Our trade policies continue to fail us. The ITC a few years ago looked at newsprint paper coming into the country. There was anti-dumping duties imposed on them, and then they were withdrawn. Once they were withdrawn, the company, called Resolute, walked away form that paper ill in South Carolina and that mill is now closed. Trade adjustments to re-educate workers is a feel-good policy. It is not enough.”
Derick G. Holt, an international trade lawyer at Wiley, said the government needed to pay more attention to and enforce anti-dumping and countervailing duties. “You have had injuries that had companies on the verge of being wiped out without those duties. We know that AD/CVD laws help. Other trade policies like Section 232 on steel and aluminum helped,” he said, saying that some 3,200 new steel jobs were created once the Trump administration put those tariffs on worldwide steel imports. Wiley said that an aluminum smelter, one of the last ones remaining here, was able to hire people. “That helped local communities,” he said.
The geopolitics of trade also hurt importers.
Thousands of companies were granted exemptions during the Trump years from the Section 301 tariffs, and around 300 more were given exemptions from paying tariffs under Biden in March.
At least one company that relies on Asian imports said that it needed those tariffs to be removed in order to keep its local assembly plant growing. Two workers from Element Electronics in South Carolina said the tariffs put them in a bind.
“I think the primary benefit of imports has been low consumer prices. I used to talk to Congress about good manufacturing jobs. I’m paying around $75,000 a year…and a Congressman would say that his constituents want $300 TVs and I said they can pay $600 for a TV if they had good jobs. We have to start thinking like that. I think aerospace has benefited from exports. Large agribusiness has done well from exports. But when you talk about tariffs you need to consider how it fits in line with protecting the whole supply chain, rather than just parts and pieces. We are the largest market. Everyone wants to sell to us. What if we sold to ourselves here and produce and consume here? I think if we did more of that, we would all have far more benefits.” – Zach Mottl, Chairman, Coalition for a Prosperous America
This reliance on imports gives importers an outsized voice in Washington. They are able to say that if imports are punished in favor of local supply chains that in some cases do not yet exist, it will cost thousands of assembly jobs.
“I think our best export is jobs” said Kevin Key, a speaker at the ITC roundtable. He praised the recent steel quota tariffs in the European Union and U.K. agreement involving the Section 232 tariffs. Key said that he was a laid-off steelworker in 2009 and his company had trade relief program funds that paid for his education. He became an electrician.
“Not every company has that to offer their workers,” he said. “The city of Fairfield in Alabama went bankrupt in 2020 after all of its steel mills left. Hundreds lost their jobs. That means no money in the restaurant industry. Even Walmart pulled out. Imagine how much that impacted the community.” For Key, entire cities and towns will be crushed if our Asia-centered globalist supply chain remains in force.
Jaladah Aslam, a retired social worker in Youngstown, used to work with the unemployed. She recalled the fallout in Youngstown. It began in the late 1970s with the closure of Youngstown Sheet and Tube Company, a 77-year-old company whose name is now used for a business redevelopment firm.
“That was just the beginning. We lost a lot from that time until now and are reeling from the effects of manufacturing jobs leaving,” Aslam said. “The impact on the family is something else. A lot of people who had property here had no one to pass it down to or sell it to because no one wanted it, their children didn’t want it because they had to move away to find jobs. So the cycle of decline and decay in the community and blight and poverty is unreal. As a child, I remember my dad saying that you could quit one job in the 1960s and find another job that same day. Now the poverty rate in Youngstown is 36%. We have maybe a third of the population we used to have. When you drive through town and see how bad it looks in parts you will say, well those people aren’t taking care of their property. No…there is a reason why it looks this bad.”