Managing Automation - August 2008 - (Page 27)

on other countries for its basic necessities. In 1993, the year before the North American Free Trade Agreement (NAFTA) took effect, the United States imported $98 billion more goods and services than it exported. By 2007, that gap had widened to $700 billion. Imports from Mexico and Canada have contributed to the rise, but China remains the biggest catalyst for America’s lopsided trade. Chris LoPresti, who participated in the Thomas survey, has seen that shift firsthand. At Andron Stainless Steel Corp. in South Carolina, where LoPresti is the plant manager, the playing field has steadily tilted toward foreign competitors. In the company’s early days, the production floor featured some specialized jobs, but most of the work was in commodity steel fittings. That dynamic is now reversed. Due to the encroachment of low-cost foreign competition, mostly in the Pacific Rim, LoPresti says, a commodity fitting that fetched $20 when Andron was a fledgling company in 1993 now sells for $4. Across the same span of time, the company’s production costs, including wages, healthcare, and other expenses, have risen. In an effort to survive, Andron had to abandon its manufacturing mainstay — shipping large orders of standard parts — and become a custom shop, delivering small quantities of product at a time. Still, LoPresti and his manufacturing cohorts aren’t looking for handouts, judging from the survey, and they aren’t blind to the complex economic realities that the new administration faces vis à vis trade. LoPresti acknowledges the economic value of delivering affordable products, but says the administration needs to take a stand on behalf of U.S. manufacturing, lest it disappear. “Long term,” he says, “you’re looking at the fact that I’m going to be working at Burger King and going to buy food from McDonald’s, and you’re going to be working at McDonald’s, coming over to buy food from Burger King, to support ourselves.” The plant manager at the small steel fittings company in South Carolina is worried, and so are his peers. Seventy-one percent of manufacturers in the Thomas sur vey said they were “very concerned” about the state of U.S. manufacturing and industry’s ability to compete effectively on the global stage. Another 16% are “somewhat” concerned. Steel may be just one element of one particular trading relationship, but many in manu- facturing see it as a microcosm of what they consider a misshapen trade policy. In a statement deeply rooted in the industrial community, LoPresti says, “The lack of response from the government in regards to trying to level the playing field is disappointing.” DISAGREEMENT OVER AGREEMENTS Of course, no U.S. president needs a reminder that the world is watching every move America makes. The recent election-inspired handwringing over NAFTA and the proposed U.S.Columbia free trade agreement sowed fear in many of America’s trading partners. What U.S. manufacturing workers considered a cry for fairness sounded to some European leaders like protectionism. A May 22, 2008, New York Times article captured French Finance Minister Christine Lagarde’s take on the situation. “Protectionism is trendy at the moment,” she said. “We need to turn that risk of extreme protectionism into something positive, and I think regulators, governments, and international organizations have a responsibility to offer an alternative path that includes more regulation and policy coordination.” Similar urging has come from one of America’s staunchest allies. David Miliband, Britain’s foreign secretary, said in a May 18, 2008, Financial Times article, “It’s absolutely clear that the world needs an America that’s engaged with the global trading system in a very fundamental, very committed way . . . The problem is not too much trade; the problem is too little trade. That is our position as a British government, and it will be articulated clearly and consistently.” On the ground in America, however, the tide seems to favor a better brand of trade agreement, not the “I’ll take my toys and go home” isolationism that some KEY RECOMMENDATIONS in the global community believe ● Diversify imports to create less dependence has taken root. As one Thomas suron China. vey respondent said, “Protection● Better enforce existing trade laws. ism and putting up barriers against U.S. trade internationally will be the ● Press China to abandon its policy of currency manipulation. death of the U.S. economy and the ● Offer accelerated asset depreciation to busilifestyle we have come to expect.” nesses to spur U.S. investment. And yet, 42% of respondents to ● Change existing taxes to a consumption tax. Thomas’ survey believe that international trade agreements have im● Reject trade legislation that negatively affects U.S. manufacturing. paired U.S. competitiveness, while 48% think they’ve had a mixed ef● Promote cost parity between domestic manufacturers and foreign producers. fect. The answer, manufacturers seem to be saying, is not fewer 27 August 2008

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Managing Automation - August 2008 Contents Take 1 After 18 Months, the Oracle/SAP Suit Has Little Effect on Maintenance Sales At 100, Foxboro Reinvents Around Its Customers New Private Equity Firm Eyes Software A Software Suite Just for Manufacturers i2 Chief Focuses on Services Plan Notes It's Time for Action Examining U.S. Competitveness Leveling the Field An Unhealthy Situation Exploring Alternatives Math and Science: Key to the Future Product Scan Advertiser Index Next

Managing Automation - August 2008

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