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As I turned on my computer (made in China), my coffee pot (made in Mexico) perked away. I looked at my watch (made in Japan) and my phone (made in China) rang. It was a call from one of my colleagues who had lost his job. Later I drove to the mall (in my Japanese car) to buy some clothes (made in Mexico). When I came home, I turned on the TV (made in Korea), and the news story outlined our horrendous trade deficits. I am clearly a part of our growing export imbalance! Soon I may be wearing a paper hat and asking, “Do you want fries with that?”
We are ShrinkingIn my nearly 30 years of ceramic industry involvement, the number of ceramic plants has dwindled to a small fraction of what there used to be. For example, sanitaryware plants have declined by more than 50 percent. Plants for tableware and insulators used to number in the dozens; a rough guess is that we now have less than 25 percent of the facilities that we used to have.
U.S. production of dinnerware is similar. In fact, no matter what market segment you consider—ferrites, technical ceramics, glass, abrasives, substrates—there are fewer and fewer U.S.-based operations. And those that remain are typically slipping farther and farther behind. In many cases, our American plants are in poor states of repair. Investment in technology and the use of our once prevalent “American ingenuity” seem to have dried up.
One of the most discouraging parts of my job is visiting closed facilities. Walking through a plant that has ceased to produce is an eerie experience. Instead of the vibrancy of production and the activity of workers and machinery, there is a dead silence that seems out of step with the surroundings. Where did all the workers go?
As a kiln specialist, I confess that I do not grasp all of the subtleties of trade relationships. But here are a few relevant observations, and facts that I believe are true:
• As Americans, we have become so price sensitive that we nearly always search for the lowest priced item, sometimes to the exclusion of quality.
• According to the China Labor Watch (http://www.chinalaborwatch.org), minimum wages in China range from $.60 to $1.00 per hour, but real wages are often lower. How can we compete with that?
• U.S. exports to China are less than 1⁄5 of the Chinese exports to the U.S. (from the testimony of Steve Beckman, assistant director of the U.S. Governmental and International Affairs Department).
• Until January 1, 2003, China did not have a specific law or act relating to cleaner production/pollution prevention, but rather a system of levies that penalized polluters according to the volume of pollutants in excess of “standard.” These levies were typically applied at the local level, and were subject to the corruption and arbitrary enforcement that is a part of the Chinese system. At present, eight of the 10 most polluted cities in the world are in China. To be fair, China has placed considerable emphasis on environmental improvement in the past year, but their projected level of expenditure is still far below industrialized economies.
• China’s protective tariffs on imports have been coming down since their admission to the World Trade Organization (WTO), decreasing from near triple-digit percentages to about 12 percent. These are still among the world’s highest levels. Additionally, the tariffs are lowest on raw materials and highest on manufactured articles.
• American ceramic plants are, generally, technically inferior to those in most developed countries.
• Internet research on political action committees (PACs)/lobbyists reveals no organized lobbying effort on behalf of the ceramic industry in general.
What’s Next?Consensus is mixed, but China’s inclusion in the WTO will put pressure on them to improve labor conditions and pay levels. Reduced tariffs will also help. However, we in ceramics cannot count on our government to protect the ceramic industry unless we take a few important steps:
• Establish a cohesive voice in Washington to educate our representatives regarding the industry’s demise.
• Plan for the future and start improving our efficiencies through technology. Cost cutting—i.e., layoffs—is no solution. We must modernize and upgrade every facet of our facilities.
• We must stop transferring our technology to other countries. How many of our inventive processes and products have we given away so far? As Daniel R. Joseph pointed out in CI, “Low-cost [Chinese] suppliers have a way of becoming low-cost competitors.”*
*Joseph, Daniel R., “Countering the China Threat,” Ceramic Industry, April 2003, pp. 36-37.