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February 28, 2003
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While job cuts can be attributed to many factors, including a continued weak U.S. economy, some studies have suggested that there is a direct link between the increasing trade deficit and the shrinking U.S. job market.

Although the final figures were not yet available at press time, the U.S. trade deficit in 2002 was expected to be more than $420 billion. Some economic forecasters believe that number will rise to a staggering $511 billion in 2003. At the same time, the unemployment rate in the U.S. manufacturing sector has also continued to rise, with more than two million jobs cut in this sector alone from August 2000 to December 2002. While these job cuts can be attributed to many factors, including a continued weak U.S. economy, some studies have also suggested that there is a direct link between the increasing trade deficit and the shrinking U.S. job market.1

This should come as no surprise to the ceramic industry; after all, this problem is not new. As early as the mid-1950s, lower-cost Japanese imports of porcelain dinnerware were already starting to adversely affect U.S. manufacturers such as The Hall China Co. (See the article on pp. 25-30.) Hall China implemented a number of strategies—including catering to niche markets such as commercial and institutional ware, creating strategic partnerships with companies such as the Longaberger Co., modernizing its manufacturing facilities and sales strategies, and focusing on high quality—that helped the company succeed throughout the 20th century, and these strategies have also positioned the company to remain successful well into the 21st century. However, many other U.S manufacturers have taken a different approach, cutting U.S. jobs and outsourcing more and more of their production to countries such as Mexico and China, where labor is cheap and environmental regulations are virtually nonexistent. This approach is paying dividends in higher profit margins in the short term—but what will be the cost over the long term?

The impact is already reverberating throughout the ceramic industry. As more ceramic manufacturers and decorators close their U.S. plants and shift production to other countries to save money, material and equipment suppliers are being forced to make drastic cuts in their workforces as well. These cuts inevitably reduce the availability of supplies and services, driving up the cost of manufacturing. Where will this cycle end?

For the ceramic industry to remain viable, manufacturers and decorators must remain focused on long-term objectives, not just short-term gains. According to Andrew Bopp, executive director of the Society of Glass and Ceramics Decorators, “This means working closely with suppliers to develop new technology to meet [new design trends], while also keeping production costs down.” (See “Ceramic Decorating”)

Strategies such as investing in new technologies to increase productivity and efficiency, developing successful partnerships and focusing on quality will be key to remaining profitable in this increasingly global business environment.

1. Impact of U.S.-China Trade Relations on Workers, Wages and Employment, Pilot Study Report, June 30, 2001, available online at http://www.ustdrc.gov/research/research.html.

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