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KILN CONNECTION: Connection Lost

April 1, 2007
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The past couple of months were tough for some of my colleagues. One of them lost his job outright, and another's job has all but been eliminated. Unfair trade, which has decimated U.S.-based manufacturing, combined with the slowdown of the housing market has put increasing pressure on the manufacturing operations that still exist.

When I worked in manufacturing as an employee, I looked forward to my annual salary increase to help cover inflation, and maybe provide a little more breathing room between my expenses and income. What do you look forward to today? There doesn't seem to be much cause for optimism for U.S. manufacturing engineers and technical people. The best that you can hope for these days, for the most part, is that the company will just hang on for a few more years.

Free Trade?

I would be the first to admit that trade policy is more complex than my technical mind can comprehend. I also freely admit that people in Third World countries are suffering and need help to overcome disease and poverty. But the logic of flinging open our borders to trade from everywhere and anywhere doesn't make much sense to me. Sure, we all appreciate low-cost products, especially when our wages are static and the future is unclear. But before long, even low-cost goods will be out of reach for many of us who have chosen careers in ceramic manufacturing.

I have heard a variety of arguments for free trade. My favorite is that as we shed dirty manufacturing jobs, our American ingenuity will help to develop new products and processes for export. It is thought that the net result will be more jobs and the elimination of trade deficits. I am still waiting. Those who voice these arguments are usually making money from increased imports, which should be no surprise.

Figure 1. Data from the Economic Policy Institute illustrates that trade with China has nearly tripled over the six years shown, while the overall U.S. trade deficit has grown 2.3 times.

Bottom Line

Figure 1 shows data gleaned from the Economic Policy Institute. Trade with China has nearly tripled over the six years shown, while the overall U.S. trade deficit has grown 2.3 times. Hopefully, the recent action the U.S. has taken with the World Trade Organization (WTO) to initiate dispute settlement consultations regarding China's unfair subsidies will have an effect, but that remains to be seen. Some of the increase in our total deficit in 2005 is associated with higher oil prices. I certainly feel better that my money is going to the Middle East!

Look, I like Cuban cigars-oops, we don't trade with Cuba because they are communist. Glad that China isn't-oops, well they are Communist, but they must be the good kind. Mr. President, what do you think about all of this? "We're going to continue to negotiate free trade agreements," Bush said recently. "And by that I mean, we just want people to treat us fairly. I'm confident in our ability to sell American products and services overseas if the playing field is level."1 Level? You've been to China, right, Mr. Bush? Where workers are paid $1.00 per hour on average? Where there are no environmental regulations? Where there are no health insurance costs? Where there is no overtime pay? Where utilities are often subsidized? Level? It's not even close. There is a high cost for free trade, and industry is paying it. 

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