For US Manufacturing to Grow, It’s Going to Take Tariffs, Experts Claim

Date: Thursday, May 28, 2020
Source: Sourcing Journal

The coronavirus pandemic has exposed holes in the U.S. manufacturing supply chain born by decades of offshoring. Now, the domestic industry is ill-equipped to deal with much that’s unexpected.

As the country looks to recover and shore itself up against future risk, it’s going to take substantial change in corporate strategies and government policies, experts on an Alliance for American Manufacturing panel said Thursday.

While the headlines highlight some of the industry’s “profound efforts” in making personal protective equipment (PPE), Kim Glas, CEO of the National Council of Textile Organizations (NCTO), said, “We’ve seen 90 percent of orders at some of our facilities be cancelled and no real understanding of when the economy and consumer spending will come back on line.”

Adding to that, she said the domestic textile industry is the largest consumer of U.S. cotton, and cotton usage among U.S. yarn and fabric mills is down 92 percent from last year.

“This has had a profound effect in our manufacturing sector, as well as other manufacturing sectors across the economy, and like any manufacturing industry, we’re the first to feel slippage in the American economy,” Glas said. “And it’s going to be a slow start to recover, even as the economy comes back on line, so we need a robust manufacturing stimulus to help workers get back on the job. We need to provide certainty in the marketplace, and we need strong public policies for industries like ours to recover.”

For the PPE that’s now being made by United Steel Workers (USW) and NCTO members across the country, Glas said, “we need to ensure that we build those supply chains moving forward.”

The breakdown of the supply chain over the long term was evident when the coronavirus crisis hit and the government turned to the textile industry and other manufacturers to somehow produce the much-needed masks, gloves, gowns and ventilators, after the domestic industry had been diminished as companies moved offshore to get the lowest price.

But, as Glas posed, at what cost t0 the local community and workers?

“What price are we willing to pay? Glas asked. “Our industry quickly pivoted. And this is not like pushing a button. You really need to work very quickly to create new supply chains, from creating face masks to gowns, to even testing kit swabs…These supply chains, without careful thought and strategy, will just evaporate. We need to think about the public policy needs long-term so that these supply chain can remain onshore.”

Moving forward, the U.S. needs a “thoughtful and strong industrial policy,” according to USW international vice president Roxanne Brown.

“The COVID crisis for our union really exposed what we have intimately known and seen for the last 40-plus years, with the offshoring of jobs and the loss of industrial capacity,” Brown said. “Unfortunately this crisis highlighted the loss of key sectors of our manufacturing economy that led to saving American’s lines and now we’re at a point where we have to step away from the rhetoric that has surrounded the manufacturing sector in this country for so long…and really turn that rhetoric into action.”

There are some facilities and sectors of the industrial economy that may rebound and some that may not, Brown said, which makes it a “very frustrating and a dire time for a lot of manufacturing companies.” The government’s response to the crisis, she said, has been “like sending a soldier into war with no weapons,” leading to the obvious shortages in PPE, but also problems like price gouging and counterfeiting.

“There’s a lot that’s happening in this crisis that’s exposing not just the woeful inadequacies in our supplies, but also the nefarious forces in this country that are taking advantage of it,” Brown said. “I’ve watched Kim Glas try to weave together a supply chain in the textile industry because there are so many holes left in the supply chain because of bad trade policies over the years.”

For too long the country has ceded jobs, technology, innovation and industrial capacity to other nations, Brown said, “and that has to stop.”

Retailers that import most of their product and have been pushing for tariff relief as a way to ease the financial effect of the coronavirus crisis, Glas said, are also culprits of the industry’s current conundrum. The domestic industry, she said, needs a tariff regime to create fair competition with low-wage countries.

“I often wonder why the solution to [retailers’] liquidity problems has to run through our manufacturing sector,” she said. “The conversation needs to be about how do we invest in the companies and the workers in the United States of America, not what is the relief package for the retailing and importing community that have offshored these industries and now we’re paying a price.”

 

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