JS Online: View of China from Watertown
JS Online: View of China from Watertown
www.jsonline.com Return to regular view
Original URL: http://www.jsonline.com/bym/news/apr05/321046.asp
View of China from Watertown
Business owner, now association spokesman, can see both sides of trade conflict
By RICK BARRETT
rbarrett@journalsentinel.com
Posted: April 24, 2005
When the National Association of Manufacturers wanted to tell Congress about U.S. manufacturers being mauled by China, it sought a credible and matter-of-fact spokesman.
China via Watertown
Photo/Dale Guldan
I have 500 people working for me who wouldn’t be happy about losing their
jobs because of unfair trade with China.
- Richard Wilkey,
Watertown business owner
Photo/Dale Guldan
Chris Williams is an employee at Thermal Spray Technologies Inc. in Sun Prairie. The company’s owner, Richard Wilkey, who also owns a Watertown firm, worries about the effects China is having on U.S. manufacturing.
Photo/Dale Guldan
Mike DePrey works on a part at Thermal Spray Technologies Inc.
The Washington, D.C., group turned to Richard Wilkey, owner of Fisher-Barton Inc., a Watertown company whose products include 1,500 types of lawnmower blades.
Wilkey had the right credentials.
His company had lost business to China, giving him a view of international trade straight from the front lines.
Wilkey realized that China was the world's fastest-growing market, and he had a global view of trade policies, said Patricia Mears, international commercial affairs director for the National Association of Manufacturers.
Wilkey was recruited to testify before the House Ways and Means Committee earlier this month. He accepted the invitation, partly for self-serving reasons.
"I have 500 people working for me who wouldn't be happy about losing their jobs because of unfair trade with China," Wilkey said. "And I wouldn't be very happy about having to close down an operation."
Alarmed over the soaring trade imbalance with China, the National Association of Manufacturers has told the U.S. government it can't wait for the Chinese to crack down on unfair trade practices, such as undervalued currency and theft of intellectual property rights.
"We do not have five or 10 years to solve these problems," Wilkey said. "I have seen many companies around me driven out of business by Chinese competition, and many of them were my suppliers. Not all of these companies were dinosaurs, either. A number of them had made significant investments in technology and modern business methods to remain competitive. They had done all of the right things."
Some of Fisher-Barton's customers have moved operations offshore and taken their entire supply chain with them.
"Once that business is gone, it's gone forever," Wilkey said.
As the U.S. trade deficit widened last month despite an increase in exports, the manufacturers association pointed to China's currency valuation as a "major cause" for the stubborn imbalance.
Over the last decade, China has set its currency rate at about 8.28 yuan per dollar - a rate that analysts say undervalues the yuan up to 40% and makes Chinese exports significantly cheaper.
At the same time, the currency policy drives up the cost of U.S. products sold in China.
Many U.S. manufacturers can deal with the fact that China uses low wages and a lack of employee benefits to keep costs down, Wilkey said. But they should not have to deal with China deliberately undervaluing the yuan, and other unfair trade practices, he added.
"We have got to stop treating China like it's some poor, Third World country," Wilkey said. "When they start cheating, we have to nail them to the wall."
The association wants the Treasury Department to cite China for currency manipulation and seek recourse under international law.
There are numerous proposals before Congress aimed at pressuring China to revalue its currency, including one proposal that would slap a 27% tariff on Chinese imports if Beijing doesn't cooperate within six months.
The steep tariffs would be going too far, Mears said.
That kind of step would be "the most flagrant violation imaginable" of international trade rules, she said. "The truth is that no one can force a country to change its currency policy. It's an issue of sovereignty."
Currency issues overplayed
Steady political pressure from the United States, the European Union and international organizations such as the International Monetary Fund is more likely to convince China to change its ways than steep tariffs, according to Mears.
"China has always said it doesn't want to act under pressure from other countries, but the pressure isn't going to ease up," she said.
The currency issue has been overplayed, said Frank Jaehnert, president and CEO of Brady Corp., a Milwaukee company with manufacturing plants in the United States and China.
"I don't think China is so strong because of currency protection," Jaehnert said. "Their strength is they have low labor costs and a tremendously ambitious work force."
Brady has an eclectic mix of products including factory-floor exit signs, laboratory vial labels and parts for mobile phones.
The company has expanded two of its three factories in China that make parts for Motorola Inc. and other multinational companies.
U.S. companies should not panic over China, Jaehnert said.
Over time, he said, China will lose some of its low-cost competitive advantage as the country raises wages and adopts more Western standards.
"I don't think a revaluation of the yuan is going to make much difference," Jaehnert said. "And what bothers me in this whole China discussion is we focus too much on their strengths instead of our own."
Part of evolution
China is not moving ahead with reforms as fast as Americans would like, but it is making progress, said Anthony Raimondo, a National Association of Manufacturers board member and CEO of Behler Manufacturing Co. in Columbus, Neb.
Behler has a plant in China that produces metal buildings for the Chinese market.
Only rarely, Raimondo said, are people in this country upset about that fact.
"I think it's part of the evolution of global manufacturing," he said. "Over time, you need a physical presence in a country to get a significant share of that market. As for the critics, I would respond by asking how they would like it if Toyota took its 35,000 jobs out of this country."
China should not be seen as a scapegoat for all of the woes of U.S. manufacturers, Wilkey said.
"We are in favor of free and fair trade with China," he added.
But at the current rate, the trade deficit with China could reach $240 billion by the end of the year, according to the National Association of Manufacturers.
The undervalued yuan makes foreign investment in China cheaper and more attractive, thus encouraging U.S. companies to move there, Wilkey said.
"It is hard to find fault with these moves offshore," he said. "You will get labor for about $4 per day. Our health care costs alone are $4 per hour. It looks like raw material costs are subsidized in China . . . and the kicker is that China has a currency advantage of up to 40 percent. The fundamentals are out of whack."
Without a doubt, China has emerged as a leading world economy, Wilkey said.
"Yet we are treating them like a Third World country while they are cleaning our clocks," he said.
From the April 25, 2005, editions of the Milwaukee Journal Sentinel
Subscribe today and receive 4 weeks free! Sign up now.
www.jsonline.com Return to regular view
Original URL: http://www.jsonline.com/bym/news/apr05/321046.asp
View of China from Watertown
Business owner, now association spokesman, can see both sides of trade conflict
By RICK BARRETT
rbarrett@journalsentinel.com
Posted: April 24, 2005
When the National Association of Manufacturers wanted to tell Congress about U.S. manufacturers being mauled by China, it sought a credible and matter-of-fact spokesman.
China via Watertown
Photo/Dale Guldan
I have 500 people working for me who wouldn’t be happy about losing their
jobs because of unfair trade with China.
- Richard Wilkey,
Watertown business owner
Photo/Dale Guldan
Chris Williams is an employee at Thermal Spray Technologies Inc. in Sun Prairie. The company’s owner, Richard Wilkey, who also owns a Watertown firm, worries about the effects China is having on U.S. manufacturing.
Photo/Dale Guldan
Mike DePrey works on a part at Thermal Spray Technologies Inc.
The Washington, D.C., group turned to Richard Wilkey, owner of Fisher-Barton Inc., a Watertown company whose products include 1,500 types of lawnmower blades.
Wilkey had the right credentials.
His company had lost business to China, giving him a view of international trade straight from the front lines.
Wilkey realized that China was the world's fastest-growing market, and he had a global view of trade policies, said Patricia Mears, international commercial affairs director for the National Association of Manufacturers.
Wilkey was recruited to testify before the House Ways and Means Committee earlier this month. He accepted the invitation, partly for self-serving reasons.
"I have 500 people working for me who wouldn't be happy about losing their jobs because of unfair trade with China," Wilkey said. "And I wouldn't be very happy about having to close down an operation."
Alarmed over the soaring trade imbalance with China, the National Association of Manufacturers has told the U.S. government it can't wait for the Chinese to crack down on unfair trade practices, such as undervalued currency and theft of intellectual property rights.
"We do not have five or 10 years to solve these problems," Wilkey said. "I have seen many companies around me driven out of business by Chinese competition, and many of them were my suppliers. Not all of these companies were dinosaurs, either. A number of them had made significant investments in technology and modern business methods to remain competitive. They had done all of the right things."
Some of Fisher-Barton's customers have moved operations offshore and taken their entire supply chain with them.
"Once that business is gone, it's gone forever," Wilkey said.
As the U.S. trade deficit widened last month despite an increase in exports, the manufacturers association pointed to China's currency valuation as a "major cause" for the stubborn imbalance.
Over the last decade, China has set its currency rate at about 8.28 yuan per dollar - a rate that analysts say undervalues the yuan up to 40% and makes Chinese exports significantly cheaper.
At the same time, the currency policy drives up the cost of U.S. products sold in China.
Many U.S. manufacturers can deal with the fact that China uses low wages and a lack of employee benefits to keep costs down, Wilkey said. But they should not have to deal with China deliberately undervaluing the yuan, and other unfair trade practices, he added.
"We have got to stop treating China like it's some poor, Third World country," Wilkey said. "When they start cheating, we have to nail them to the wall."
The association wants the Treasury Department to cite China for currency manipulation and seek recourse under international law.
There are numerous proposals before Congress aimed at pressuring China to revalue its currency, including one proposal that would slap a 27% tariff on Chinese imports if Beijing doesn't cooperate within six months.
The steep tariffs would be going too far, Mears said.
That kind of step would be "the most flagrant violation imaginable" of international trade rules, she said. "The truth is that no one can force a country to change its currency policy. It's an issue of sovereignty."
Currency issues overplayed
Steady political pressure from the United States, the European Union and international organizations such as the International Monetary Fund is more likely to convince China to change its ways than steep tariffs, according to Mears.
"China has always said it doesn't want to act under pressure from other countries, but the pressure isn't going to ease up," she said.
The currency issue has been overplayed, said Frank Jaehnert, president and CEO of Brady Corp., a Milwaukee company with manufacturing plants in the United States and China.
"I don't think China is so strong because of currency protection," Jaehnert said. "Their strength is they have low labor costs and a tremendously ambitious work force."
Brady has an eclectic mix of products including factory-floor exit signs, laboratory vial labels and parts for mobile phones.
The company has expanded two of its three factories in China that make parts for Motorola Inc. and other multinational companies.
U.S. companies should not panic over China, Jaehnert said.
Over time, he said, China will lose some of its low-cost competitive advantage as the country raises wages and adopts more Western standards.
"I don't think a revaluation of the yuan is going to make much difference," Jaehnert said. "And what bothers me in this whole China discussion is we focus too much on their strengths instead of our own."
Part of evolution
China is not moving ahead with reforms as fast as Americans would like, but it is making progress, said Anthony Raimondo, a National Association of Manufacturers board member and CEO of Behler Manufacturing Co. in Columbus, Neb.
Behler has a plant in China that produces metal buildings for the Chinese market.
Only rarely, Raimondo said, are people in this country upset about that fact.
"I think it's part of the evolution of global manufacturing," he said. "Over time, you need a physical presence in a country to get a significant share of that market. As for the critics, I would respond by asking how they would like it if Toyota took its 35,000 jobs out of this country."
China should not be seen as a scapegoat for all of the woes of U.S. manufacturers, Wilkey said.
"We are in favor of free and fair trade with China," he added.
But at the current rate, the trade deficit with China could reach $240 billion by the end of the year, according to the National Association of Manufacturers.
The undervalued yuan makes foreign investment in China cheaper and more attractive, thus encouraging U.S. companies to move there, Wilkey said.
"It is hard to find fault with these moves offshore," he said. "You will get labor for about $4 per day. Our health care costs alone are $4 per hour. It looks like raw material costs are subsidized in China . . . and the kicker is that China has a currency advantage of up to 40 percent. The fundamentals are out of whack."
Without a doubt, China has emerged as a leading world economy, Wilkey said.
"Yet we are treating them like a Third World country while they are cleaning our clocks," he said.
From the April 25, 2005, editions of the Milwaukee Journal Sentinel
Subscribe today and receive 4 weeks free! Sign up now.
posted by Eastlaw at Tuesday, April 26, 2005
0 Comments:
Post a Comment
<< Home