Posts from Matthew McMullan

Congress Has Ironed Out Its TIVSA Disagreements

Matthew McMullan

Matthew McMullan Communications Manager, Alliance for American Manufacturing

You might think Congress is entirely tied up in the impeachment hearings. But no!

On Monday, House and Senate negotiators agreed to a compromise version of the massive National Defense Authorization Act (NDAA), which sets in place policy and spending for Department of Defense. Tucked in this huge conference report is legislation modeled on the Transportation Infrastructure Vehicle Security Act (TIVSA) that would bar federal dollars from being used to purchase rolling stock – rail cars or buses – from state-owned or -controlled companies. In effect this meant big Chinese companies, whose presence in the American bus and rail car markets has grown significantly in recent years.

Both the House and Senate versions of the NDAA included TIVSA language, and while the Senate’s TIVSA was comprehensive the House’s carved out electric buses from this legislation. In the end, though, the TIVSA language on which the negotiators agreed leaned toward the Senate version; it was more comprehensive.

The Alliance for American Manufacturing (AAM) thinks this is a good outcome. Detailed reports have shown CRRC and BYD – a Chinese state-owned rail car manufacturer and a state-supported bus manufacturer, respectively, that have growing footprints in the American market – maintain close ties to the Chinese Communist Party, the Chinese military, and huge telecom companies like Huawei, which currently sits on a Commerce Department export blacklist because of national security concerns.

AAM President Scott Paul applauded Congress for recognizing that such companies “operate as extensions of China’s government.” Said Paul:

“By moving forward with this legislation, Congress is defending our transportation infrastructure against deeply subsidized Chinese companies that threaten to disrupt our manufacturing capabilities and displace tens of thousands of American jobs throughout our supply chain of parts and components.”

Read the reports on BYD and CRRC here.

***

Reposted from AAM

There’s a Lot of “Banned, Unsafe, Mislabeled” Stuff on Amazon That’s Imported From China

Matthew McMullan

Matthew McMullan Communications Manager, Alliance for American Manufacturing

The Wall Street Journal has published a lengthy look at Amazon’s years-long effort to bring products directly from Chinese factories to me and you, the American consumer. How has this effort turned out?

Well, the title of the article is “Amazon’s Heavy Recruitment of Chinese Sellers Puts Consumers at Risk.” So … maybe good for The House That Jeff Built, but kinda bad for consumers!

This is another example of the Journal giving Amazon the business recently. Only a few weeks ago it reported that the company stubbornly lists for sale lots of clothing produced in Bangladeshi factories that even competitors like Walmart shun because of chronic violations of basic safety standards. And in August, the Journal detailed how little oversight the company has over the products sold on its platform, which results in “thousands of banned, unsafe or mislabeled products” floating around on there. The paper itself found more than 10,000 such items on the site between June and August.

And now comes today’s story. The paper reports that out of nearly 2,000 sellers of problematic items (whose addresses could be determined), more than half were based in China.

That’s the result of Amazon’s effort to “cut out the middleman” between Chinese manufacturers and America’s online shoppers.

That was the sales pitch an Amazon representative made this year at a trade event in Hong Kong … but it’s not an accurate description of what the company has been selling to the Chinese manufacturers it’s recruiting. The Journal cites another Amazonian who was much more on the nose in 2017 when she told a conference audience of Chinese business people: “We help factories directly open accounts on Amazon and sell to U.S. consumers directly. This is our value.”

These pitches appear to have been effective. Amazon doesn’t require its sellers to list where they’re located (or share that information), but the Journal cites an outside analysis of the 10,000 most-reviewed Amazon sellers that found approximately 38% of them are now located in China … a percentage that has increased steadily since Amazon began recruiting Chinese sellers in 2013.

More ...

China, Which Has a Steel Overcapacity Problem, Leaves Forum on Steel Overcapacity

Matthew McMullan

Matthew McMullan Communications Manager, Alliance for American Manufacturing

Last week we noted how an international group of steel industry associations had released a statement, calling on their governments to figure out a way to reduce steel production overcapacity – the difference between an industry’s potential output and current production.

They released it ahead of a meeting of the G20 Global Forum on Steel Excess Capacity, which convened in Japan over the weekend. That forum was created in 2016 to find some international consensus on how to fix the overcapacity problem, which is (not entirely but) mostly a problem created by China’s massive steel industry.

The Chinese government might dismiss that as an outsider’s biased opinion, but consider the context in which China’s steel industry grew. In the early 90s it became a “strategic” industry in government planning documents. According to an analysis of the industry produced a few years ago at AAM’s behest by Duke University, “state direction, supplemented by state subsidies, incentives, and strong internal demand for steel, had an important role in developing China’s steelmaking capacity.”

And so it went from responsible for a fraction of global production in 2000, when it produced 129 million metric tons (MMT), to approximately half of production in 2015, when it produced 804 MMT. While most of that Chinese steel was consumed in China – the country spends a lot on infrastructure as a form of economic stimulus, and infrastructure requires steel – its considerable excess spilled out into the international market, depressing prices and triggering bankruptcies and layoffs. This was essentially the preamble to the import tariffs the Trump administration finally raised on steel in 2018.

So back to this weekend’s G20 steel forum: Was any news created during this meeting? Anything of note?

More ...

China Wants $2.4 Billion from the U.S. Over an Old WTO Tariff Dispute

Matthew McMullan

Matthew McMullan Communications Manager, Alliance for American Manufacturing

Amid an enormous trade war between the U.S. and Chinese governments, China’s trying to get $2.4 billion from the United States for its non-compliance with a World Trade Organization (WTO) ruling over the legitimacy of tariffs from the Obama era.

Yes, that’s right: In 2012 China disputed the application of a bunch of tariffs on solar panels, wind turbines, and certain steel and aluminum products, and a WTO appeals court agreed that some of the U.S. tariffs were unfair. From Reuters:

China’s request appears on the agenda of the (Dispute Settlement Body) set for Oct. 28. The United States could challenge the amount of retaliatory sanctions sought, which could send the long-running dispute to arbitration.

The office of U.S. Trade Representative (USTR) Robert Lighthizer has said the WTO ruling recognized that the United States had proved that China used state-owned enterprises to subsidize and distort its economy.

But the ruling also said the United States must accept Chinese prices to measure subsidies, even though USTR viewed those prices as “distorted”.

Without having read the text of the WTO ruling, that ruling seems kinda odd ... despite being in a vein similar to previous WTO rulings against the U.S. It’s well documented that China has for years subsidized the friggin’ heck out of these industries, saturating some of them so much that they caused global overcapacity problems. And accepting Chinese prices to measure subsidies would seem to fly in the face of the fact that China remains a non-market economy.

The lawyers are gonna wrestle this one out, and we’ll keep an eye on it. This case is illustrative, though, of a larger point: The trade policies pushed by the Chinese government were a problem before Donald Trump became president. And although negotiations toward a comprehensive deal continue, and although it’s a good thing that this guy has (however ham-handedly) squared off with China over its unfair trade practices, these problems are almost guaranteed to continue after him.

This is a long game. Whatever deal the USTR is able to reach with his Chinese counterparts needs to be a comprehensive as possible. No settling for soybeans!

***

Reposted from AAM

WTO Report Revealed: Yes, EU Industries Can Treat China as a Non-Market Economy

Matthew McMullan

Matthew McMullan Communications Manager, Alliance for American Manufacturing

Remember when the Chinese government was beating the drum hard to gain “market economy” status in the eyes of the World Trade Organization (WTO)?

It’s been a little while since this last came up. A lot of trade politics has happened since we last wrote about it. Namely; the Trump administration has hit China with a raft of tariffs on Chinese goods, and the Chinese government has responded in kind. Billions of dollars in tariffs tend to distract from questions like “is China a market economy?”

But it really is a fundamental question in the context of WTO decisions. Because China is considered a non-market economy (NME), WTO-approved anti-dumping tariffs on Chinese products suspected of being sold at an unfair price can be based on the price of the same product from a third country – where the product is manufactured at a market rate.  

China had argued that the terms of the WTO accession deal it made in 2001 granted it automatic market economy status after 15 years (the terms made it clear that other WTO members could treat China as a NME because it was clearly a NME). And as soon as those 15 years were up in December 2016, it took the European Union to the WTO’s dispute settlement – basically, to trade court – over “the method Brussels applied for calculating anti-dumping duties on states seen as non-market economies,” writes Politico. Back then we called this a “divide and conquer strategy.”

Well, Politico got its hands on a confidential WTO report on that case. It was was issued earlier this year, and only to the parties involved. China, Politico reports, “conceded that parts of the ruling would have been so detrimental that it suspended the case and asked for the report to not be published, keeping the panel's reasoning locked away.”

More ...

Robots On Everyone’s Mind At the Fourth Democratic Debate

Matthew McMullan

Matthew McMullan Communications Manager, Alliance for American Manufacturing

Another hours-long primary debate is in the books. There were 12 candidates on stage last night! For another three hours! Not a great format for TV!

That said: One of these people could be in the White House in a little over a year from now, so we should probably pay a little attention, even if we're still months away from voting. So let’s boil it down. What did we notice in last night's debate?  

Elizabeth Warren on trade vs. automation 

Moderator: “Senator Warren, you wrote that blaming job loss on automation is, quote, ‘a good story, except it's not really true.’ So should workers here in Ohio not be worried about losing their jobs to automation?”

Warren: “So the data show that we have had a lot of problems with losing jobs, but the principal reason has been bad trade policy. The principal reason has been a bunch of corporations, giant multinational corporations who've been calling the shots on trade, giant multinational corporations that have no loyalty to America. They have no loyalty to American workers. They have no loyalty to American consumers. They have no loyalty to American communities. They are loyal only to their own bottom line.”

“I have a plan to fix that, and it's accountable capitalism. It says, you want to have one of the giant corporations in America? Then, by golly, 40 percent of your board of directors should be elected by your employees.”

Insta-Analysis: That is indeed Sen. Warren’s plan. Requiring 40 percent of all corporate boards to worker-elected is not the only part of it, but it’s a real big part. You can read about the rest here.

Is she right, though, that trade’s a bigger job-loss culprit than automation? It depends on which jobs you’re talking about. Manufacturing jobs have definitely been lost as we’ve run up trade deficits with China over the years. There’s a plausible argument to be made that import competition killed off factory employment in the United States.  

More ...

Manufacturing Rebounds in August

Matthew McMullan

Matthew McMullan Communications Manager, Alliance for American Manufacturing

So check it out, we’ve got another economic indicator out. And this one – unlike another recent one – is good!

The Federal Reserve said Tuesday that U.S. manufacturing output rose by 0.6% in August on the back of machinery and primary metals production. That may sound like only a little, but it beats a forecast returned by a poll of economists conducted by Reuters. From the story:

Motor vehicles and parts production fell 1.0% last month after increasing 0.5% in July. Excluding motor vehicles and parts, manufacturing output increased 0.6% in August after declining 0.5% in the prior month. Machinery output rebounded 1.6% after dropping 1.7% in July.

The jump in manufacturing output in August together with a 1.4% rebound in mining, lead to a 0.6% increase in industrial production last month. That was the largest gain in industrial output since August 2018 and followed a 0.1% dip July. Industrial production rose 0.4% on year-on-year basis in August.

Capacity utilization rates were up too. It’s a nice rebound in fortunes from the recently released ISM Manufacturing index, which signaled a further slowdown in economic activity.

So while its numbers aren’t astounding, manufacturing isn’t completely tanking. But the longer-term forecasts aren’t great, either. MarketWatch asked around, and those it spoke to said that the negative trend is likely to continue.

We’ve said it before and we’ve said it again: Infrastructure spending is the right way to turn this around.

***

Reposted from AAM

Is Manufacturing Slowing Down?

Matthew McMullan

Matthew McMullan Communications Manager, Alliance for American Manufacturing

There was new ISM data released today. And it wasn’t good. Oh no!

The Institute for Supply Management (ISM)’s monthly index is considered a pretty good gauge of activity in the U.S. manufacturing sector. ISM goes around, asks a bunch of folks whether they’re buying supplies or not, and averages them (and their comments) out. A score above 50% is good. Below is bad – it suggests a contraction in manufacturing activity. Anyway, it’s now at 49.1%.

This is no guarantee the manufacturing sector is about to slip. Somebody on the Internet who is paid to do economic analysis pointed out:

Meanwhile, another important gauge of the manufacturing sector’s health – employment data – will be out this Friday when the jobs report comes out.

But look, let's say this is fraying your nerves. The trade fight with China is dragging a little bit, the fight seems to be a drag on manufacutirng, and President Trump seems to be trying to influence it all by tweet.

Is there something Congress could do … that polls well … that Trump himself says (or at least implies) he wants … and is incredibly overdue … that could help improve the fortunes of the American manufacturing sector?

Infra … infrastruct … I can’t think of the word!

***

Reposted from AAM

America’s Spies Considering What Happens if Huawei Wins the 5G Race

Matthew McMullan

Matthew McMullan Communications Manager, Alliance for American Manufacturing

There was a really interesting story published Monday morning in Politico about the U.S. intelligence community’s assessment of Huawei, the Chinese telecom giant it largely sees as a security threat because of its ties to the Chinese military. They spent the weekend gaming out what it would look like if Huawei indeed emerges over its competitors as the dominant force in 5G technology – basically, the computer infrastructure that will underpin the economy for the foreseeable future.

It’s an interesting thought experiment! It’s a complicated issue, made more complex by the fact that President Trump …

… has politicized the living heck out of the Huawei issue by essentially making it a chit in trade talks with the Chinese government. Not good!

The president’s Commerce Department blacklisted Huawei a few months ago on national security grounds because of fears the company will use “back doors” in its tech to facilitate espionage. What’s more:

“Trump has also signed an executive order that would block Huawei from selling equipment in the U.S. and Congress passed a law last year that would ban procurement of Huawei products by federal agencies.”

And yet:

“One person involved in last week’s exercise said it’s clear the meeting was focused on the long term and not meant to offer an immediate policy solution in the context of Trump’s trade fight.

“‘The timeline of this is not consistent with the way the president looks at the world,’ the person said.”

Today, Commerce announced a 90-day reprieve on its Huawei ban, so the many rural telecom companies in the States that rely on Huawei equipment will have more time to decouple. The New York Times reports that the administration is keeping up an appearance of pressure by adding nearly 50 Huawei affiliates to that blacklist.

More ...

Move to Missouri or Lose Your Job: GM Workers Facing Hard Choices

Matthew McMullan

Matthew McMullan Communications Manager, Alliance for American Manufacturing

Around here the best stuff is $16 an hour, an hour, hour and a half from my house. Anything else is nine to 11 dollars, and that just doesn’t cut it. When I was working that before I started at GM, my credit cards just kept getting fuller and fuller just trying to make it.”

So Lincoln Fegley, a northeast Ohio native who worked at General Motors’ Lordstown plant until the company mothballed it a few months ago, took the forced transfer notice he was handed and moved his family to Wentzville, Missouri where GM makes vans.  

That’s like 600 miles from his friends and family, and not an easy decision to make. But decisions like these are being made a lot. GM says it will provide positions for the 2,800 affected workers who want one, and says 1,700 of them have already done so.

Of course, though, it’s even more complicated than that: GM’s contract with the United Auto Workers (UAW) union is up, and negotiations on the next one begin in September. Reopening some of the plants GM closed in this round of restructuring is expected to be on the bargaining table.

So, if you’re an affected worker … what do you do? Volunteer to move?

Do sell your house, pack up your family, and move to a different time zone?

Or do you hope you don’t get a forced transfer notice (like the one Lincoln Fegley got)? Turn it down when it arrives and lose your unemployment benefits and the right to transfer to another GM plant closer to home?

More ...

There is Dignity in All Work

There is Dignity in All Work

Union Matters

The Big Drip

From the USW

From tumbledown bridges to decrepit roads and failing water systems, crumbling infrastructure undermines America’s safety and prosperity. In coming weeks, Union Matters will delve into this neglect and the urgent need for a rebuilding campaign that creates jobs, fuels economic growth and revitalizes communities. 

A rash of water main breaks in West Berkeley, Calif., and neighboring cities last month flooded streets and left at least 300 residents without water. Routine pressure adjustments in response to water demand likely caused more than a dozen pipes, some made of clay and more than 100 years old, to rupture.

West Berkeley’s brittle mains are not unique. Decades of neglect left aging pipes susceptible to breaks in communities across the U.S., wasting two trillion gallons of treated water each year as these systems near collapse.

Comprehensive upgrades to the nation’s crumbling water systems would stanch the flow and ensure all Americans have reliable access to clean water.

Nationwide, water main breaks increased 27 percent between 2012 and 2018, according to a Utah State University study.  

These breaks not only lead to service disruptions  but also flood out roads, topple trees and cause illness when drinking water becomes contaminated with bacteria.

The American Water Works Association estimated it will cost at least $1 trillion over the next 25 years to upgrade and expand water infrastructure.

Some local water utilities raised their rates to pay for system improvements, but that just hurts poor consumers who can’t pay the higher bills.

And while Congress allocates money for loans that utilities can use to fix portions of their deteriorating systems, that’s merely a drop in the bucket—a fraction of what agencies need for lasting improvements.

America can no longer afford a piecemeal approach to a systemic nationwide crisis. A major, sustained federal commitment to fixing aging pipes and treatment plants would create millions of construction-related jobs while ensuring all Americans have safe, affordable drinking water.

More ...