And Another Take - Tire Review Magazine

And Another Take

Danny Schechter, an American journalist, wrote the following piece for the Huffington Post, which appeared on July 15.

Will Protectionism Protect Our Workers?

Can Doing What Seems to be The Right Thing Turn Out To Be The Wrong Thing
In Promoting Protectionism, American Labor May Be Putting US Workers At Risk

LeoGerard of the United Steelworkers union is one of America’s mostprogressive and outspoken labor leaders. I was impressed when I met himat a Cornell University conference that brought environmentalorganizations and labor unions together to fuse a forward lookingconsensus on the need for green jobs as key to the transformation ofour declining industrial base.

Aunion blog speaks of us being in the best of times and the worst oftimes. The best because we finally have a Democratic presidentsensitive to labor concerns. The worst because American workers are upagainst hard times as unemployment grows because of a financial crisisthat labor had no role in. Among the trends cited: "30 years ofstagnant and declining wages while workers productivity climbed by 75%;lower take home pay than in 1973; Yawning inequality."

Yetfor all the union’s activism and militancy, it has also been lookingfor someone to blame for this situation. Rather than focus on WallStreet’s predatory practices or financing job outsourcing, it hasturned its anger on workers on the other side of the world. China hasbecome "the enemy." It is seeking protectionism in the belief that thatcan save American jobs.

Theirtarget are tire companies in China that manufacture the least expensivetires on the market for cars and light trucks and sell them in America.The union argues that its imports are stealing American jobs and"disrupting the market" and has petitioned a government body, theInternational Trade Commission (ITC), to slap limits on them.

BloombergNews reports: "The Chinese import surge has been a significant factorthat has led to the idling of factories," Leo Gerard, president of theUnited Steelworkers, told reporters. The union represents about 15,000tire workers at 13 plants including those owned by Bridgestone Corp andGoodyear Tire & Rubber Co."

TheITC, set up under our trade laws, has now, by a 4-2 vote, agreed withthe union and then went even further recommending stiff tariffs on allChinese made tires in a remedy sent to President Obama. Perhapsunknowingly, the ITC decision also puts tariffs on Goodyear tires madein China, potentially hurting a U.S. company, as well. (1 out of every6 tires manufactured by U.S. firms are made in China!)

Explainsthe news service: "The president has the final decision over whether totake action or disregard the commission’s recommendation, and that willbe due in September."

Gerardsees the decision as a big victory but the logic is illogical andillustrates the dilemma of trying to fight our economic decline in anage of globalization by taking refuge in protectionist policies thatoften lead to counter attacks, in this case, from the one country thathas kept the U.S. economy alive by buying our treasury bills and debt.

Without China’s financial support, we would be in far more dire straits, perhaps a deeper depression. Everyone knows that.

What’smost revealing is that that none of the U.S.-based tire companies havejoined the union in this China bashing. If their business was at riskfrom predatory trade practices from China, they would speak up, butthey know that tire imports from China constitute only 11% by value ofthe U.S. tire market.

Anotherreason for the silence of U.S. companies: they had long ago stoppedproducing lower-cost so-called "Tier 3" tires and instead opted tomanufacture premium more expensive and more profitable products whichare not in the same category, hence, not directly competitive. Some ofthese companies benefit as well because import the third tiereconomy-priced tires from China for their own U.S. distributionnetworks.

When U.S.brands got out of the cheaper so-called replacement-tire low-profitmarket, China got into it, including working through these U.S.manufacturers’ American distribution networks and dealership which hirethousands of American workers. They service cost-conscious U.S.consumers who can’t afford higher priced brands. These consumers willbe hurt if the Steelworkers and ITC prevail in this wrong-headed move.

Andwho are they? They are the union’s own constituency, American workerswho are coping with high unemployment levels and all sorts of economicdistress because of the collapse of our financial system. Why victimizethem further?

StoppingChinese firms from manufacturing low-cost tires and selling them herewill not create new jobs in America or turn the economy around.

Then,why is the union advocating it? Clearly to do something, to beperceived symbolically as fighting for its members by taking a popular"Buy America" stand even though there are no comparable American tiresat that price point that are made here or even sold here.

Thelikely outcome is that if Chinese made tires are sanctioned, imports oftires made in Venezuela and other countries will replace them. Who willbenefit? Not American workers!

Insteadthe Chinese work force with 20 million out of work because the economiccrisis will face even more painful job losses that will likely enragethem, and then put pressure on the Chinese government to strike back,perhaps with more pressure on the American dollar, or other U.S.businesses there.

As the saying goes, what’s good for the goose is good for the gander.

Manyin China already resent U.S. economic bullying and blame Wall Streetfor selling them junk loans and infected financial products that havecaused vast economic losses. (Even as the U.S. blames China for sellingus infected peanuts or risky toys.)

To be honest, there is plenty to find fault with on all sides.

China-madetires meet US safety standards. If these more affordable tires go up inprice, consumers would likely replace them less, leading to real safetyworries.

So, let’s stopreducing this problem to black and white, right and wrong, to demonizethe "foreigners" with whom we are, like it or not, in an economicallyco-dependent relationship. In this industry there are both Americanowned firms in China and Chinese firms doing business in America.

TheSteelworkers deserve support in their fight for economic fairness andnew laws to help them organize. They deserve respect for their advocacyof an environmentally sustainable economy.

Their’save our tires’ tactic, however, is a throw back, a step in the wrongdirection and likely to hurt all sides in our economic relationships.We need each other to achieve economic stability.

Insteadof gaining jobs for Americans, this measure could lose them. 500 USbusinesses could be hurt if this "remedy" goes through. Also, bear inmind, those US tire plants that were closed down before the Chineseimports from China began.

We need to ask: whom does protectionism really protect? When things are so bad, why make them worse?

If you have comments to share, send to me at [email protected].

– Jim Smith

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