10 American Industries Still Hanging On
By Donn Fresard, Matthew Mallon, and Justin Rohrlich Aug 24, 2011 10:00 am
Bloodied, battered, but not yet down for the count, there are still pockets of US manufacturing scrappy enough to keep the lights on in the face of overseas competition.
Without tariffs against Chinese imports, you might as well erase pencil manufacturing from the ledger of American industry. And even since the US government took anti-dumping action against Chinese exporters in 1993, China's dominance of the industry here has barely slowed: American companies in 2008 produced only 14% of pencils sold stateside, whittled down by half from just four years prior.
While the duties (running as high as 53%) provide some relief, the remaining nub of an American pencil industry just can't compete on price, especially when it comes to the familiar yellow No. 2, a school staple. Major US producers, like Dixon Ticonderoga and Newell Rubbermaid's Sanford, have closed plants that employed hundreds in the past few years as they shifted production to Mexico and elsewhere. Other companies largely retreated into specialty graphite utensils, like colored and drawing pencils. "The yellow pencil basically became a Chinese commodity," Jim Weissenborn, whose family has owned General Pencil of Jersey City for 150 years, explained to Bloomberg news in June. "We've had to become a very boutique type of business in order to survive."
New Balance is the only major player in athletic footwear that still operates American factories, and it's hanging on by a shoestring as free-trade negotiations with Vietnam loom. The privately held Boston company has 1,000 US workers in its five New England plants, whose $10-and-up hourly wages are a quaint holdover in an industry that imports 99 percent of its product. "The company already could make more money by going overseas, and they know it," 35-year-old floor leader Scott Boulette told the Washington Post. "So we hustle."
But all the elbow grease in Norridgewock, Maine, won't keep New Balance competitive if an expected agreement with Vietnam eliminates the tariff on imported shoes, typically around 20%. The region's legislators are trying to carve out an exemption to keep New Balance's factories open. The firm's competitors like Nike and Reebok, though, seeing an opportunity for higher profits on imports and, displaying little sympathy for the scrappy northeastern holdouts, have banded together to fight the duty – or "shoe tax," as they call it. "For products that are no longer produced here and haven't been produced here for decades, there's no sense for consumers to be paying it." said Nate Herman, of the industry's lobbying group.
The US footwear industry now employs about 12,000 people, less than half what it did a decade ago, and a mere shadow of the quarter-million jobs it provided in the 1950s. That makes a third-generation Norridgewock shoemaker like Michelle Witham, 40, a rarity in the US. "When I started, people would say, 'Oh, you don't want to work there. They're not going to be around for long. They ain't got a chance,' " Witham told the Post. "But I've been here 20-something years now."
If New Balance lacks allies within the footwear industry, at least it has fans among domestic manufacturing cheerleaders. Scott Paul, head of the Alliance for American Manufacturing, says his closet holds 10 pairs of New Balance sneakers.
The last U.S.-based manufacturer of electrical relays and controls, Struthers-Dunn was founded in Philadelphia in 1923, and moved to South Carolina in the mid-1980s. It specializes in building customized relays -- basically electrically operated switches for controlling high-powered devices in industry and military operations -- for factory automation, elevators, cranes, traffic controls and power generation and distribution. Its 219 series of industrial relays, developed in 1958, is still used today as a crucial element of modern nuclear energy plants. During World War Two, Struthers-Dunn became the first supplier of electrical relays to the U.S. military.
After being purchased and reorganized by a series of parent companies in recent years, the company, now specializing in custom-built industrial controls, is once again a privately-held firm. Where's the rest of the industry? Overseas, naturally, and mainly concentrated in India and other Asian locations.
Sometimes globalization brings an ironic twist that actually helps American manufacturers. In the case of chopsticks, it was a double-dose of irony that made Americus, Georgia, a center of wooden utensil production for China. The huge, fast-growing powerhouse, which seems to export the bulk of Americans' everyday consumer products, produces most of the world's chopsticks, about 63 billion pairs annually. It's a simple product that serves a huge market -- a third of the world's population uses the sticks to pluck morsels from their dishes. When China's several hundred manufacturers started running short of wood, though -- remember, that country is building furiously, and it's not heavily forested to begin with -- an opportunity arose for a US company to turn the international-trade tables. Enter Jae Lee, the Korean-born American who in November 2010 founded Georgia Chopsticks to take advantage of China's shortfall and rural Georgia's abundance of wood.
Before long, Americus (fitting name, isn't it?) was processing a few million pairs of chopsticks daily, slapping Made in the USA labels on them, and exporting China's favorite utensil to Chinese. Lee is ramping up production as fast as he can order machinery, and intends to churn out 10 million a day by year's end. At full capacity, the company plans to have around 150 hires. Not bad for a town with a 12% unemployment rate, in a country supposedly burdened by sky-high labor costs.
The irony isn't lost on the workers. "Everywhere you see in America 'Made in China,'" new hire Susan White told Voice of America, "and you wonder if, in China, they ever see 'Made in America.'" They do now.
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