Not so fast…
Despite recovery signs, cheap imports still plague U.S. manufacturing.
More and more, industry buzz indicates American manufacturing is trending in a positive direction.
Pardon the cliché, but where’s the beef?
The “Made in America” label is significant for manufacturers, distributors, designers and end-users. Products made in America almost always guarantee quality workmanship backed by manufacturers operating on U.S. soil. The “Made in America” label means U.S. workers earned an honest living. This domestic productivity drives construction needs, ultimately increasing the need for more materials made in the United States.
Adding to this, patriotism is making a manufacturing comeback that seemingly is everywhere — except in the hard numbers. The cost of U.S. imports continues to exceed the value of its exports, resulting in a national trade deficit. Specifically, as exports decreased and imports increased, the nation’s international trade deficit in goods and services increased $4.6 billion from June to July last year, as reported by the U.S. Department of Commerce.
Some may argue that pipe is pipe and price is king, but in a market where the products manufactured and supplied are exclusively sold on price, it’s imperative to understand the illegal practice of dumping, why it’s a problem and how it affects customers.
The downside of dumping
When a company exports a product at a price lower than the valued price in a domestic market, or sells the product at a price that does not meet the full manufacturing costs, it is known as dumping. Cost is a significant driver in any mechanical or plumbing job. But when countries price a product so low that a U.S. manufacturer can’t compete at the supply house — where the manufacturer would never be able to recoup the cost and continue manufacturing on U.S. soil — it’s no wonder some say the U.S. manufacturing renaissance is a myth. U.S. manufacturers can’t compete with cheaters. If there are any signs of a manufacturing recovery, then illegal dumping is stunting the recovery.
Because the foreign manufacturer ships its product overseas, domestic distributors invest a significant amount of money into stocking large chunks of imported pipe so that it’s accessible. But if it’s not needed — if construction activity slows and plumbing does too — then distributors are left with material they can’t sell. While capital is tied up in imported product, distributors can’t invest in other opportunities that may come along. And if the price of steel drops while the pipe sits idle, the value of that inventory drops as well. Distributors suffer financially as a result.
On the other hand, when distributors carry product from a domestic manufacturer, their supplier is one short car or plane ride from a qualified technical support specialist. The product is a short lead time away so distributors can better manage inventory.
When distributors supply both domestic and unfairly priced imported pipe, domestic manufacturers lose. This isn’t just about inventory. This is about ensuring quality product is used in domestic construction applications, ensuring American jobs are created and the American manufacturing industry as a whole is protected.
Fair play in the free market
Domestic manufacturers shouldn’t have to compete against countries dumping product into the United States. Products sold at drastically lower prices, and produced at a lower quality than domestic products, hurt domestic companies as well as suppliers who stock and sell these lesser-quality products that can potentially create unsafe environments at the construction site.
The illegal practice of dumping is a problem that affects many industries throughout the United States. Will you stand and help support fair trade?
Jelani Rucker serves as director of marketing and business development for JMC Steel Group, parent company of Wheatland Tube, and manages marketing, new business and strategic relationships across the entire JMC product portfolio. Contact him at firstname.lastname@example.org.
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