America’s ‘other’ war

America’s ‘other’ war
Wisconsin’s manufacturers form new organization to confront growing trade deficit with China

By Steve Jagler, of SBT

Though the world’s attention is focused for the moment on the Middle East, America is engaged in another war with permanent and ominous implications.
At least that’s the way Catherine Schuldt sees it. Schuldt is the owner of Butler Wire & Metal Product, a Menomonee Falls custom metal fabrication shop, which she says is endangered by America’s trading policies with China.
Schuldt and Jerald Skoff, president of Badger Metal Tech, Menomonee Falls, are forming the Wisconsin Chapter of Save American Manufacturing (SAM).
Schuldt is the chairwoman of the new Wisconsin organization, which is putting out a call to arms for the state’s citizenry and business community to fight for fairer American trade relations with China.
Schuldt and Skoff aren’t mincing any words.
They see Wisconsin manufacturers increasingly outsourcing their production work – and jobs – to China, where companies operate with miniscule labor costs and virtually no environmental standards.
Schuldt says those Wisconsin manufacturers are “slitting their own throats” by outsourcing their production to China. She says the following scenario is unfolding with alarming frequency.
An American company contracts with a Chinese company to produce parts. However, before a Chinese firm can manufacture an American company’s wares, the Chinese company needs to know the equations of the materials, the technology and the processes needed to make those goods.
Once those products are manufactured in China, the Chinese company, replete with the American technology, begins manufacturing the same product “on the side.”
The Chinese company then sells the pirated products, often even bearing the American company’s name and logo, at a lower price than the original American product is being sold.
Ultimately, China will displace America as the world’s most powerful economic force, Schuldt says. America will be beholden to the prices and the timetables that Chinese companies will dictate, she says.
“This is America’s ‘other’ war. It is the Chinese government that is putting the money back into their country, into their military. And it’s a military that they are not even going to have to use, because they already will have taken over us financially in the next 10 years They’re going to take us over without even firing a missile,” Schuldt says.
Schuldt is not about to just let her company bleed to death.
Enter SAM.
SAM was formed last October by some Illinois manufacturers who wanted to address the problem of American companies and jobs being lost to China.
Schuldt and Skoff contacted the Illinois SAM chapter and discovered it already has grown to more than 500 members.
Soon, they hope a SAM chapter will be formed in every state.
As they launch the Wisconsin chapter, Schuldt and Skoff are busy recruiting members and lobbying for legislative support for their mission.
SAM members believe that unless the Chinese government begins to better enforce penalties for the theft of American patents and intellectual properties, China should be revoked from the World Trade Organization.
Furthermore, the United States should rescind China’s status as a “most favored nation” trading partner unless China enforces those penalties with more vigilance, SAM members contend.
Additionally, SAM members say the playing field should be leveled for trading between the United States and China. With the most favored nation designation, Chinese companies pay no tariffs for products they export to the United States. However, American companies must pay tariffs and many other penalties to export products to China.
SAM members know they may be outgunned in pushing for such reforms. After all, it was America’s largest corporations that fought for increased trading with China. Those companies were enamored with the notions of selling products to China’s 1.2 billion population and employing China’s cheap labor force.
In many ways, the issue is evolving into a civil war between America’s largest corporations, which have supported more commercial trade to China, and America’s small businesses, which are closing up shops because they can’t compete with such cheap labor and lax environmental standards.
“The General Electrics, the Motorolas …. To go and change their minds that this bad for us. … I don’t think that’s going to work,” Schuldt says. “American greed is American greed. And these large corporations, they don’t care. And to some extent, you don’t necessarily blame them. The rest of us, the smaller manufacturers, we need to represent ourselves. We need to tell what’s going on in our businesses and what the big corporations are doing,” Schuldt says.
“I’m not against free trade. I’m against unfair trade. I believe that the stuff coming in from China should at least be taxed to the minimum standards of living in the United States,” Schuldt says.
“The impact is on everyone here. For so long now, we’ve been hearing that the only thing keeping America from going into recession is that the consumers are still spending,” Skoff says. “Well, guess what? The consumers are stopping their spending now. Their confidence is down. People are no longer maxing out their credit cards, or they’re maxed out, and they’re just not buying those things they used to buy.”

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March 7, 2003 Small Business Times, Milwaukee

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