Briggs & Stratton Corp. chief executive officer Todd Teske said Tuesday businesses should embrace the potential for global trade while also working to make better products through innovation.
“We shouldn’t shy away from global trade,” Teske said. “We should embrace it, because we can compete.”
Teske was the morning keynote speaker at the Wisconsin International Trade Conference, which was hosted by the Metropolitan Milwaukee Association of Commerce’s World Trade Association. BizTimes Milwaukee is a media partner for the event.
Free trade agreements have become a frequent topic on the presidential campaign trail. Republican Donald Trump has threatened to impose a 45 percent tariff on Chinese goods if China doesn’t follow trade rules and said he would declare the country a currency manipulator. Democrat Bernie Sanders has repeatedly criticized opponent Hillary Clinton for her support of free trade deals.
“We have some candidates here that are running for president that say we should become protectionist,” Teske said. “That’s a tough one, because as soon as we become protectionist, it amps up on the other side.”
He added that those policies would make it difficult for many companies, including Wauwatosa-based Briggs, to export around the world.
With trade deals getting attention on the campaign trail, public sentiment toward them has shifted. A Pew Research Center survey conducted in March found 51 percent felt free trade agreements have been a good thing for the United States, down from 58 percent in 2015.
A Marquette Law School poll conducted around the same time found 41 percent of Wisconsinites felt free trade agreements have been a good thing, while 40 percent said they were a bad thing.
“I think the reason why there’s the trepidation is people question why trade agreements are so complicated and they just don’t trust Washington,” Gov. Scott Walker told reporters after speaking at the conference.
Like Teske, Walker said Wisconsin businesses can compete on a global scale and if trade agreements are done right, they can open doors for businesses. Walker said he advocates for keeping it simple and focusing on leveling the playing field.
“I’m a big fan of fair trade, not free trade,” Teske said, adding that trade policy is difficult, even though it is easy to spout soundbites about a shrinking middle class or greedy companies.
Teske recounted that as global competition increased, manufacturers moved work offshore to stay competitive. He noted that Briggs still makes 85 percent of its products in the United States. The company did move jobs out of Milwaukee to smaller plants in the south with a focus on productivity.
“We also got lower labor costs along the way,” Teske said.
Still, the level of competition continued to increase as China entered the market. Teske said the competition was made harder by China’s ability to subsidize companies, meaning those firms could come in at a lower price.
“I don’t blame them for what they do because if you don’t feed your people and give them jobs, they get mad. And then they kind of throw you out,” Teske said.
He noted that Briggs is about 10 to 15 percent higher on price than its Chinese competitor.
“We can get it,” Teske said. “Once we go beyond that it gets a little bit interesting.”
The increased competition has led to automation of production and a focus on innovation in products.
“As long as you compete solely on cost, you become a commodity at that point,” Teske said.
However, he added that the term innovation has become overused and Briggs has begun thinking about it in terms of “user-driven problem solving.” He described it as understanding what the users in a particular country might need and then determining whether it can be delivered at a reasonable cost.
“It sounds pretty simple, but it’s not,” he said.
Teske said that as global competition has forced manufacturers to make decisions about where and how to produce, the nature of the available jobs has changed. More automation has led to a need for workers with a higher skill level.
“We can build a really nice middle class again in the U.S. if we simply fill the skills gap, because manufacturers can’t find the skills they need,” he said.