Local Manufacturers Wary of Trump, Clinton Trade Talk

Shoreline PlantLocal manufacturers generally are prospering in a national economy that has been expanding, albeit more slowly than many would like, for nearly seven years.

Bank loans are easier to get, while demand for the region’s durable goods and agricultural products is rising. And manufacturing employment is up nearly 30 percent in the four-county Traverse City micropolitan area since the bottom of the Great Recession in 2009.
Benzie, Grand Traverse, Kalkaska and Leelanau counties make up the micropolitan area.

“It’s a good time to be a manufacturer,” said Corey Geer, chief financial officer at Shoreline Fruit in Traverse City and chairman of the Grand Traverse Area Manufacturing Council.

But some are warily eyeing the upcoming presidential election like sailors keeping track of a dark cloud rising in the west over Grand Traverse Bay.

They are loath to openly discuss partisan politics or state support for a candidate. But when pressed, some express concern and bewilderment over the restrictive trade policies Republican Donald Trump and Democrat Hillary Clinton say they would enact if elected president.

“What they’re talking about is all kind of vague,” said Mike Novik, chief financial officer of Clark Manufacturing Co., a Traverse City company that machines parts for the medical and energy industries. “Some of our customers’ customers are international, but it’s hard to say how (restrictions on trade) would affect us.”

Trump has famously said he would build a wall on the Mexican border to keep illegal immigrants out of the United States and make Mexico pay for it. He also has said he would renegotiate the North American Free Trade Agreement with Canada and Mexico, and slap tariffs on Mexican-built cars sold here.

The Republican presidential nominee also has vowed to get tough with China on trade practices he says put America at a huge disadvantage. As president, Trump said he would immediately declare China a “currency manipulator,” which could lead to duties on imported Chinese goods and, some economists fear, a costly trade war.

Hillary Clinton has said she wants to renegotiate NAFTA, which her husband, former President Bill Clinton, signed into law in 1994. And like Trump, she is opposed to the Trans-Pacific Partnership, a free trade agreement between the United States and 11 Pacific Rim countries awaiting a ratification vote in Congress.

“I have a hard time wrapping my head around the Trans-Pacific Partnership and whether or not it is going to hurt or help my company,” said Ken Osborne, vice president of Boride Engineered Abrasives in Traverse City.

“NAFTA has probably helped us in some respects with,” he said, noting that 60 percent of his company’s sales are generated by exports. “Our business goes up and down there – I’m not sure why. We’re on a growth spurt now.”

The candidates’ talk of enacting trade barriers is designed to appeal to working-class voters who blame globalization for the loss of good-paying middle-class jobs in manufacturing. They want those jobs brought back from China, Mexico and other low-wage countries.

It might seem that the Grand Traverse region is far removed from the controversies surrounding global trade. But the region’s economy is dotted with manufacturers and fruit processors who export their products around the world.

Graceland Fruit in Frankfort, for instance, boasts on its website that it exports dried fruit, including apples, blueberries, cherries and cranberries, to more than 50 countries. It offers Kosher products and fruits certified as Halal under Islamic law.

Alan DeVore, Graceland’s CEO, said he regards talk by Clinton and Trump of renegotiating NAFTA and opposing the TPP as little more than “saber rattling and campaign rhetoric.”

He’s said he’s more worried about growing competition from countries such as Chile that have embraced free trade. Chile has signed dozens of bilateral free trade agreements, including one with the European Union.

“If you look around the world, the country that’s impacted us the most is Chile,” DeVore said. “It’s kicked our butts.”

DeVore said he wants trade policies that continue to benefit his employees and the extended families of his supply base. “Don’t screw it up,” he said.

Trade tensions made headlines in Traverse City last month when a prominent auto supply executive expressed support for Trump’s trade positions at a major industry conference at the Grand Traverse Resort and Spa.

Rick Dauch, CEO of Accuride, an Indiana company that makes wheels for commercial vehicles, said Chinese companies are dumping wheels into the U.S. market at prices that are lower than his cost of production.

“So, something has to change. Otherwise the standard of life here in North America goes down,” Dauch said at the CAR Management Briefing Seminars, according to the trade publication WardsAuto. “That is the angry middle class we have: The guys who can’t come out of high school anymore and get a good job and afford a cabin Up North in Traverse City.”

Several Traverse City manufacturing executives say they don’t expect the trade views of whoever becomes president to have a major impact on their businesses.

Kalkaska Screw Products (KSP) President Kevin Schlueter said it’s possible his company could win more business if, for example, automakers and his upper-tier supplier customers moved production back from Mexico. KSP manufactures air bag inflators and a variety of other parts for the automotive and aerospace industries.

Trump has said he would levy a 35 percent tariff on Mexican-built cars and trucks sold in the U.S. Schlueter said he’s skeptical that will happen.

“Our overall approach is to do the best job we can to win regardless of the competition,” he said. “We’re not counting on work coming back” from Mexico or China.

And Osborne of Boride Engineered Abrasives is dubious of another Trump plan regarding for Mexico.

“I don’t believe Trump will build a wall,” he said. “It’s not going to happen.”