The apparent lack of a cohesive trade policy from President-elect Obama may spell problems for manufacturers striving to survive in today's economic climate, according to a leading industry economist.
“The subject of trade is controversial under normal circumstances, but it becomes almost toxic during a recession,” says Dr. Chris Kuehl, economic analyst for the Fabricators & Manufacturers Association, International (FMA), in the new FMA economic update newsletter Fabrinomics.
“U.S. exports have broken records for 22 straight months,” Kuehl says. “For almost a year, it was the export sector that kept the United States out of recession and it will very likely be overseas markets that help manufacturers survive the current recession. The Obama plan has a lot of content that relates to domestic activity, but a coherent trade policy will have to emerge if the United States is going to navigate the challenge of trade, other nations' protective impulses and the tendency of U.S. companies to retreat into isolationist strategies.”
Kuehl believes a creation of a cohesive plan may be a challenge as recent Obama appointments reflect a mix of anti- or lukewarm trade proponents, such as Secretary of State Hilary Clinton and Secretary of Labor Hilda Solis, and advocates that include Chief of Staff Rahm Emanuel and trade representative Ron Kirk.
“And, with the withdrawal of Bill Richardson, the post of Secretary of Commerce seems to be a hot potato nobody seems to want,” he says.
According to Kuehl, nobody objects to the export side of the equation, but there “is plenty of venom over imports.” The problem with trade is that it is very difficult to have one without the other. He says if the United States wants access to foreign markets it must provide access to its own, and that invites competition.
“Yes, plenty of U.S. companies fail to compete with imports effectively; they are the ones where the negative impact of trade is most obvious,” Kuehl says. “But many more companies find foreign markets and are able to expand. It is critical for the Obama administration to spell out how the United States will maximize the gains from trade and minimize the losses.”
Based in Rockford, Ill., the Fabricators & Manufacturers Association, Intl. (FMA), is a professional organization with more than 2,300 members working together to improve the metal forming and fabricating industry. Founded in 1970, FMA brings metal fabricators and fabricating equipment manufacturers together through technology councils, educational programs, networking events, and the FABTECH International & AWS Welding Show. FMA also has a technology affiliate, the Tube & Pipe Association, International (TPA), which focuses on the unique needs of companies engaged in tube and pipe producing and fabricating.
For more information about FM visit http://www.fmametalfab.org/
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