U.S.-China Economic and Security Review Commission, "Hearing: The Impact of U.S.-China Trade and Investment on Key Manufacturing Sectors," September 23, 2004

September 23, 2004
Akron City Council Office 166 South High Street
(Municipal Building) Room 301
Akron, OH 44308

OPENING REMARKS OF CHAIRMAN C. RICHARD D’AMATO

Good morning, and welcome to everyone to the U.S.-China Commission’s first hearing since issuing our 2004 annual report. By the way, the 2004 annual report, if anyone would like a copy, is on a table outside of the hearing room. It’s an important report containing a 12-page summary of the Commission’s recommendations and findings.

We begin our new report cycle by holding a hearing in the field, a practice that we initiated for our last report and found to be extremely helpful in giving us a practical perspective of what is happening to the manufacturing base of the United States. We're pleased to be here in Akron today, and I want to express my gratitude to the Akron city government for the use of this facility and all the other help from the Mayor’s office and others who made this hearing possible.

The Commission was established by the United States Congress to investigate the national security implications of our trade and economic relationship with China. The Members of the Commission were appointed by the Republican and Democratic leaders of both the House and the Senate of the United States. It is a bipartisan Commission in practice and spirit and in the way we conduct our business. The report that we issued this past June was released with a unanimous vote of 11 to 0, with one Commissioner position currently vacant. Congress has directed us to take a broad view of national security, to include an assessment of how our wide-ranging economic relationship with China affects our basic economic health and prosperity, and hence our national security. It is this central mandate that brought us to Ohio.

Congress is increasingly interested in determining whether or not our country has in place the appropriate policies to enhance American well-being through our international trade and investment activities. We’re keenly interested in whether the Administration is implementing those policies on behalf of our businesses, our workers and ordinary citizens. What’s the track record in Ohio? If we need new policies, what should they be? Are U.S. Government policies and practices helping people in Ohio; if not, why not?

The goal of today’s hearing is to hear practical first-hand perspectives of how U.S.-China trade and investment patterns are impacting our industrial base. U.S. manufacturers, labor unions, economists and others have increasingly identified China’s manufacturing competition as a critical factor in the erosion, and some say decimation, of the United States manufacturing capacity.

The loss of our manufacturing base also reverberates at the personal and community levels. So we are also here today to understand the human context of manufacturing job losses. We hope this hearing will help this Commission and the broader national audience understand what challenges Ohio’s manufacturers and workers face, what hardships they have endured, and responses in Washington have worked to help in Ohio, and what responses have failed or have yet to be tried.

With that I would like to turn over the proceedings to the Co-Chairs of today’s hearing, my colleagues, Commissioner Michael Wessel and Commissioner June Teufel Dreyer.

OPENING REMARKS OF COMMISSIONER MICHAEL R. WESSEL, HEARING CO-CHAIR

Thank you, Mr. Chairman.

I’m pleased to Co-Chair today’s hearing with my colleague, June Dreyer. I will chair the morning panels, and Co-Chair Dreyer will chair this afternoon’s panels. As my esteemed Chairman said, we have got a lot of help from the Mayor’s office and others. We would like to take this opportunity to recognize the outstanding support Mayor Plusquellic and his very capable staff have given us. A special thanks goes to Laraine Duncan, Deputy Mayor for Intergovernmental Relations, who assisted us with the facility and logistical arrangements. We want to personally thank you, Laraine—I saw her earlier—for all your personal efforts on our behalf.

We also owe a special thanks and our deep gratitude to Mr. Mark Williamson, John Valle, and Laurie Hoffman of the Mayor’s office for their support and assistance. They did an outstanding job for us and thanks to each of you.

We also want to thank Congressman Sherrod Brown and his staff for their assistance and support. The personal efforts and hard work of Brett Gibson, Laura Pechaitis, Mike West and Joanna Kuebler were instrumental in our ability to successfully conduct this important regional hearing.

And finally we want to thank Congressman Regula and his office, especially Karen Buttaro, for their help in organizing today’s hearing and witnesses.

As the Chairman said, in June of this year we issued our second comprehensive report. We did so with a unanimous vote, Democrats and Republicans, representatives from business and labor, Commissioners with varied backgrounds in government and in the private sector. While the Commission’s report is comprehensive, its conclusion was simple, and I quote, ‘‘A number of the current trends in U.S.-China relations have negative implications for our long-term economic and national security interests, and therefore that U.S. policies in these areas are in need of urgent attention and course corrections.’’

Ohio has been called ground zero in this year’s Presidential race. That’s not an issue this Commission will address, that’s for the voters to decide.

But as we see it, Ohio is ground zero in terms of the impact that trade has had on our nation. In the past four years Ohio has lost almost 19 percent of its manufacturing jobs. That’s over two-thirds of the total private sector job loss in Ohio over the same period.

Ohio maintains a merchandise trade deficit with China that increased by more than eight percent from 2002 to 2003. Ohio is not alone: 48 states have merchandise trade deficits with China, and all but two of those states saw their deficits increase in 2003.

The Commission’s focus here today on America’s manufacturing base stems not only from the fact that it is explicitly mentioned in our Congressional mandate, but also because manufacturing is an indispensable part of the U.S. economy. Two-thirds of the money that the U.S. spends on research and development is spent by the manufacturing sector, and 90 percent of new patents originate in manufacturing. Manufacturing is also important for the maintenance of a middle class, with its jobs paying 20 percent more than the average American jobs, accompanied by better benefits.

So I thank all the participants who are here today to aid us in our duty to inform and advise Congress of the implications that the U.S.-China American trade and investment relationships hold for the American manufacturing base, the American economy, and ultimately the American way of life.

I would now like to turn to Co-Chair Dreyer for her opening statement.

OPENING REMARKS OF COMMISSIONER JUNE TEUFEL DREYER, HEARING CO-CHAIR

I would like to join my hearing Co-Chair, Co-Chair Wessel, in thanking the Mayor’s office and the Akron community for facilitating our visit here today. This is an area of the country that, as we are all aware, is on the very front lines of U.S.-China trade. I noticed on the television this morning that your neighboring city, Cleveland, has undergone further job losses and more people have sunk into poverty. The reason is loss of manufacturing jobs. Interestingly the third city on the list was my own city, Miami, so this is very close to home in many ways.

Later today we are going to talk about the steel and glassware and ceramic industries and how they’ve been affected by trade and investment with China and the likely trends for the future. Finally, a panel will address the machine tool industry. As a former resident of the State of Ohio I’m very familiar with Square D and Cincinnati Millicron and so on.

These industries, as we all know, are vital parts of Ohio’s economy. For example, Ohio employs 16 percent of the nation’s iron and steel workforce, which generates one-sixth of America’s raw steel. Ohio’s machinery manufacturing accounts for 2.4 percent of its economic activity compared to one percent nationally. The industry is characterized by above average wages and significant spending on research and development.

Since I’m in charge of the afternoon, the contrast with the morning session will be that we hope to garner information regarding the continued vitality of these industries, the pressure they are under from trading with, and investment in, China, and appropriate U.S. Government policy responses to meet the competitive challenges posed by China.

I note from an article in today’s newspaper that the cost of producing a disposable camera for Kodak in Rochester, New York was one dollar. The cost for producing it in China is 15 cents. How can we compete with something like that? Are there ways? What can we do better?

There are also broader questions that need to be examined. This is the Economic and Security Review Commission. We are aware that economics is vitally connected to security, and if we lose jobs, our security position is eroded as well. Hence, we’re looking forward to productive discussions with business and labor representatives from these manufacturing sectors who are going to testify.

Our final panel will discuss the effects of a declining manufacturing base on the local community, and we will close with an open microphone session. With these portions of our hearing we hope to ground ourselves in the human element of the economic forces that we are discussing. They will provide an opportunity for us to assess at the most material level which U.S. policies have proved helpful and what economic and human needs remain unfilled.

Again, we are very pleased to be in Akron today, and we’re looking forward to this day of testimony. Thank you.

OPENING REMARKS
OPENING STATEMENT BY CHAIRMAN Richard D. D'Amato
OPENING STATEMENT BY CHAIRMAN Michael R. Wessel
OPENING STATEMENT BY CHAIRMAN June Teufel Dreyer

Panel I: Overall Impact of China Trade on Ohio
Mr. William A.Burga, President, Ohio AFL-CIO, Columbus, OH
Dr. Jon Honeck, Research Analyst, Policy Matters Ohio, Columbus, OH
Mr. David Hansen, Managing Director, Ohio Manufacturers Association, Columbus, OH
Mr. Jeff Otterstedt, General Manager, CLOW Water Systems Company

Panel II: Autos and Auto Parts
Mr. Ron Gettlefinger, President, United Auto Workers, Detroit, MI
Mr. Stephen Girsky, Managing Director, Morgan Stanley, Purchase, NY Representative, Auto Industry

Panel III: Rubber, Steel, and Glassware and Ceramics
Mr. Dave McCall, District 1 Director, United Steelworkers of America, Columbus, OH
Mr. David W. Johnson, President and CEO, Summitville Tile, Summitville, OH
Mr. Brad I. Root& Jerry Van, Lancaster Colony Glassware and Candle Group, Cincinnati, OH
Mr. Scott Tackett, Vice President, Denman Tire Corporation, Leavittsburg, OH
Mr. Doug Bartlett, President, U.S. Printed Circuit Board Alliance, Cary, IL

Panel IV: Machine Tools and Other Industries
Mr. Dan Imbrogno, President and CEO, Ohio Screw Products, Inc., Elyria, OH
Mr. John Colm, Executive Director, WIRE-Net, Cleveland, OH
Mr. David Murphy, Director of Personnel, Ferriot Inc., Akron, OH
Mr. Bruce Cain, President Manufacturing, XCEL Mold & Machine Inc., Canton, OH
Mr. Jim Evans, Purchasing Manager, Gentzler Tool & Die, Green, Ohio

Panel V: Community Impact
Mr. James C. Newport, Organizing Coordinator District 1, United Steelworkers of America, Columbus, OH
Prof. John B. Russo, Youngstown State University, Labor Studies Program
Rev. Anne Haggler, Akron, OH