What Trade War? CPA Members See Business Gains in Recent Months

October 03, 2018

Free traders predicted economic armageddon from new tariffs on steel, aluminum and Chinese products. But, with the significant exception of agriculture, CPA members’ businesses are booming. They are raising wages, investing in new equipment, reopening production lines and seeing production move back from China.

The unemployment rate has dipped to 3.9 percent. US manufacturing employment is up by almost 350,000 jobs in the past year and a half.

Frank Chesek, of Exact Tool and Die, located near Cleveland, reports that his company is actually having its best year ever. As the steel tariffs went into effect, he experienced some market adjustment for buying steel. Some prices rose and inventories were uncertain. But Chesek has been able to pass along these price increases.

He expects the markets to adjust to the new tariffs so prices and supplies stabilize into a new normal. Government data show that consumers have not seen increased prices and inflation remains low.

Chesek says that he’s been able to pass along these price increases.

Overall, Chesek says that business volume and profitability is quite good. His company is enjoying good margins, some profitability, and a 23 percent increase in sales. This has allowed him to reinvest in his company, and he recently purchased both a $1 million dollar press line and a $500,000 press line. These upgrades allowed his company to replace older equipment with newer, better systems. He’s also been able to give bonuses to his employees.

Another CPA member seeing increased business is Penn United Technologies, located north of Pittsburgh. Penn United president Bill Jones says business is “booming,” and that the company, which employs 700-plus workers, is having its “best year ever, including the largest backlog for orders.”

Penn United was founded in 1971 as a precision die builder. Thanks to years of stamping and real-to-real plating, as well as making carbide components and machine tools, Jones says that Penn United has now become a successful “precision manufacturer.”

Jones believes business is going well for Penn United in large part because America’s gas and oil industry is booming. The company produces carbide components for gas and oil companies, and also makes seal faces used in the pumps that transport gas, oil, and other fluids. However, he also points to robust growth in the medical industry. Penn United produces stamping and plating components for medical devices, and has been able to attract business from medical companies that had previously shifted to overseas suppliers.

Penn United is currently enjoying record shipments, and Jones expects more of the same in the coming months. One problem he faces, though, is finding qualified employees. There are specific skills needed for precision metal working, and Jones says that at times he’s struggled to find qualified workers.

When it comes to the Trump administration’s recent tariffs, Jones notes that Penn United buys flat stock steel, brass, and aluminum. Following the tariffs, he has seen small price increases. But his company has continued to negotiate with customers, and considers any price increases to be minor since raw materials comprise only a small part of their overall costs.

“A little bit of real inflation is good,” Jones explains. “Wages are up, we’re paying our workers more, consumers are buying more. It’s what’s needed to get the economy moving.”

Another CPA member, Helm Tool Company, Inc., of Elk Grove, Illinois, is experiencing a similar success story. Company president Helmut Mueller says that his workload is “skyrocketing,” and he believes the company’s outlook is “terrific.”

Helm Tool has been producing tools, dies, and injection molds for 41 years. Mueller said that his business has been booming for the past year and a half, and he attributes this to a better business environment. He believes companies are facing less uncertainty than in previous years, and he thinks last year’s tax cuts are helping the economy. As a result, he was able to pay his employees a much higher Christmas bonus this past December than in previous years. He also increased his employee’s wages. Because of full employment, Helm Tool is now farming out work to 14 other companies.   

When asked about the Trump administration’s tariff actions, Mueller says that his company is not facing difficulties. Helm Tool is seeing so much work that the company can simply absorb any added costs that may result from the tariffs. Mueller believes the tariffs will likely continue for a few years, until they help to equalize business for domestic manufacturers.

Mueller said he can look back to the 1980s and 1990s, when Americans enjoyed more ample more manufacturing employment, and could buy American-made products. But things changed significantly starting in 2000. After that, roughly 60 percent of Mueller’s fellow mold builders went out of business.

Now, however, Mueller is encouraged to see business coming back to the US. He was even contacted by a Chinese firm that wants to locate production in the US because of the tariffs. “In the past, you’d never have a company from another country coming here,” said Mueller. “Japan and Germany may have done that with cars and other products. But otherwise, it was unheard of. Now it’s happening.”

Lastly, CPA company member Stupp Brothers has also experienced growth. Company president John Stupp says that his privately-owned company is restarting production of 30-60 inch diameter spiral pipe at its Baton Rouge mill. Getting this new operation up to speed will require two separate shifts of 45 workers each. Stupp believes that the added work will also have a helpful carryover effect for his pipe coating plant, which would require another 45 new workers. Including additional shipping work, Stupp expects the new mill to help create 150 jobs throughout the company.

CPA has been right all along that aggressive trade action is good for jobs, wages and growth. The old-style free traders have been wrong. We need to get out the message as the increasing China tariffs shift more production back to the US.

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