Selling all-American ladders from an apple-pie-and-opioids town in the Rust Belt
This has been a big month for “Buy American”: last week the slogan was used to bludgeon a cheeky Canadian aircraft maker, Bombardier, the pride of Quebec, into donating control of its C Series jet business to Airbus.
[ Nick Hagen | October 23, 2017 | Financial Times]
Bombardier thought “buy global” could topple “buy local” if the price and the product were right. But the administration of Donald Trump disagreed, threatening 300 per cent tariffs on C Series planes exported to the US. Bombardier bet against Buy American – and lost. That little protectionist jingle reshaped the global aircraft industry.
But the slogan is not just a cudgel in the hands of Mr Trump. It is also a great marketing tool for those lucky enough, in Trump’s America, to fly the stars and stripes.
People such as Tom Harrison, who is counting on that motto to help him make ladders which used to be made in China, here in the Midwest. With the help of Buy American, he is now manufacturing rungs on the wrong side of the tracks, in a draughty 106-year-old factory in the Rust Belt city of Ypsilanti, Michigan. Mr Trump would be so thrilled.
Mr Harrison hopes that bringing his steps home from the Middle Kingdom will help him make Michigan Ladder, the oldest ladder manufacturer in the US, great again. His is one of a growing number of US companies, large and small, that have brought manufacturing back from overseas in recent years, for reasons that mostly have nothing to do with Mr Trump. He is not the only one forcing them to flag local roots. These decisions have everything to do with Chinese wages, energy and freight costs, quality and intellectual property worries, keeping inventory low and improving responsiveness to customers.
This backlash against globalisation began, of course, long before visions of the West Wing began dancing in Mr Trump’s head. From 2010 until last year, reshoring of American industry helped boost direct jobs in US manufacturing by 400,000 along with 1.2m support jobs, according to Boston Consulting Group.
China’s cost advantage over the US shrank from 14 per cent in 2004 to only 1 per cent last year, the consultancy said.
So Mr Harrison brought his ladders home. Sitting in the low-ceilinged office of the building that has housed Michigan Ladder for more than a century, the 52-year-old Mr Harrison says he thinks he was “ahead of the curve” when he stopped importing aluminium and fibreglass ladders from China in 2011 and started making them in Ypsilanti, not far from the plant where Rosie the Riveter made B-24 bombers during the second world war.
Closeness to market was also a big factor, especially since what Mr Harrison calls “the great unpleasantness”, by which he means the great recession. “Since then, our customers don’t want to keep any more inventory than they have to, but they expect us to have whatever they need immediately available,” he says. China is just too far from Ypsilanti, it turns out.
But cost and distance were far from the only reason for the change, he adds. “When we looked at the numbers . . . it might have been cheaper for us to continue to import, but we thought the trend would be in our direction and it’s a great story to tell. We are the only ladder manufacturer making wood, fibreglass, and aluminium ladders in the States,” he says, adding “as a company you have to look at ways to differentiate yourself”.
Reshoring has helped Mr Harrison double his workforce, from 15 to 30. Half are disadvantaged in some way: special needs, ex-convicts, or veterans. Still, it’s tough, he says, recalling that there were hundreds of small ladder guys like him in the US a hundred years ago, and now there are two ladder behemoths, who produce only overseas. His comparative advantage is to be more red, white and blue, at a time when the colours of the US flag are so popular.
It is good business selling all-American ladders from an apple-pie-and-opioids small town in the heartland, in the era of Buy American. And to do it while doubling your workforce, instead of replacing all the humans with robots? Mr Trump couldn’t make this stuff up: not even when he is at his most creative, say 5 to 6am on Twitter?