If you were a sprinter and competing with someone who took drugs that allowed them to run four times faster than you, would you consider it fair? Most small to medium-sized U.S. manufacturers competing with China are in exactly that position.
Those of you who have read my book know that I’m the CEO of a small manufacturer that competes with China every day. My company, Trans-Tex, is not in what one would normally call an “advanced” industry. We manufacture dye sublimated lanyards, which you might receive if, for example, you are an attendee at a trade show. The lanyard is used to hold the badge that bears your name. Search online for “images of dye sublimated lanyards” to see examples.
Recently, we bid on a government project for a significant number of lanyards. We lost the bid to China because they bid 75% less than we did. The lanyard they make overseas will not be of the same quality that we manufacture. However, even given the difference in the quality of the parts and printing, the fact that a China manufacturer can make that lanyard at ¼ of our cost illustrates the huge gap in manufacturing costs between a U.S. manufacturer and a China manufacturer. What accounts for the gap? Extremely low wages, lax to non-existent enforcement of weak environmental laws, and generally bad working conditions, to name just a few of the reasons.
Although the bid was issued under “Buy American” provisions, the pricing gap was so substantial that the GPO (Government Printing Office) was able to award the bid to China under a loophole that allows for overseas purchases if the government would be forced to pay “unreasonably high costs” by buying domestically.
Despite such handicaps, we’ve become successful at Trans-Tex by following the American Dragon principles of FEWER, FASTER, and FINER. Because we’re competing with China manufacturers that specialize in low cost and long production runs, we focus on shorter, more customized production runs, speed to market, and good quality safe products. That focus has allowed us to quadruple in size during some of the worst economic times since the Great Depression.
That being said, the playing field – in spite of increasing costs out of China – obviously remains heavily skewed in China’s favor. And China’s trade policy is to keep it that way. Job One for the new Trump administration is to reset U.S. trade policy to protect U.S. manufacturers in the same manner that Beijing protects theirs. And I’m not even asking for a level playing field – just give me a fighting chance.