Fewer tariffs would boost U.S. industry
Just over 50 years ago in a river town in southeastern Ohio, a high-tech polymer called Udel PSU was produced for the very first time. NASA applied the shiny gold film to the visor on Neil Armstrong’s helmet. It protected his eyes from glare when he famously took those first steps on the lunar surface during the Apollo space mission. And that’s how a little bit of Marietta made it to the moon.
Today, Udel is still produced in Marietta by Solvay, a chemical company that creates specialty polymers for cutting-edge aerospace, healthcare and water filtration applications that demand Apollo-worthy durability and quality. More than 250 full-time employees work on site. Solvay also has nearly 50 employees in Cincinnati.
Our facilities are part of a global corporation that owns many manufacturing sites across the country and around the world. We have seen investment here in the U.S. but we’ve also seen it go to our sister plants overseas at times. We compete globally, so every penny and every employee counts when it comes to the short-term and long-term competitiveness of our local operations.
A number of factors make the difference in our success here in the U.S. Taxes and tariffs are among them.
At Solvay, we are pleased to see Congress show renewed interest in reducing import tariffs for certain goods and materials. Import tariffs, also called duties, are meant to protect domestic industry. But, when there is no domestic producer to protect, Congress has the leeway to implement a duty-free policy. This is not a subsidy; it just recognizes a competitive reality.
For example, Solvay imports a handful of key raw materials in Marietta because they are currently not produced in the U.S. We pay 6.5 percent duties on these imports. For what? To protect a domestic producer that doesn’t exist!
Several years ago there was a process that allowed manufacturers like us to ask Congress for temporary duty relief so long as there was no domestic industry to harm and there was a limited impact on U.S. customs revenue. Congress would consider legislation, called a Miscellaneous Tariff Bill, to account for actual market conditions. The whole process was thoroughly vetted by the U.S. International Trade Commission. It was well-documented and transparent.
It served its purpose, too. For many years, we benefitted from that policy and paid a reduced duty rate on that raw material. This allowed us to be more competitive with our overseas rivals, who make and sell cheaper products with fewer quality controls, not to mention sometimes questionable labor and environmental practices.
Then the legislative process broke down. Effectively, a political stalemate caused a de facto tax hike on U.S. industry-to protect no one. Those costs had to be passed on to our customers and ultimately to consumers. Of course, our overseas competitors enjoyed our disadvantage.
In Solvay’s case, that nearly 7 percent increase in tariffs hurt, with no benefit. Our “made in the USA” products have strict quality and environmental controls, and more energy efficient manufacturing processes than our competitors. We also face more government regulations and customer scrutiny.
Together these factors make our product more expensive. Anything adding to that expense, like increased and needless tariffs, further cuts into our competitive position.
More recently, we see our Congressional leaders in both parties working together again to address this issue and boost U.S. competitiveness. Solvay applauds Congressional efforts to streamline the Miscellaneous Tariff Bill process, again clearing a path for lower tariffs. This will help level the playing field and recognize market realities. We thank Senator Rob Portman, Senator Sherrod Brown and Representative Bill Johnson for supporting this important legislation called the American Manufacturing Competitiveness Act of 2016.
Manufacturers like Solvay compete globally. Our Marietta plant competes for customers, competes with foreign-made products, and even faces intense competition within the company for capital that can be invested anywhere in the world.
When our global business leaders see that Congress understands the ultra-competitive, worldwide nature of business today-and that they are willing to use their power to ensure that tariffs work for the U.S. business community and not against it-that gives companies the confidence to continue investing here.
It means that manufacturers like Solvay can spend more on critical business needs like workforce development, capital improvements and R&D rather than tariffs that only benefit our foreign competitors.
It’s one way to keep businesses competitive, protect American jobs and create new ones.
Wally Kandel is Marietta site manager and senior vice president of Solvay.