On August 8, 2019, Katie Reilly writes on Time:
A South Carolina plant that assembles televisions using Chinese parts plans to shut down and lay off nearly all its employees because of new tariffs imposed by the Trump Administration, the company announced this week.
Element Electronics — which describes itself as the only assembler of televisions in the U.S. — plans to lay off 126 of its 134 permanent full-time employees and close the Winnsboro, S.C. plant on Oct. 5. Notably, there are still at least two smaller companies that continue to assemble speciality televisions in the U.S.
“The layoff and closure is a result of the new tariffs that were recently and unexpectedly imposed on many goods imported from China, including the key television components used in our assembly operations in Winnsboro,” Carl Kennedy, Element’s vice president of human resources, said in a letter to the South Carolina Department of Employment and Workforce on Monday.
Kennedy said he hopes the closure will be temporary and the company is advocating for its parts to be removed from the tariff list. “We remain hopeful that the closure of our South Carolina factory will be avoided,” Element said in a statement shared on social media Tuesday.
President Donald Trump often lamented on the campaign trail that the United States “doesn’t make television sets anymore.” At the time, it was already truethat there were no U.S. factories making televisions from scratch — just a few that assembled televisions using imported parts. But with the closure of Element’s plant, the United States will no longer assemble mass-market television sets anymore, either.
Trump has defended his escalating trade war with China as necessary to reduce the U.S. trade deficit and bring back American jobs. But U.S. companies have complained about rising business costs, and trade experts have warned that the tariffs could hurt the U.S. economy. An analysis by the right-leaning Tax Foundation last month predicted Trump’s trade policy could lead to the loss of nearly 365,000 jobs in the long run.
South Carolina Gov. Henry McMaster, a Republican and a Trump supporter, told reporters on Wednesday that he is “doing every single thing we can” to find a solution that would not harm Element Electronics and its employees.
“We believe South Carolina has great economic prosperity in its future,” McMaster said. “And we don’t want to hurt it by any tariff or any tax or any regulation or anything else, so we are fighting with all we can, all that’s possible to be done, to see that these tariffs and proposed tariffs do not, in the end, hurt South Carolina.”
McMaster defended Trump, and said he has spoken with both the President and Vice President about implementing an exemption for Element Electronics.
“This is a difficult issue. It’s a difficult time. The President is right that there are countries out there that have been treating trade from the United States unevenly,” McMaster said. “He’s correct about that, and he is trying to fix it. What we want to do is be sure that the fix doesn’t hurt South Carolina.”
Meanwhile, James Smith, the Democratic gubernatorial nominee running against McMaster in November, said he spent the day in Winnsboro discussing the loss of jobs “due to job-killing tariffs.”
“These tariffs are not helping anyone in our state who are hurting from the loss of these jobs and many to come,” Smith said at a press conference on Wednesday, calling on McMaster to “tell this President when he’s doing what’s wrong for the people of our state.”
Gary Reber Comments:
Imposing tariffs on Communist China imports, supply chain parts and finished products that have resulted from the controlling owners of American corporations to decide to move their manufacturing there, will be tough on numerous American corporations who end up as “assemblers,” not true manufacturers of finished products. The deterioration of our economy as a result of American capital asset owners investing in Communist China instead of the United States has brought us to today’s junction as the American people have to make a choice: either continue in the path of “free trade” and invest in manufactories in slave-wage labor foreign countries OR decouple from dependence on such countries and instead invest in the resurgence of American manufacturing using the most technologically advanced automation and “machines” to make products in our homeland for Americans, that can be traded fairly with other fair trade foreign producers.
South Carolinans know all too well the devastation factory closures can bring, as the state lost 50,700 manufacturing jobs between 2001 and 2015 because of unfair trade with China, according to the Economic Policy Institute.
The electronics company has always generated a lot of attention for its South Carolina facility. When it was first announced in 2013, the AP reported that Element was “moving a plant from China to South Carolina” and creating 500 new jobs — leading to a ton of praise its reshoring move.
It turns out that Element received some big subsidies to open the plant, including job creation credits and an infrastructure grant of $1.3 million, and some reports indicated that it was set to receive $14.8 million worth of subsidies over 15 years. Thus, the company wasn’t exactly opening the South Carolina factory out of the goodness of their hearts.
The problem was that those TVs — which were practically draped in the American flag in their marketing — were in fact still being Made in China.
As the Alliance for American Manufacturing (AAM) first reported in 2014, the television sets arrived at Element’s factory in the United States already packaged in their boxes (and even the boxes were Made in China). Element’s South Carolina workers took the TVs out of the boxes, checked the screens for scratches, and then used screwdrivers to open the back of each TV and insert a memory board.
The TVs went through some mechanical testing, repackaged, and sold in stores in boxes with “Assembled in the USA” packaging. Meanwhile, we found the back of one television labeled as “Made in China.”
AAM filed a petition with the Federal Trade Commission to expose Element’s “Red, White & Blue Washing,” noting that the televisions did not meet the minimum standard for being labeled as Assembled in the United States. Element wound up having to make changes to its Webssite to better clarify things for consumers.
Now Element finds itself in trouble, and wants to pin the blame entirely on the tariffs.
There is no quest that Communist China engages in unfair trade practices that put American manufacturers at a major disadvantage. These unchecked practices have led to millions of lost jobs and tens of thousands of factory closures since 2001.
What Element Electronics wanted to do — and continues to want to do — is play both ends. It took advantage of Americans’ genuine, admirable desire to buy more American-made products while also remaining heavily dependent on manufacturing in China. It used taxpayer dollars to help fund its South Carolina facility, but it all amounted to nothing more than a PR stunt.
Now playing the victim, Element says it is seeking to have “our parts removed from the tariff list” in order to maintain its taxpayer-funded operations in South Carolina. But nothing has changed — Element still wants the government to pick up the tab for its American facility while staying dependent on Communist China.
The controlling owners of Element Electronics may intend to shut down their Winnsboro, South Carolina plant, but the article states that eight full-time employees will keep their jobs, and does not mention that now they will have 100 percent of their manufacturing and assembly done in Communist China to save costs and maintain profitability for the few persons who OWN Element.
The only ones who deserve any support are those 126 people who now find themselves without work because of their employer’s decision to game the system.
If South Carolina Gov. Henry McMaster really wants to assist Element Electronics he would arrange for “pure”, interest-free capital credit for the employees to buy-out the existing owners using a leveraged equal allocation Employee Stock Ownership Plan (ESOP). A properly designed ESOP would enable working people without savings to buy stock in their employer company and pay for it out of its future dividend yield — on the promise of the capital investment’s future income.
See https://www.cesj.org/ch-vehicles/employee-stock-ownership-plans-esops/
