More Trade Actions – Wind Turbine Towers, Washing Machines

More Trade Actions – Wind Turbine Towers, Washing Machines

Dave Johnson  |  July 31, 2012  |  Campaign for America’s Future

The game is to underprice your product until your competitors go out of business (like Solyndra & other solar companies). Then you own the market. This is about a lot more than just jobs. Our government is finally doing something about leveling the playing field!

This week, in separate actions, our Commerce Department imposed “anti-dumping” tariffs on wind turbine towers and washing machines. The wind turbine towers were coming in from China and Vietnam, the washing machines from Mexico and South Korea.

Why Sell Under Cost?

Dumping is when a product is sold for less than it costs to evenmake the product. The idea is that your competitors will go out of business and the manufacturing ecosystem of suppliers, knowledge and infrastructure moves to you, so you’ll come out ahead in the long run.

It takes enormous investment to open up a manufacturing operation because you need the proper facilities, the right local utilities, the tools and machines, the skilled workforce, the suppliers, the local infrastructure, the channels to markets, and all the rest of the ecosystem that supports manufacturing. When that is lost to another country it is very, very difficult to get it back. Especially in a country with a Congress that refuses to understand the need for a national industrial policy.

This is the game that countries like China have been playing with their national industrial policies designed to capture strategic industries like solar and wind energy. By selling lower than cost for several years you gain market share and shed competitors. The suppliers, knowledge base, and jobs move their way. Eventually they build or strengthen an entire ecosystem and it is just too costly for others to try to compete.

At first it is attractive to take advantage of the lower prices, later the jobs, factories, companies and entire industries are gone along with the jobs and economic power they bring. Or, in other words, look around at what has happened to us.

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China solar giant faces glare of US trade war

The low cost of labour, coupled with the massive scale of production at its 14,000-person plant, have enabled China's Suntech to become the global industry leader in solar power in just a decade

In the eastern Chinese city of Wuxi, home to the world’s biggest maker of solar panels, labour is so cheap that workers carry out jobs by hand while machines designed to perform the same tasks sit idle.

The low cost of labour, coupled with the massive scale of production at its 14,000-person plant, have enabled China’sSuntech to become the global industry leader in just a decade.

Chinese producers now dominate the global solar power business. But their success has become a major global trade issue as American companies accuse them of dumping in the US market and receiving unfair subsidies from Beijing.

The US government is due to announce findings on the issue later this month, which could result in duties against Chinese manufacturers.

Suntech denies unfair business practices have helped make it the world’s largest producer, but it makes no secret of its strategy of keeping prices low to boost sales and make solar power available to more people.

“We don’t believe we have any unfair subsidies or anything like that,” said Suntech’s vice president for global marketing Edwin Huang. “We just hope it doesn’t turn into a full-scale trade war. It’s not good for anyone.”

US companies have accused China of improperly subsidising its solar sector as part of a no-holds-barred commercial battle for supremacy over an industry experts estimate will be worth trillions of dollars in the future.

They say Chinese competitors have access to cheap financing from state-owned banks and outright government subsidies aimed at building up the industry, as Beijing makes alternative energy a priority.

At least three US solar companies collapsed last year as global prices slumped, among them Solyndra, which had a $535 million loan guarantee from US President Barack Obama’s administration.

Evergreen Solar, once listed on the Nasdaq exchange, and high-profile Intel spin-off SpectraWatt also shut down.

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