Manufacture This

The blog of the Alliance for American Manufacturing

There's a lot more going on. Let's break things down.

Television manufacturer Element Electronics announced this week that it will lay off 126 people and close its plant in Winnsboro, S.C. — and the company is pinning the blame directly on the Trump administration’s China tariffs.

Judging from the news coverage of the closure, a whole lot of people seem to be taking the company at its word. But whatever you may think of Trump’s tariffs (and indeed, the president in general) it’s important to know that there is far more to this story than is currently being discussed.

Before we begin, I want to make it clear from the start: It is terrible that 126 people are losing their jobs, and we should offer nothing but our support to these workers. Our main mission at the Alliance for American Manufacturing (AAM) is to support the creation and retention of U.S. manufacturing jobs, and we always hate to see any factory close, especially in a small community like Winnsboro.

Indeed, 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. Thankfully, this appears to be on the reverse — the state has seen a steady uptick in factory job growth since the lows of the Great Recession, including 1.6 percent growth over the past year.

But I digress. Back to Element Electronics.

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 from local leaders like then-Gov. Nikki Haley, who happily posed with Element officials during a Walmart summit in Orlando.

We even jumped on board here at AAM, praising Element for their reshoring move. Heck, we even bought one of the company’s televisions for our own office!  

Unfortunately, things were not quite as they seemed.

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. As Christopher Balding noted on Twitter, the company wasn’t exactly opening the South Carolina factory out of the goodness of their hearts.

But that wasn’t the worst of it.

There’s little doubt that Element was counting on the patriotic goodwill it created via its big announcement and subsequent marketing efforts to sell its TVs. But 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 we 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.”

The back panel of an Element TV labeled as "Made in China," as seen in the bottom right corner. | Photo by AAM

So 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 website to better clarify things for consumers.

Now Element finds itself in trouble, and wants to pin the blame entirely on the tariffs.

This… is frustrating.

It’s a lot like what went down recently with Harley-Davidson. The company happily used its American manufacturing footprint to promote its motorcycles — with Trump on the White House lawn, no less! — and then blamed the tariffs when it made the decision to offshore production.

As my colleague Matt McMullan wrote, Harley already was shipping more of its manufacturing overseas to serve its international customers (an important consumer base, given that fewer Americans are buying motorcycles these days, which is the real reason behind Harley’s recent troubles).

Harley-Davidson likely would have offshored production anyway — but hey, the tariffs were a nice excuse to shift the blame!

While the rollout of the one-time steak salesman’s tariffs can be debated, this can't be: 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.

It is well past time for Washington to do something about this problem.

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 pick up the tab for its American facility while staying dependent on China.

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.