Chinese Tires: Where the Road Meets the Rubber
Posted by admin on 06/17/2009
The U.S. International Trade Commission (ITC) is scheduled to vote tomorrow, June 18th at 11:00 a.m., on a petition presented earlier this year by the United Steelworkers requesting that the Administration cut imports of Chinese tires into the U.S. in an amount that would revert those imports back to 2004 levels – and half the imports of 2008.
That the ITC will vote “yes” is not in question. It is already planning to issue recommendations on June 29th to cure market disruptions caused by huge increases in Chinese tire imports over the last five years. These remedies will be presented to President Obama on July 9th, with expected White House action accepting or rejecting them by early September.
The rubber will meet the road with the President’s decision whether or not to approve trade relief for U.S. tire manufacturers. Although the petition and subsequent remedies are required to be full of tradespeak and legal mumbo jumbo, the issue is simple and critically important to the U.S. manufacturing economy. Its important for the President and the rest of us to understand what is at stake – namely, jobs and consumer safety.
As with so many other manufactured products from China, its tire industry benefits from illegal government subsidies, exploited labor and intentional undervaluation of its currency. Because of its cheating, its tires are cheaper and U.S. tire manufacturers - who obey laws and regulations - can’t fairly compete. Since 2004, Chinese tire imports to the U.S. have increased 215% with 46 million tires worth 1.7B in sales being sold here in 2008. U.S. domestic production is down 25%; eight tire production facilities will be closed in 2008/2009 with a resultant loss of 8,000 jobs.
This number does not account for other retail sales and services jobs either lost or diminished when tire plants close.
And remember toxic Chinese toothpaste, dog food and toys? True to form, Chinese tires also have their own consumer horror stories.
In 2002, a U.S. importer contracted with a Chinese tire company to import tires that “exceeded” U.S. safety guidelines. Soon the importer received a number of complaints about the tires falling apart, and in August 2006 a van in Pennsylvania lost control when a tire tread and belt separated, leaving two people dead and two seriously injured. Later that year an ambulance in New Mexico rolled over; fortunately, no one died..
It was then discovered that many of the 45,000 tires imported through this contract were missing an all-important gum strip normally placed between the steel belts to ensure that separation does not take place. Once again, a production shortcut by a Chinese manufacturer in an effort to save money ended up with American consumers hurt – and in this case – killed.
Chinese tire manufacturers are also involved in industrial espionage against U.S. tire manufacturers. Earlier this year two employees of Chinese-based tire manufacturer were caught in a Goodyear plant in Kansas photographing production machinery which allowed Goodyear’s Chinese competitor to fabricate a similar machine using these stolen trade secrets. The two men are currently under federal indictment and are facing 150 years in federal prison.
Critics of the petition to limit the import of Chinese tires claim that imposing such quotas would set a precedent that may be used to control import quantities of other Chinese manufactured goods.
With Chinese cheating, hoodwinking and stealing occurring at the expense of American jobs and even lives – we can only hope that it does.
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It is important to recall
It is important to recall China's successful lobbying against the "buy American" clause in the federal stimulus package from the Obama Administration. This was done by the letter dated Feb. 11, 2009, from the Bretton Woods Committee (the lobby for the ultra-rich), with signatories ranging from every major bankster (JPMorgan Chase, Goldman Sachs, UBS, Deutsche Bank, Citigroup, as well as Walter Mondale, Jimmy Carter, Roubini, Peter Morici (Univ. of Md.) and various foundations, and on and on.
Meanwhile China's $800 billion stimulus package contains a "buy Chinese" clause, with extremely deadly penalties for anyone who disobeys.