U.S. mold, tool and die makers are looking toward a U.S. International Trade Commission (USITC) report this fall to bolster their case for relief from foreign competition. They say U.S. government trade and other forms of assistance are needed to avert further shuttering and loss of jobs and business to foreign competitors. More than a score of industry association representatives and shop owners and congressmen from two centers of U.S. tool, die and mold making—Illinois and Pennsylvania—presented their case to the USITC in stark terms. They described their industry variously as "hemorrhaging" and of being threatened with extinction along with other U.S. manufacturing sectors.

Charges of unfair foreign competition were aimed primarily at China, but also at Brazil, Portugal, Spain, and Mexico. Canada, where the bulk of U.S. imports come from, was also mentioned. The problem from across the northern border was couched, however, in terms of unfavorable exchange rates between the Canadian and U.S. dollars rather than unfair trade practices.

The USITC is conducting a general investigation of the industry's situation at the request of the House Ways and Means Committee. Under this type of investigation, the Commission makes no recommendations, but reports independent findings and analysis. "We're waiting to see what the report says," says a spokesman for Rep. Donald Manzullo (R-Ill.), who sits on the committee and chairs the House Small Business Committee.

Manzullo told the ITC: "This is an industry that is hemorrhaging." U.S. trade statistics "grievously underestimate" the losses to foreign competition, he claims. The Chinese are undercutting with bids as low as a third of those tendered by U.S. shops. In a survey of members prepared for the USITC, the American Mold Builders Association (AMBA) reported that the industry lost $1.3 to $1.6 billion in business to foreign competition in 2000 and 2001. Of the 10,645 reported orders lost, 59% went to Chinese producers and 16% to Canadian.

Rep. Phil English (R-Pa.), who also sits on the Ways and Means Committee, says one purpose of the investigation is to "generate factual information that otherwise is not available to the domestic tool and die industry" regarding global competitive conditions.

Matt Coffey, president of the National Tooling and Machining Association says U.S. companies, despite heavy investments in new technology, face unfair competition, such as Chinese tool and die shops quoting prices below the cost of materials. "They must be subsidized," Coffey says, citing a Japanese Ministry of Economy, Trade and Industry (METI) report showing Chinese prices about one third the level of Japan's (see box). Another major problem he cites is the disappearing customer base of U.S. shops. OEMs are moving offshore and sourcing their tool, die and mold machinery abroad, says Coffey. If the trend continues, he predicts a "hollowing out" of U.S. manufacturing.

Several company presidents cite cases of losing bids by large margins to Chinese competitors. Daniel Jepsen, president of Jepson Precision Tool Inc. in Cranesville, Pa., says he learned from customers that Chinese shops price jobs "typically at about 25-30% of my quoted price, which is less than my fixed costs." Jepsen believes they are able to do so using unfair trade practices, such as subsidized raw materials, buildings and equipment from the government.

John Belzer, president, TCI Precision Metals and board chairman of the National Tooling and Machining Association said his company's top three customers have moved their production overseas—to China, Singapore, and India. The customer that moved to India reported that machinists are paid 50¢/hr there compared to $19/hr, including fringes, in his shop.

Olav Bradley, chairman of AMBAS government affairs committee and owner of P.M. Mold Company in Schaumburg, Ill., said the association has lost 103 of its 450 members in the last two years, mainly because of Asian competition.

In response to questions from commissioners about statistics showing U.S. tool, die, and mold shipments rising, the witnesses claimed that they did not reflect current conditions and that some of the shipments represented molds made overseas coming back to the U.S. for rework.

AMBA , in its written submission to the commission, advocated:

• Adding import tariffs equal to those imposed by foreign countries on U.S. goods,
• Giving the president authority to initiative emergency tariffs "in the interest of national security,"
• Discouraging the World Bank from financing companies that place tooling orders outside the U.S.,
• Reinstating the investment tax credit to manufacturers that buy only U.S.- made molds and dies, and
• Encouraging schools to reinstate industrial arts classes with federal support.