Monday, August 26, 2013

Fair Trade Initiative - It's a Marathon, Not a Sprint

AEC Past Chairman Duncan Crowdis
In the last blog we talked about the process that we must go through in order to maintain our hard fought, and dearly needed orders from the Department of Commerce (DOC) that have applied level-playing-field duties on Chinese imports.

What we know now is that this is clearly a long term initiative. Where we perhaps had entered into the process thinking that this was a sprint – a two- to three-year all-out effort which would slow down significantly once we cross the finish line – we must now think of as a marathon. There is no real finish line. Where winning a race is typically measured on crossing some sort of finishing line, our success in this process will be measured by the continued growth and health of our industry over time. Metrics of success will be things like improving P&Ls (beyond historical levels), strong cash flow, the domestic industry’s penetration of aluminum extrusions against other materials, domestic industry’s growth that is well beyond simple GDP growth, increased capital investment and more.

Like any marathon there are many challenges associated with not having that finish line clearly visible in front of us:
  • We start questioning why we are putting out all this effort. After all, things are getting better.
  • The passion that got us started begins to wane
  • We become distracted with other more short-term issues and opportunities that have risks/rewards that are perhaps more clearly visible
  • We start to question if this issue is perhaps as urgent as we originally thought and does it still makes sense for it to continue to garner the attention and resources of both money and time
  • We start to think that perhaps without “my support,” the fight will still be carried on by others
  • And the list goes on.

You WILL be asking yourself all of these questions. Most of us have already.

However, at the same time ask yourself this question-perhaps the most important question. “Will the Chinese give up? And if they don’t what will the outcome be for me; for the industry?”

To us, this is a very easy question to answer. THE CHINESE WILL NOT GIVE UP. They can’t afford to give up. They have created an aluminum extrusion industry in the past 10 years with a capacity that far exceeds the domestic needs and MUST export. In fact, the capacity of the Chinese extrusion industry has the capability to supply most of the world demand. Countries around the world have felt the on-slot of Chinese imports and a number (Canada and Australia, in particular) have taken action and applied dumping and countervailing duties. The United States is an obvious large and attractive target for them. We MUST NEVER think that they will simply go away. They have extremely strong strategic, economic and political reasons for continuing the battle and they obviously have the financial clout to keep it up.

So, our question is a simple one. “Are we going to let it happen?” Or are we going to stand up for our customers, our employees, our shareholders and all of the families connected to our industry.  Once we won our original case, Chinese imports plummeted from roughly 20% of the domestic demand to close to zero. So based on this success, we KNOW that when we ban together, we can win even against a foe as mighty as the Chinese industry and the Chinese government. Without this concerted team effort, we don’t stand a chance and they will run over our industry in quick order.

Is the fight worth it? I would expect each of us to have seen an improvement in our respective businesses over the past several years. Certainly the slight improvement in the US economy has helped to a certain extent and I am sure that each of us have not been idle in taking internal action that has improved our bottom line. But let’s not kid ourselves; without these current duties that have leveled the playing field on Chinese imports, the gains we would have experienced would have been much, much less than what we have actually realized.

If you answered a resounding “NO” to the above question of “Are we going to let it happen?” you need to contact the AEC and find out how you can help to control our industry’s destiny.

Visit www.AECfairtrade.org to find out more.

This post was written by AEC Past Chairman Duncan Crowdis

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