Be Wary of Claims that Trump’s Trade Policy Is Working
Last week, Trump trade adviser Peter Navarro wrote the following in a USA Today op-ed:
A poster child for the success of President Trump’s tax, trade and worker-training policies in lifting the spirits — and incomes! — of American workers will be a new aluminum mill. This new aluminum mill will be built in Ashland, Ky., in the midst and mists of Appalachia’s rugged mountains, in one of our nation’s most poverty-stricken areas.
Ashland is located in Boyd County off Route 60, on the banks of the Ohio River, bordering West Virginia and Ohio. It was once a booming steel, oil and coal town — until the steel mills in the area started closing down, Ashland Oil moved its headquarters to the Cincinnati region, and the coal mines began to shutter.
Today, Boyd County suffers from a declining population and a debilitating opioid epidemic. But help — not just false hope — is on the way.
The new $1.5 billion aluminum rolling mill that will soon be built — with a groundbreaking on Friday — will cover 45 acres. This state-of-the art mill will create up to 1,800 construction jobs and about 500 permanent positions in a county where the unemployment rate is almost 40% higher than the national unemployment rate.
For the sake of the people in that region, I hope the mill does get built and is very successful. But just for fun, I took a closer look at this "poster child" aluminum mill. Its actual origins paint a very different picture. In May of 2017, a WSJ op-ed entitled "The Mill That Right-to-Work Built" explained how Craig Bouchard, the CEO of the company building the mill, chose Ashland, KY as the site:
[A past experience with owning a steel factory] soured him on organized labor, and it’s one reason he was determined to build his new aluminum plant in a right-to-work state, where workers can’t be compelled to join a union. Before choosing Ashland, he drew up a list of 24 potential sites. The logistics favored Ashland, and Kentucky offered $10 million in tax incentives as well as low-cost electricity. But Mr. Bouchard says he was prepared to build elsewhere had Kentucky’s Republican governor, Matt Bevin, not signed right-to-work legislation in January.
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Mr. Bouchard says one of the plant’s advantages will be freedom from rigid union work rules and retiree legacy costs, which handicap many American steel and aluminum manufacturers. “There’s only one way to build a big business in these industries today, and it is greenfield,” he says. “You have to start from scratch. No unions, therefore no pension legacies.”
There are more details in an April 2017 article in Ashland's Daily Independent:
Bouchard said his company’s interest in locating the massive plant in Kentucky piqued after the state passed its controversial right-to-work legislation.
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Bouchard said he spoke with [Governor Matt] Bevin “right after” the state passed right to work, which happened in January, and Bevin remained persistent for weeks in promoting cities and regions across the state. The company narrowed its field of candidates down to 12 cities in Kentucky, and 12 cities in another state Bouchard refused to name.
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Last winter, CSX Corporation cut 101 jobs at its facility in Russell. A year before, AK Steel Ashland Works sliced its payroll by 633 workers through a mass layoff still in effect. The steel mill now employs about 200. Some of the laid-off steelworkers have fled the Tri-State region in search of a new lifeblood, but a majority still cling to hope and remain with their families.
Bouchard said the AK Steel situation “did play a factor.” He said he knows the AK Steel executives well, and some of his companies have been a supplier or customer of the major American steel provider in the past.
“It’s a great company, and their employees are always well trained. I feel for those families, I think the AK Steel executives feel for those families, we’re going to put some of them back to work.”
There seem to be a lot of reasons -- right to work, state tax breaks, available labor -- for the company's decision to build an aluminum mill at that time and in that place. Trump's trade (and other) policies do not appear to have played much of a role.
