OP-ED: Illinois manufacturers need D.C. to tackle currency issue
By Zach Mottl –
For more than 100 years, my company, Atlas Tool Works, has been making precision parts and components in Illinois. In that time, our state has benefited from the middle-class jobs created by thousands of manufacturers who opened their doors. Illinois became a nexus of precision manufacturing. In the past 20 years, however, I’ve watched many of my fellow manufacturers go out of business. Seeing so many factories close their doors is troubling, and our state has lost roughly 290,000 manufacturing jobs over the past two decades. Overall, the U.S. has lost almost 5 million manufacturing jobs since 2000.
Our employees are hard-working and dedicated, and our products are highly competitive. Unfortunately, we continue to lose customers to China. And the products we’re seeing from China come into the U.S. at a cheap price simply because Beijing has made a longstanding practice of artificially manipulating its currency to lower the cost of its exports. China’s manufacturers also receive billions and billions of dollars in subsidies from their central government.
In studying the currency issue, I’ve learned two things. First, Congress has toyed around with legislation at times, but has never taken action to fully respond when countries like China artificially undervalue their currency. And second, there’s also the problem of the U.S. dollar becoming continually overvalued simply because foreign investors keep buying U.S. securities and financial assets. Excessive and uncontrolled amounts of incoming capital have the unfortunate side effect of driving up the value of the dollar.
Last year, the Coalition for a Prosperous America issued a study showing the U.S. dollar was overvalued by roughly 25 percent. That means American-made goods and services become 25 percent more expensive than they should be when we try to sell them overseas. It also makes imports artificially cheaper than they would be if the dollar were priced fairly.
Thankfully, some in Washington are starting to listen. There have been proposals to draft legislation that would require the Federal Reserve to help U.S. producers by imposing a modest “market access” fee on incoming investment. That would help to bring the dollar to its correct and competitive value, allowing farmers and manufacturers to export more. Legislation like that could work particularly well if it also contained measures to respond when countries like China deliberately weaken their currency in order to boost exports.
Zach Mottl is chief alignment officer for Atlas Tool Works. He serves as government relations chairman of the Technology and Manufacturing Association in Illinois and is on the board of the Illinois Chamber of Commerce and other manufacturing and business groups.
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