Opinion: Georgia’s manufacturers need Washington to tackle currency problem

For more than 135 years, our company, Goldens’ Foundry & Machine Company, has been manufacturing machined iron castings in Columbus, Ga. In 2006, we opened our second machine shop and foundry in Cordele, Ga. My two brothers and I are the fifth generation of our family to manage Goldens’. While the company made it through two world wars and the Great Depression, the last 40 years has been among the most challenging. We’ve watched many of our fellow manufacturers go out of business. Seeing so many factories close their doors is troubling to me, and our state has lost roughly 140,000 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. Many of them have been with us for most of their adult lives. It’s not uncommon for their parents to have worked with us, too. Our products are highly competitive, and yet we continue to lose sales to China. And what really bothers me is that the products we’re seeing from China are often of lower quality. But they come into the U.S. at a cheap price simply because China 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. All of this violates the rules that China accepted when it joined the World Trade Organization in 2001. But Washington has done nothing of consequence over the past 20 years to address this “China problem.”

In studying the currency issue, I’ve learned two things. First, Congress has toyed around with legislation at times, but has never actually taken action to give the federal government real tools to respond when countries artificially undervalue their currency. And this matters because it’s not just China that engages in “currency manipulation.” Japan, South Korea, Germany and others also take steps to lower the value of their currencies.

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. I’m all for foreign investment, but it’s become too much of a good thing. Excessive amounts of incoming capital have the unfortunate side effect of driving up the value of the dollar. And that makes our products more expensive when they compete head-to-head with imports.

Last year, the Coalition for a Prosperous America issued a study showing the US 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 cheaper than they would be if the dollar was priced fairly.

If Congress really wants to help America’s manufacturers and farmers become competitive against China and other countries, it needs to start addressing the currency issue. Thankfully, some in Washington are starting to listen. There have been proposals to draft legislation that would require the Federal Reserve to help US manufacturers by imposing a modest “market access" fee on incoming investment. That would help to gently lower the dollar price to a competitive level, allowing my company and other 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.

Manufacturing matters in America because companies like ours create good jobs and drive demand for other goods and services throughout the supply chain. Washington needs to appreciate how important small and mid-sized businesses are. And when other countries cheat, our elected officials should act to make sure that there are consequences.

George Boyd Jr. is Vice President of Goldens’ Foundry & Machine Co, in Columbus, Ga., and was recently elected chairman of the Georgia Manufacturer’s Association.

This story was originally published June 18, 2018 at 12:03 PM with the headline "Opinion: Georgia’s manufacturers need Washington to tackle currency problem."