As President Donald Trump pursues a bold new trade agenda for the United States, moving to enact tariffs on steel, aluminum and billions of dollars in imports from China, American companies are keeping a close watch on those policies, and how other countries are responding to them.
One of those companies is Brown Deer-based Rite Hite Co. LLC, a manufacturer of loading dock equipment, industrial doors, safety barriers and industrial fans. The company has manufacturing operations in China and Europe and does business all over the world.
Ellen Kosidowski, vice president of order administration and logistics for Rite-Hite, is heavily involved in managing the company’s exporting and global logistics and trade compliance. She is also the president of the Metropolitan Milwaukee Association of Commerce’s World Trade Association.
Kosidowski recently spoke with BizTimes Milwaukee editor Andrew Weiland about the tumultuous international trade environment. Following are portions of that conversation.
BizTimes: First of all, what is your take on President Trump’s move to slap tariffs on imported steel and aluminum, with exceptions granted for some countries?
Kosidowski: “I certainly understand where it’s coming from. I was a little bit relieved to hear that it’s not across the board. There are plenty of countries that the U.S. is importing steel from and we don’t have those same (trade deficit) challenges. Initially it was going to be across the board, no matter where they are coming from. At least to have it a little bit more targeted I think it will have less of an impact, certainly on our business. Personally, I see where it’s coming from. I’m not sure it’s the right approach, but it’s certainly sending a message.”
BizTimes: More recently, President Trump announced tariffs on $50 billion in imports from China. He said a major reason is because of intellectual property theft and currency manipulation by China. What do you think of the tariffs he wants to place on Chinese goods? Does Rite-Hite do a lot of trade with China?
Kosidowski: “We have a manufacturing facility and an Asian service and sales headquarters in China. Our big sales office is in Shanghai. Our manufacturing facility is in Kunshan, which is about a 40-minute drive from Shanghai. As far as the imports, what we bring in from China, it’s very little. There was a time when we were exporting quite a bit to China and the Asian market. That’s been reduced because we are manufacturing a lot more locally. While we do have a lot of business that happens with China, there isn’t a whole lot of importing or exporting that’s happening. We do send manufacturing and production parts from the U.S. to them. So that does happen. But on the import side I’m not sure how much it would affect our business. However, that being said, there is the bigger picture issue of the relationships. We’ve also heard some stirring about China and what they will do to retaliate. It sounds like there are already some things in the works to do that. But there will be some retaliation and there will be some things that impact our exports to the China market.”
BizTimes: Are you worried that the United States is heading into a trade war?
Kosidowski: “Certainly it’s going to play a role and have an impact on business. It sounds like for the steel and aluminum tariffs, the European market is going to be protected from some of these new regulations. I don’t know if I’m concerned about the rest of the world. It’s almost like it’s a threat and as this is being rolled out it really is targeted more toward China and a few other countries that we have had some other issues with. With China, I can speak to some of the things like (theft of) trade secrets or patents, things like that we have seen stolen or abused because they didn’t have the same kind of laws in China. We’ve had that happen with our products, the copycat kind of things, like you hear about with the Coach purses. We’ve certainly had that happen with our products, and them showing up again in the U.S. market. So those kinds of things I understand why we are trying to combat some of that. But certainly there’s a concern (about a trade war), absolutely.”
BizTimes: You said that Rite-Hite has a plant in China, but does not import much from China to the United States. Where do your products made in China go?
Kosidowski: “The real purpose of getting started with our sales and manufacturing in the China market was to serve the China market itself. So the products we initially started out making there were specific models that we knew would suit the China market. But as soon as we got that manufacturing going, we realized with production lead times and the expense of the freight, it made sense to offer those products to all of the Asia market. So, really our goal with that whole thing was just to serve the entire Asian market. We are not manufacturing products in China and bringing them back to the U.S. What we are selling in the U.S. is U.S. (manufactured) product. What we are making in China is going to China and that southeastern Asia market.”
BizTimes: Considering the trade issues between the United States and other countries, is the best approach to make products in the areas where they will be sold and consumed?
Kosidowski: “It’s certainly a solution. Our reason for doing it really had more to do with lead times. We’re using the same models, just determining what makes sense for that area. It’s expensive (to ship product a great distance). Obviously you are adding to the freight. A lot of it has to do with how quickly you can get the product and not having to be on the ocean for four to six weeks or whatever. It has worked well for us and I think it can certainly be a viable option for other companies.”
BizTimes: With this president, he has a reputation as a deal-maker. It seems like these tariffs are driven by the desire to make deals with individual countries. Bilateral deals seem to be his preferred approach as opposed to being in large, multi-national partnerships. One of the first things he did in office was pull out of the Trans-Pacific Partnership. What do you think of that approach?
Kosidowski: “A lot of this is so new and it’s been hypothetical. It’s hard to know exactly what his intentions are. With so many things being rolled out, it seems to be changing day-by-day. In my role, I’m trying to facilitate being able to take the orders easily and be able to ship them and get them to our customers in the manner that we can do some decent business. So I have always been a big advocate of the trade agreements. I see the reciprocity that happens, and the back-and-forth and building those business relationships with the companies in those countries. The WTA and the MMAC has had some great programs and great networking opportunities, informational meetings. We’ve met several times on the TPP to talk about what it meant, what the impact would be and what if we didn’t do it. How it would impact the U.S. if other countries were in an agreement and we weren’t. I’m an advocate for being involved in those and do think it’s a little scary that we are starting to target specific countries and kind of isolate ourselves. Like with NAFTA, I can’t see how that can go away because so many U.S. companies, their business is so ingrained with that. It would have some severe impact on how companies are doing business.”
BizTimes: The Trump administration is in the process of trying to renegotiate the NAFTA deal. What do you think about that?
Kosidowski: “We have distribution across Canada and we have a strong distributor in Mexico, as well. They are completely different countries. The way you import and export to those two countries is different, as well. But they are certainly, for the U.S., our biggest trade partners and so I see a huge benefit in us having some kind of trade agreement and a partnership and a relationship with those countries. From the whole logistics part of it, it just makes sense. For so many Wisconsin companies, Mexico and Canada are their biggest export destinations. You think about the impact to our business and our ability to be able to sell our products in those countries if there were suddenly huge import duties and tariffs that were put on those products. So I am a big advocate of renegotiating and not making huge changes. I think it’s working. I’m hopeful we don’t see a whole lot of huge changes.”
BizTimes: Big picture, global trade remains an important part of the U.S. economy, right?
Kosidowski: “Right. The definition of trade is the give and take, the back-and-forth. We have to have some kind of partnership. We have to be able to do that. You’re not really trading if we don’t want to have to pay these big duties and taxes to be able get our products into their country, but on the other hand say they need to (pay duties and taxes) when they are (sending product) back here. That’s not how trade works. Trade has got to be give and take. Our business, on the international side, we are certainly heavier on the export side than on the import side. We rely on our exports. We want to facilitate that. But at the same time, you have to be able to understand there are some imports to be able to balance that out. Finding a balance would be ideal.”
