The Wall Street Journal - 02.10.2019

A2| Wednesday, October 2, 2019 *** THE WALL STREET JOURNAL.**

in China is down about 40%,

dragging down overall revenue

by about 20%.

“Not only has the volume

been reduced substantially but

it’s caused pricing to drop sig-

nificantly,” Jeff Meyer, presi-

dent of Baillie, said last month.

While U.S. manufacturing

was down, ISM’s new orders in-

dex—one of the measures that

contributes to the overall man-

ufacturing index—rose slightly

to 47.3 in September from 47.

in August.

New orders for export,

however, dropped for the third

straight month, underscoring

the challenges posed by trade

tensions. Newly placed orders

for manufactured goods are

seen as a proxy for business

investment and consumer de-

mand.

William Byrd, chief execu-

tive of Pacific Die Casting

Corp., said a truck-making

customer informed him this

week that they were lowering

production rates.

Orders from customers have

fallen “just a teeny bit” in re-

cent weeks, he said. The Van-

couver, Wash.-based metal

products maker is still on-track

to boost revenue by about 5%

this year.

“We are still running over-

time and extra days,” Mr. Byrd

said, adding that the company

has increased its starting wages

by $2 to around $15 an hour

this year to retain workers.

Surveys of purchasing man-

agers in Asia and Europe

showed continued weakness in

factory activity.

Compiled by IHS Markit, the

surveys pointed to declines in

activity in South Korea, Japan

and Indonesia. A separate sur-

vey by the Bank of Japan

showed sentiment among the

country’s large manufacturers

deteriorated to the weakest

level in more than six years.

In the U.K., which faces the

additional challenge of an un-

certain departure from the Eu-

ropean Union, factory activity

fell for the fifth straight month,

the longest stretch since the fi-

nancial crisis.

Across the eurozone, activity

was at its weakest since Octo-

ber 2012.

—Austen Hufford,

Likhitha Butchireddygar

and Megumi Fujikawa

contributed to this article.

Firms Look to Duck

Duties on Imports

WASHINGTON—U. S. com-

panies are continuing to seek

exemptions to tariffs on a wide

assortment of Chinese im-

ports—including frozen fish, au-

tomotive parts, cosmetics and

other products—ahead of a

planned increase in levies.

More than 2,500 companies

had asked the Trump adminis-

tration to exclude about 31,

products as of midnight Mon-

day, the deadline for filing re-

quests to be exempted from

the $200 billion tranche of tar-

iffs that the U.S. implemented

last year on items imported

from China. Two earlier

tranches covering $50 billion in

goods also allowed for exemp-

tions. The targeted Chinese im-

ports are currently subject to a

25% tariff. On Oct. 15, the duty

is set to rise to 30%.

In their requests to the Of-

fice of the U.S. Trade Represen-

tative, companies typically say

they are either unable to find

comparable replacement goods

outside of China, or that doing

so would be at prohibitive cost.

“We have not been able to

move infant knitted cotton hat

production to the U.S. due to

capability, volume and cost im-

pact,” retailer The Gap wrote in

one of its 13 submissions.

About a third of the re-

quests came from a single

company, Minnesota-based Ar-

rowhead Engineered Products

Inc., which imports from China

aftermarket repair parts for

cars, lawn mowers, all-terrain

vehicles and other products.

The USTR has ruled on 439

requests for exclusions from

the $200 billion tranche so far,

or about 1% of all filings. Of 61

requests granted as of Tuesday

morning, 10 went to Apple Inc.

—Anthony DeBarros

and Josh Zumbrun

U.S. WATCH

Saudi Arabian Oil Co. has

restored its oil production to

levels that preceded the Sept.

14 attacks on its facilities. In

some editions Tuesday, a Busi-

ness & Finance article about

the company, commonly

known as Aramco, incorrectly

said it restored its oil-produc-

tion capacity.

CORRECTIONS

AMPLIFICATIONS

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third time this year.

President Trump, however,

blamed the Fed for the worsen-

ing U.S. factory numbers, say-

ing its interest-rate policies are

responsible for the recent ap-

preciation of the U.S. dollar. He

has urged the central bank to

cut rates more aggressively

than it has.

Many economists attribute

the dollar’s strength to the U.S.

economy’s solid, if cooling, per-

formance relative to other ma-

jor economies, and the manu-

facturing sector’s woes to the

escalating trade disputes.

“The dollar’s strength is

hurting our [U.S.] ability to

export. It’s the number one

comment I hear from suppli-

ers, outside of trade issues,”

said Timothy Fiore, head of

the ISM manufacturing survey

committee.

The World Trade Organiza-

tion, in new forecasts on trade

flows, warned Tuesday that

slowing trade could hit invest-

ment and jobs.

“Job creation may be ham-

pered as firms employ fewer

workers to produce goods and

services for export,” said Ro-

berto Azevêdo, the WTO’s di-

rector-general.

The Geneva-based body said

it now expects flows of goods

across borders to grow by just

1.2% this year, down from 3% in

2018. If the WTO is correct, it
      would be the lowest annual in-
      crease since 2009.
      The global trade system has
      been disrupted by the dispute
      between the U.S. and China
      that has resulted in a steady
      increase in tariffs since early


2019. 
      

      The U.S. has raised tariffs
      on a limited range of imports
      from other countries, meeting
      with retaliation. Japan and
      South Korea are also at odds
      over trade.
      Hardwood lumber compa-
      nies such as Baillie Lumber Co.
      have been hurt by tariffs the
      Chinese government has
      placed on imports from the
      U.S. The Hamburg, N.Y.-based
      company has eliminated sev-
      eral dozen jobs as its business

      
      

SpreadingWeakness

FactoryactivitycontractedintheU.S.andabroadamidslowinggrowthinglobaltrade.

TheInstituteforSupplyManagement'smanufacturingindex

Annualchangeinvolumeofglobalmerchandisetrade

Sources: Institute for Supply Management (ISM manufacturing index); World Trade Organization (merchandise trade volume); IHS Markit (Germany,

South Korea and Japan purchasing managers’ indexes)

ManufacturingPMI

20

• 
  


• 
  
  
  
  • 
    
  
  
  
  

0

5

10

15

%

2000 ’05 ’10 ’15 ’

Germany

Japan

SouthKorea

70

30

40

50

60

2000 ’01 ’02 ’03 ’04 ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 ’16 ’17 ’18 ’

60

40

45

50

55

2017 ’18 ’

EXPANDING

CONTRACTING

EXPANDING

CONTRACTING

son, chief economist at Pan-
theon Macroeconomics, said in
a note to clients, referring to
the ISM reading, which is based
on a survey of U.S. purchasing
and supply executives.
A separate survey of U.S.
manufacturing activity from
data firm IHS Markit showed
factory activity increased in
September, though the reading
also indicated the July-Sep-
tember period marked the
worst quarterly performance
for the sector since the same
period in 2009. IHS Markit
said its September manufac-
turing index rose to 51.1 from
50.3 in August.
Surveys of purchasing man-
agers in Europe and Asia re-
leased Tuesday pointed to
deepening declines in factory
activity in September, as a
slowdown in exports hit facto-
ries.
Slowing economic growth
has prompted a wave of central
bank stimulus measures around
the world, including from the
Federal Reserve and the Euro-
pean Central Bank. The latest
effort came Tuesday, when the
Reserve Bank of Australia cut
its key interest rate for the

ContinuedfromPageOne

Factory

Activity

Shrinks

PENNSYLVANIA

Mail-Order Fentanyl

Ring Linked to China

Three Chinese nationals
worked with a former deputy
sheriff in Pennsylvania to run an
international mail-order drug op-
eration linked to five overdose
deaths in the U.S., state and fed-
eral authorities said Tuesday.
The Chinese nationals, using
an alias, allegedly ran websites
based in China that offered us-
ers fentanyl, a synthetic opioid.
The drugs were then shipped to
a storage facility in Pennsylvania
rented by David Landis, a former
deputy sheriff in suburban Phila-
delphia, according to William M.
McSwain, U.S. Attorney for the
Eastern District of Pennsylvania.
Mr. Landis, who pleaded
guilty to separate charges last
year, shipped an estimated
2,900 packages across the U.S.
and internationally, officials said.
—Talal Ansari

JUSTICE DEPARTMENT

Judge Sets Deadline

On McCabe Charges

A federal judge has given the
Justice Department about six
weeks to either charge former
FBI No. 2 Andrew McCabe or
drop its investigation into
whether he lied to investigators
about a media disclosure, criti-

bribes to allow a test proctor to

cheat on SAT and ACT exams,

agreed to plead guilty in connec-

tion to his role in the sprawling

college-admissions cheating

scheme, according to a plea

agreement filed federal court in

Boston.

Mr. Dvorskiy was charged in

March with racketeering conspir-

acy, accused of accepting money

from college counselor William

“Rick” Singer in exchange for

looking the other way when

Mark Riddell, another participant

in the scheme, helped students

cheat on the tests or corrected

their answers afterward. Mr. Rid-

dell and Mr. Singer have both

pleaded guilty.

A lawyer for Mr. Dvorskiy de-

clined to comment.

—Melissa Korn

GEORGIA

Federal Judge Blocks

New Abortion Law

A federal judge temporarily

blocked Georgia’s restrictive new

abortion law from taking effect

on Tuesday, following the lead of

other judges who have blocked

similar measures in other states.

The law signed in May by Re-

publican Gov. Brian Kemp bans

most abortions once a fetal

heartbeat is detected, which can

happen as early as six weeks

into a pregnancy.

—Associated Press

cizing prosecutors for leaving

the decision “in limbo.”

At a hearing on Monday in a

lawsuit seeking records related

to an internal Federal Bureau of

Investigation inquiry into Mr.

McCabe, Judge Reggie Walton

said the Justice Department was

undermining the credibility of

both the department and the

court by not making a decision,

according to a transcript of the

hearing.

Judge Walton ordered the de-

partment to make a decision by

Nov. 15.

The order comes weeks after

a federal grand jury met to con-

sider the case against Mr. Mc-

Cabe, the FBI’s former deputy di-

rector, without issuing an

indictment, indicating the case

against him was in jeopardy.

—Aruna Viswanatha

COLLEGE-ADMISSIONS CASE

Test Administrator

Will Plead Guilty

Igor Dvorskiy, a West Holly-

wood, Calif., high-school adminis-

trator who prosecutors say took

CROSSES ON THE STRIP: People pray at a Las Vegas memorial on the second anniversary of the mass shooting that killed 58 people.

JOHN LOCHER/ASSOCIATED PRESS

U.S. NEWS

Usada described as “orchestrat-

ing and facilitating prohibited

doping conduct.”

The reports also allege that

at least one of the pair’s ex-

periments—determining

whether the use of topical tes-

tosterone cream would trigger

a positive doping test—was

conducted in a laboratory at

Nike’s headquarters.

Mr. Parker was included on

several emails from Mr. Salazar

and Dr. Brown, detailing the

pair’s research to find perfor-

mance-enhancing benefits for a

stable of Olympic runners in the

Nike Oregon Project, an elite

training group based at Nike’s

Beaverton, Ore., headquarters.

In a July 2009 email ex-

change, Dr. Brown wrote to

Mr. Parker to apprise the Nike

chief on the testosterone ex-

periment, in which he relayed

testing varying amounts of

hormonal creams on Mr. Sala-

zar’s adult sons, who aren’t

professional athletes.

“We tested levels in the

commonly used screening at

least for track and field of uri-

nary T/E (testosterone/epites-

tosterone) ratios after 1 pump

(1.25 grams) and 2 pumps (2.

grams) of Androgel,” Dr.

Brown wrote, according to the

report on his sanction, refer-

encing the brand of testoster-

one cream used. “We found

that even though there was a

slight rise in T/E ratios, it was

below the level of 4 which

would trigger great concern.”

Mr. Parker responded, “Jeff,

thanks for the update on the

tests. It will be interesting to

determine the minimal

amount of topical male hor-

mone required to create a pos-

itive test. Are there other topi-

cal hormones that would

create more dramatic re-

sults...or other substances that

would accelerate the rate of

absorption into the body?”

Testosterone is a substance

banned by the World Anti-

Doping Agency, the global an-

tidoping authority whose codi-

fied rules are adopted by

Usada, the International Olym-

pic Committee, and various

other national and interna-

tional sports organizations.

According to the reports, Mr.

Salazar contends he devised

the testosterone experiment af-

ter he became concerned that

his athletes could be victims of

sabotage by competitors.

Usada argues that “this same

experiment can be used to fur-

ther the nefarious purpose of

evading doping control just as

easily as it can be used for the

claimed prophylactic purpose of

determining the likely success

of attempted sabotage.”

“At the time Alberto was

concerned that Nike runners

could be sabotaged by some-

one rubbing testosterone

cream on them,” a Nike

spokesman said Tuesday.

“Mark was shocked that this

could be the case and given

Mark’s passion for running, Dr.

Brown and Alberto made Mark

aware of their findings. Mark

Parker had no reason to be-

lieve that the test was outside

any rules as a medical doctor

was involved. Furthermore,

Mark’s understanding was that

Alberto was attempting to pre-

vent doping of his athletes.”

Mr. Parker sent an email to

employees underscoring his

support for Mr. Salazar. “I

would never condone cheating

of any kind in sport or other-

wise and I expect you wouldn’t

either,” he wrote, adding that

“we looked into these allega-

tions and did not find that he

violated any rules.”

Mr. Salazar said Monday he

was “shocked” by the ban and

planned to appeal. A recep-

tionist at Dr. Brown’s medical

office in Houston said he

wasn’t available Tuesday. He

stopped consulting for Nike in

2013, according to the reports.

Nike-backed running coach
Alberto Salazar on numerous
occasions briefed top Nike Inc.
officials, including Chief Execu-
tive Mark Parker, on his experi-
ments to manipulate the use of
performance-enhancing drugs
for track and field athletes, ac-
cording to emails referenced in
reports published by the U.S.
Anti-Doping Agency on Monday.
The reports, prepared by the
American Arbitration Associa-
tion for Usada, delivered four-
year bans for Mr. Salazar and a
Nike-sponsored doctor, Jeffrey
S. Brown. Together they show
that Mr. Parker was made
aware of Mr. Salazar and Dr.
Brown’s ongoing work in what

BYSARAGERMANO
ANDJOSHUAROBINSON

Coach Told Nike CEO of Doping Research

NY