E C O N O M I C S
4
Bloomberg Businessweek Month 00, 201926Edited by
Cristina Lindblad DATA:U.S.FEDERALRESERVE,QUARTERLYPERCENTAGECHANGESAREAT
ANNUALRATESThe moment usually comes during Greg Petras’s
commute through the rolling hills and cornfields
of southern Wisconsin. Somewhere between his
home near Madison and the factory he runs on the
edge of the small town of Brodhead, the news will
turn to the trade war, and President Trump will
again claim that China is bearing the cost of his tar-
iffs. That’s when Petras loses it.
“It’s just an outright lie, and he knows it,” says
Petras, president of Kuhn North America Inc.,
which employs some 600 people at its farm-
equipment factory in Wisconsin. For Kuhn,
Trump’s trade war has produced a toxic mix of ris-
ing costs and falling revenue. “You’re slamming
your fist on the steering wheel and saying, ‘Why
would you tell people this?’ ”
About 250 Kuhn employees spent Labor Day
caught in a two-week furlough, and they’re facing
another one in early October. A shrinking orderbook means the company is cutting costs and
slashing production as Petras and his managers
peer out at a U.S. economy that looks far bleaker
from the swing-state heartland than it does from
the White House or Wall Street.
Kuhn’s circus-themed summer picnic survived,
but weekend shifts are gone. A plant that just four
years ago was humming along to a record $400 mil-
lion in sales together with a sister plant in Kansas is
running at 50% capacity. The five-year-old, $11 mil-
lion paint shop that coats manure spreaders and
livestock feeders in a distinctive “Kuhn Red” is at
39% capacity. Plans for a $4 million research and
development building are on hold. “We’ll do it
someday,” Petras says. “We just need things to be
going in a better direction.”
And there’s the rub. After two boom years
the picture has changed for America’s factories.
Battered by slowing export markets, higher input
costs because of tariffs, a stronger dollar, and the
damper that rising uncertainty has put on capital
expenditures, U.S. manufacturers are making less
than they did a year ago. A widely watched index
of manufacturing activity compiled by the Institute
for Supply Management showed a contraction in
August—the first since 2016. The Sept. 3 release● Trump capitalized on
weakness in manufacturing
to win the presidency. Now it
could cost him a second termo
e Recess
T E C O N O M I C S
26
Edited by
Cristina Lindblad DATA:U.S.FEDERALRESERVE,QUARTERLYPERCENTAGECHANGESAREATANNUALRATESThemomentusuallycomesduringGregPetras’s
commutethroughtherollinghillsandcornfields
ofsouthernWisconsin.Somewherebetweenhis
homenearMadisonandthefactoryherunsonthe
edgeofthesmalltownofBrodhead,thenewswill
turntothetradewar,andPresidentTrumpwill
againclaimthatChinais bearingthecostofhistar-
iffs.That’swhenPetraslosesit.
“It’sjustanoutrightlie,andheknowsit,”says
Petras,presidentofKuhnNorthAmericaInc.,
whichemploys some 600 peopleat itsfarm-
equipment factory in Wisconsin. For Kuhn,
Trump’stradewarhasproduceda toxicmixofris-
ingcostsandfallingrevenue.“You’reslamming
yourfistonthesteeringwheelandsaying,‘Why
wouldyoutellpeoplethis?’”
About 250 KuhnemployeesspentLaborDay
caughtina two-weekfurlough,andthey’refacing
anotheroneinearlyOctober.A shrinkingorderbookmeansthecompanyiscuttingcostsand
slashingproductionasPetrasandhismanagers
peeroutata U.S.economythatlooksfarbleaker
fromtheswing-stateheartlandthanit doesfrom
theWhiteHouseorWallStreet.
Kuhn’scircus-themedsummerpicnicsurvived,
butweekendshiftsaregone.A plantthatjustfour
yearsagowashummingalongtoa record$400mil-
lioninsalestogetherwitha sisterplantinKansasis
runningat50%capacity.Thefive-year-old,$11mil-
lionpaintshopthatcoatsmanurespreadersand
livestockfeedersina distinctive“KuhnRed”is at
39%capacity.Plansfora $4millionresearchand
developmentbuildingareonhold.“We’lldoit
someday,”Petrassays.“Wejustneedthingstobe
goingina betterdirection.”
Andthere’stherub.Aftertwoboomyears
thepicturehaschangedforAmerica’sfactories.
Batteredbyslowingexportmarkets,higherinput
costsbecauseoftariffs,a strongerdollar,andthe
damperthatrisinguncertaintyhasputoncapital
expenditures,U.S.manufacturersaremakingless
thantheydida yearago.A widelywatchedindex
ofmanufacturingactivitycompiledbytheInstitute
forSupplyManagementshoweda contractionin
August—thefirstsince2016.TheSept.3 release● Trump capitalized on
weakness in manufacturing
to win the presidency. Now it
could cost him a second termo
e Recess
T