◼ ECONOMICS Bloomberg Businessweek September 16, 201928PHOTOGRAPHS BY LYNDON FRENCH FOR BLOOMBERG BUSINESSWEEK. DATA: BUREAU OF LABOR STATISTICS, FEDERAL ELECTIONCOMMISSION(LEFT), SOCIETY OF INDIAN AUTOMOBILE MANUFACTURERS (RIGHT)THE BOTTOM LINE The U.S. added only 44,000 manufacturing
jobs in 2019 through July, while the number of factory workers fell in
the swing states of Wisconsin and Pennsylvania during that period.a sign that many factories have spare capacity
and are chasing work. It’s his own leading indica-
tor. “You can tell the health of the economy from
these phone calls,” he says.
Steel prices, which surged last year after
Trump imposed a 25% tariff on all imports, have
come down as demand has fallen and the admin-
istration has exempted imports from Canada and
Mexico. But Kuhn is still digesting the impact. In the
12 months through July, it paid $2.5 million more for
steel than the year before, or 1% of the $250 million
in sales it expects this year. The company will also
pay more than $1 million in tariffs in 2019 on about
100 different parts that it buys from outside suppli-
ers. The bill on one type of ball bearing from China
alone was $138,000, Petras says.
As costs rise, Kuhn is also being squeezed by
falling demand from an agricultural sector bat-
tered by the loss of China as an export market.
The hit to commodity prices from the sudden col-
lapse of Chinese buying came as markets were
already absorbing a glut in supply of everything
from corn to soybeans. The Trump administration
has offered aid to farmers. But a summer of esca-
lation in the China trade war has only made things
worse, Petras says: “There’s more uncertainty, not
less uncertainty.”
Kuhn isn’t alone in feeling the effects of an agri-
cultural downturn. Moline, Ill.-based John Deere,
its far bigger competitor, said in May that it would
trim production in response to sagging sales. But
the impact of the trade war on industrial America
goes far beyond companies catering to farmers.
At Cummins Inc., the Columbus, Ind.-based
diesel engine maker, executives are responding to
downturns in the U.S. and Chinese truck markets,
the world’s two largest. “We know that 12 months
from now our sales will be significantly lower than
they are now in a couple of our really important
key markets,” says Tom Linebarger, Cummins’s
chairman and chief executive officer.
That hasn’t yet translated into layoffs. But
Cummins is already cutting back production and
looking at other ways to trim spending, in part to
offset higher costs resulting from Trump’s tariffs.
The company expects to spend more than $150 mil-
lion on tariffs this year, or more than twice the
$70 million it expects to save as a result of a cut
in the corporate tax rate passed by a Republican-
controlled Congress in 2017.
Tariffs aimed at China have become a “gigantic
tax over the U.S. economy,” says Linebarger. While
Cummins is looking at sourcing parts from other
countries to reduce the bill, he dismisses the idea
pushed by Trump that U.S. companies could simplypull out of China, where Cummins both makes and
sells 40% of its engines.
If China is often viewed as the boogeyman that
stole America’s factories, the current reality is that
many U.S.-based manufacturers’ fortunes are more
linked to China, whether as a market or as a supplier,
than Trump or his hawks are prepared to admit.
Allan Klinge spent his summer driving back and
forth from his York, Pa., factory to Washington to
lobby against new tariffs on Chinese-made shipping
containers, which his family-owned company cus-
tomizes to create explosion-proof, temperature-
controlled, and other specialized transports that
sell for up to $150,000. He scored a victory in
August when the Trump administration struck
shipping containers off a list of products subject
to new tariffs, but that doesn’t mean Klinge’s chal-
lenges have gone away.
Klinge Corp. is paying tariffs on other imported
parts and has seen the price of aluminum go upManufacturing Jobsover the past year as a result of Trump’s duties.
Klinge, who came to York from Denmark as a
6-year-old when his father and grandfather bought
the business in the 1980s, is also concerned about
the faltering global economy, given that exports
account for 80% of his revenue.
“It’s really hard to think in anything beyond
90-day increments,” Klinge complained recently as
he walked a visitor through his factory and aired
his frustration at all the expansion plans he had on
hold. “The biggest thing for us is the uncertainty.”
�Shawn Donnan-9k -3k -1 k 0 1k 3k 12kChange in manufacturing jobs, January 2019 to July 2019● State won by Trump in 2016 with less than 50% of the vote
The swing state of
Wisconsin has lost more
than 4,000 positionsPennsylvania leads
in losses: It’s down
8,300 jobsTexas’ Permian shale
boom has translated
into the strongest job
gains of any state, but
momentum is flagging◼ ECONOMICS Bloomberg Businessweek September 16, 201928
PHOTOGRAPHS BY LYNDON FRENCH FOR BLOOMBERG BUSINESSWEEK. DATA: BUREAU OF LABOR STATISTICS, FEDERAL ELECTIONCOMMISSION(LEFT), SOCIETY OF INDIAN AUTOMOBILE MANUFACTURERS (RIGHT)THEBOTTOMLINE TheU.S.addedonly44,000manufacturing
jobsin 2019throughJuly,whilethenumberoffactoryworkersfellin
theswingstatesofWisconsinandPennsylvaniaduringthatperiod.a sign that many factories have sparecapacity
and are chasing work. It’s his own leadingindica-
tor. “You can tell the health of the economyfrom
these phone calls,” he says.
Steel prices, which surged last year after
Trump imposed a 25% tariff on all imports,have
come down as demand has fallen and theadmin-
istrationhasexemptedimportsfromCanadaand
Mexico.ButKuhnis stilldigestingtheimpact.Inthe
12 monthsthroughJuly,it paid$2.5millionmorefor
steelthantheyearbefore,or1%ofthe$250million
insalesit expectsthisyear.Thecompanywillalso
paymorethan$1million in tariffs in 2019onabout
100 different parts that it buys from outsidesuppli-
ers. The bill on one type of ball bearing fromChina
alone was $138,000, Petras says.
As costs rise, Kuhn is also being squeezedby
falling demand from an agricultural sectorbat-
tered by the loss of China as an exportmarket.
The hit to commodity prices from the suddencol-
lapse of Chinese buying came as marketswere
already absorbing a glut in supply of everything
from corn to soybeans. The Trump administration
has offered aid to farmers. But a summerofesca-
lation in the China trade war has only madethings
worse, Petras says: “There’s more uncertainty,not
less uncertainty.”
Kuhn isn’t alone in feeling the effects ofanagri-
cultural downturn. Moline, Ill.-based JohnDeere,
its far bigger competitor, said in May thatit would
trim production in response to sagging sales.But
the impact of the trade war on industrialAmerica
goes far beyond companies catering to farmers.
At Cummins Inc., the Columbus, Ind.-based
dieselenginemaker,executivesarerespondingto
downturnsintheU.S.andChinesetruckmarkets,
theworld’stwolargest.“Weknowthat 12 months
from now our sales will be significantly lowerthan
they are now in a couple of our really important
key markets,” says Tom Linebarger, Cummins’s
chairman and chief executive officer.
That hasn’t yet translated into layoffs. But
Cummins is already cutting back productionand
lookingatotherwaystotrimspending,inpartto
offsethighercostsresultingfromTrump’stariffs.
Thecompanyexpectstospendmorethan$150mil-
lionontariffsthisyear,ormorethantwicethe
$70million it expects to save as a resultofa cut
in the corporate tax rate passed by a Republican-
controlled Congress in 2017.
Tariffs aimed at China have become a“gigantic
tax over the U.S. economy,” says Linebarger.While
Cummins is looking at sourcing parts fromother
countries to reduce the bill, he dismissestheidea
pushed by Trump that U.S. companies couldsimplypull out of China, where Cummins both makes and
sells 40% of its engines.
If China is often viewed as the boogeyman that
stole America’s factories, the current reality is that
many U.S.-based manufacturers’ fortunes are more
linked to China, whether as a market or as a supplier,
than Trump or his hawks are prepared to admit.
Allan Klinge spent his summer driving back and
forth from his York, Pa., factory to Washington to
lobby against new tariffs on Chinese-made shipping
containers,whichhisfamily-ownedcompanycus-
tomizestocreateexplosion-proof,temperature-
controlled, and other specialized transports that
sell for up to $150,000. He scored a victory in
August when the Trump administration struck
shipping containers off a list of products subject
to new tariffs, but that doesn’t mean Klinge’s chal-
lenges have gone away.
Klinge Corp. is paying tariffs on other imported
parts and has seen the price of aluminum go upManufacturingJobsover the past year as a result of Trump’s duties.
Klinge, who came to York from Denmark as a
6-year-old when his father and grandfather bought
the business in the 1980s, is also concerned about
the faltering global economy, given that exports
account for 80% of his revenue.
“It’s really hard to think in anything beyond
90-day increments,” Klinge complained recently as
he walked a visitor through his factory and aired
his frustration at all the expansion plans he had on
hold. “The biggest thing for us is the uncertainty.”
�Shawn Donnan-9k -3k -1 k 0 1k 3k 12kChange in manufacturing jobs, January 2019 to July 2019● State won by Trump in 2016 with less than 50% of the vote
The swing state of
Wisconsin has lost more
than 4,000 positionsPennsylvanialeads
in losses:It’sdown
8,300jobsTexas’ Permian shale
boom has translated
into the strongest job
gains of any state, but
momentum is flagging