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Rethinking trade deals, reshoring and champagne

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International trade pacts, such as the often-maligned North American Free Trade Agreement (NAFTA) of 1993, tend to be quite divisive not just between companies and workers but also in the business community itself.

You've witnessed some of that in the news with regard to the Trans-Pacific Partnership Agreement, the Asia-Pacific deal that's still being negotiated. A complete list and overviews of U.S. free-trade agreements can be found here at the Office of the U.S. Trade Representative.

If you work in one of those industries where the elimination of tariffs means your products are going to compete with low-cost versions from another country, your apprehensions for the effects on your business and workforce are not unwarranted.

But check out this perspective from the National Association of Manufacturers: According to its Dec. 30 Shopfloor blog post, after 20 years of NAFTA, the trade deal likely positioned U.S. manufacturing well by nearly doubling U.S. exports. And the largest growth in manufactured exports was to Canada and Mexico.

It also cites a Wilson Center blog where estimates place the U.S. content at 40 percent for Made-in-Mexico products. So, even if a product is assembled or mostly manufactured elsewhere, it still generated work for U.S. manufacturers. By the way, ready yourself for the perennial iPhone-assembly analogy.

So can deals such as the recently signed South Korean trade pact, or the proposed Asia-Pacific pact, be good for the long-term prosperity of U.S. companies? Possibly, but that might depend on what you're building in those factories. And, if trade deals change your markets, can you adjust to those changes?

What we have seen more of recently is manufacturing reshoring.

We've written several stories about reshoring, including, in Lancaster County, farm-equipment maker Pequea Machine and building-products manufacturer Armstrong World Industries Inc.

If you're wondering how significant reshoring is, well, online trade publication Manufacturing.net named it its second-largest story of 2013. The caveat to that honor: Although companies are rethinking the off-shoring trend of past decades, some barriers prevent them from bringing work back to the U.S., according to Manufacturing.net.

Will that change in 2014? Your guess is as good as mine; it's only 10 days into the New Year!

But some indications are good, such as U.S. Census data showing increased spending on construction projects in 2013, and this 2014 forecast from the Manufacturing Alliance for Productivity and Innovation that projects 3.1 percent growth, up from 2013's 2.1 percent.

Jim T. Ryan

Jim T. Ryan

Jim T. Ryan covers Cumberland County, manufacturing, distribution, transportation and logistics. Have a tip or question for him? Email him at jimr@cpbj.com. Follow him on Twitter, @JimTRyanCPBJ.

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