New data show that imports from China increased 62x more than GSP imports in the first half of 2021. Triad Magnetics in Perris, California helps explain the trend: GSP expiration has already cost the company $200,000 in extra tariffs, leading to reduced orders from the Philippines and increased orders from China.
Triad Magnetics manufactures transformers and inductors for American producers of medical equipment, the power grid, renewable energy and transportation systems. It employs 30 workers in California doing design, manufacturing, and distribution. In 2010, Triad Magnetics moved manufacturing of its main product line – about $7 million/year – from China to the Philippines due to GSP benefits. Without GSP, the Philippines is not as competitive.
Triad Magnetics’ history of creating jobs, raising environmental standards, and creating economic opportunities for women is a textbook example of what GSP benefits are meant to promote. As shared by company president Bill Dull:
“When we opened our Philippine factory in 2010 there was a line around the block with applicants. Many Filipinos are forced to work overseas as they can’t find work at home, so moving 1,500 jobs out of China to the Philippines was a very welcome move.
Furthermore, we treat our employees well. We offer transportation, health care, PTO and recreational benefits. The majority of our workers as well as line-leaders, supervisors and management team are women. They are paid equally to men doing the same jobs and are afforded equal advancement opportunities.
Our Philippine factory is ISO14000 which is a family of standards related to environmental management that exists to help organizations (a) minimize how their operations (processes, etc.) negatively affect the environment (i.e. cause adverse changes to air, water, or land); (b) comply with applicable laws, regulations, and other environmentally oriented requirements; and (c) continually improve in the above.“
Perhaps ironically, it is discussions about how to add new provisions on these topics (e.g., environment) that are holding up renewal and undermining this GSP success story.
And expiration impacts are not limited to the Philippines. Triad Magnetics has been forced to delay new hires and investments in California. Its president expressed the feelings of many:
“Working through COVID in a “critical Infrastructure” market has been challenging. The continued delays reinstating GSP simply add to the challenges, stress and frustration that we are already dealing with. Frankly as an ordinary citizen trying to run a business, it’s very hard to understand why it’s taking so long to reinstate GSP knowing that it has bi-partisan support and the last time it was reinstated Congress passed the legislation something like 98% yes to 2% no.” (emphasis added)
GSP expiration is a clear lose-lose outcome (except for some producers in China). Congress must pass a GSP renewal bill ensures companies like Triad Magnetics can create jobs and opportunity in Philippines and the United States. And it must do so as soon as possible to limit the (already significant) damage.
Note: this example came from a new Coalition survey on expiration impacts. It was published with permission. GSP importers are encouraged to take the survey here – no company-specific details will be published without such permission.