A New Jersey-based company (that wishes to remain anonymous) recently told me why GSP’s expiration is particularly harmful to their business. The company provides goods and services to hundreds of municipal water and sewer boards around the country, including those in New York, Los Angeles, Houston, and Miami. Since its clients are located around the country, so are its 250 employees, who are spread out among eight states. After New Jersey, its operations in Alabama and Texas employ the most workers.
The company’s imports from India face average tariffs of 6.0% without GSP. The savings are significant: the company estimates that it will need to pay an extra $750,000 in 2011 if Congress doesn’t renew GSP.
We’ve mentioned before that companies often face a difficult choice: raise prices or absorb the costs. For some companies, the options are even worse. In this case, the contracts with municipal boards are locked in through mid-2012, so raising prices is not an option. Like most small- or mid-sized companies, it also can’t afford to pay those tariffs and continue operations “as is.” Instead, if Congress fails to renew GSP, the company will be forced to take other steps to reduce costs, but no one likes to discuss the actions necessary to save that much money.
For now, the company is praying that Congress will act quickly to renew GSP. At some point in the near future, though, the company will need to start making some very tough decisions.