Hung out to dry twice, Tennessee city stumped by Trump's washer tariffs

Hankook Tire & Technology

29/01/2018 06:00

By David Lawder 
    CLARKSVILLE, Tenn., Jan 29 (Reuters) - When President Donald 
Trump's imposed steep tariffs on imported washing machines last 
week it was a "Not Again" moment for officials in this north 
Tennessee city that has lost jobs to an international trade 
dispute before. 
    The move threatens to stunt the launch of a new LG 
Electronics  066570.KS  washing machine factory under 
construction in Clarksville, just four years after the 
U.S.-China trade fight over solar panels scuttled a nearby $1.2 
billion Hemlock Semiconductor polysilicon plant. 
    "It's like déjà vu for Clarksville, to say 'how can this be 
happening twice to us,'" the city's mayor, Kim McMillan, told 
Reuters. 
    She said that the city government was scrambling to help the 
South Korean manufacturer accelerate its production launch by 
ensuring that utilities and infrastructure are quickly put in 
place at the factory site and expediting approvals. 
    "We've got to do whatever we can to make sure that LG is 
able to still open their facility and hire people," McMillan 
added. "We don't want to see a repeat of what happened with 
Hemlock where they can't open the plant." 
    At stake is an appliance manufacturing complex that could 
eventually employ thousands of workers and which the state of 
Tennessee and the local community supported with some $23 
million in grants. The 310-acre (1.25 square kilometer) site an 
hour north of Nashville has room for three additional buildings 
identical to the plant's $250 million, 600-job first phase. 
    Trump's decision to impose 20 percent to 50 percent tariffs 
on washer imports and parts has local officials asking what his 
"America First" stands for: supporting all U.S. manufacturing 
jobs or just favoring traditional American brands over foreign 
rivals. Labor statistics show that foreign companies have been 
the source of the majority of new manufacturing jobs since the 
2009 recession.  urn:newsml:reuters.com:*:nL3N1JO47Q 
    LG told U.S. retailers on Wednesday it would raise prices in 
response to the tariffs.  urn:newsml:reuters.com:*:nL4N1PJ5HN That could dent its market 
share, reducing initial output and employment, said company 
spokesman John Taylor. 
    "If you lose floor space at retail, it can take years to get 
it back," Taylor said.  
    Construction crews were working 24 hours a day on the site 
last week, still only a partial steel skeleton, after LG said 
earlier this month it would bring forward its production launch 
a second time again to the fourth quarter of 2018. 
    LG's rival Samsung Electronics  005930.KS , whose imported 
washers also will be hit by the tariffs, has more breathing 
room. It has already started production at a $380-million washer 
plant in Newberry, South Carolina, in a former Caterpillar Inc 
 CAT.N  generator set factory. 
    The washer tariffs are the culmination of a decade-long 
campaign by Whirlpool Inc  WHR.N  against what it saw as unfair 
pricing and "country hopping" by LG and Samsung to avoid 
anti-dumping duties.  urn:newsml:reuters.com:*:nL2N1M91BG 
     
    HEMLOCK FLASHBACKS 
    The tariffs on washers and solar panels triggered memories 
of a 2014 U.S.-China trade spat over solar panels, which made 
Hemlock abandon its just-completed Clarksville plant at a loss 
of 500 initial jobs and dashing hopes for more to come. 
     Hemlock's main market for polysilicon, a core ingredient in 
solar cells, dried up after Beijing responded to U.S. 
anti-dumping duties on Chinese solar panels with duties on U.S. 
polysilicon. 
    While beyond its control, the Hemlock pullout has affected 
the region's efforts to attract other firms, said Jim Durrett, 
mayor of Montgomery County, which has its seat in Clarksville.  
    The closure "kind of gave our community a black eye from a 
recruitment standpoint," Durrett said. 
    With the help of competitive state and local grants and tax 
incentives, low living costs and a steady supply of well-trained 
workers retiring from a nearby U.S. Army base, this city of 
about 150,000 managed to regain some traction. 
    A year after Hemlock left and razed its plant to protect its 
technology, Google  GOOGL.O  acquired it for a data center, 
though the tech giant has only committed to 70 jobs and has yet 
to detail its plans. 
    Hankook Tire  161390.KS , whose decision to build its first 
U.S. factory in Clarksville pre-dated the Hemlock closure, 
opened the 1,000-worker plant last year. 
    Landing the LG washer plant was seen as marking a full jobs 
recovery from the Hemlock debacle, said Michael Evans, the 
county's economic development director. 
     
    FOREIGN COMPANIES, LOCAL JOBS 
    With local industrial parks filled with foreign names that 
have arrived with the rise of the mid-South's manufacturing 
base, local officials and residents interviewed by Reuters saw 
no distinction between foreign-owned and American-owned firms.   
    "Once they're here and once they've embarked on the 
investment, those are local jobs. LG's a continuation of that," 
said Jeff Robinson, owner of the Blackhorse Pub and Brewery in 
Clarksville. 
    And in a region where support for Trump runs deep, they are  
wondering why he would use tariffs to favor Whirlpool and GE 
Appliances, now owned by China's Haier Electronics Group 
 1165.HK , over a competitor moving production to Tennessee. 
    "I think it goes against what (Trump) has talked about doing 
and that's bringing jobs back to America," said Durrett, the 
county mayor and a Republican.    
 
 (Reporting by David Lawder; Editing by Tomasz Janowski) 
 ((David.Lawder@tr.com; +1 202 354 5854; Reuters Messaging: 
david.lawder.thomsonreuters.com@reuters.net)) 
 
Keywords: USA TRADE/TARIFFS JOBS