China's trade policy puts squeeze on companies in U.S.

ROME, N.Y. — As lawmakers squabble over how to create jobs and what to do about China's undervalued currency, Rome is burning.

Rome, N.Y., that is.

Here, a legendary copper rolling mill's fight for survival underscores what's at stake in the battle over China policy and a free-trade philosophy championed by both political parties.

A weathered copper bell made by Paul Revere sits in front of the offices of Revere Copper Products, a company whose origins date back to 1801. Paul Revere supplied the copper sheets used to protect the USS Constitution.

Today, Revere employs about 350 workers, who for three shifts a day in a cavernous plant make architectural copper products and huge rolls of copper purchased by other manufacturers for a wide range of electrical and industrial uses.

Chairman Brian O'Shaughnessy bought the company in a leveraged buyout in 1989, and at the time it had 800 workers in two plants.

Shifts in global-trading patterns and soaring energy costs forced him to close a sister plant in New Bedford, Mass., in 2007. Today, he watches incredulously as lawmakers seek to threaten China with "tough" legislation that stands little chance of passage in Congress.

Meanwhile, his customers keep moving abroad, primarily to China.

"Since the year 2000, we have seen more than 30 percent of the facilities we ship product to in the United States shut down, or move offshore. Most of them initially moved to Mexico, but they have since moved to China," he said.

"When that happens, we have fewer manufacturing companies to ship product to in this country, so the competition for that smaller industrial base that we ship to is pretty fierce."

By fierce, he means costs have to come down, way down. And they have to stay there. The plant demands savings from its suppliers, ranging from accountants to providers of pallets.

At the plant, wages have been flat for two years, and employees contribute more to their own health care.

"This is typical of the United States. This is typical of Rochester and Michigan and Ohio, and even North and South Carolina, where industry used to move to. They've faced the same pressures," O'Shaughnessy said. "And so those pressures mean that real wages have not increased in this country in 10 years, and this is directly related back to international trade."

For the handful of remaining U.S. copper mills, China's currency and related trade policies are having a cascading effect across the supply chain.

A decade ago, he said, U.S. copper mills supplied domestic makers of lock sets for doors. That's gone completely overseas. Now the fear is China's push into the automotive sector may hit the same way.

"We're not concerned about China sending in components and subassemblies into the United States. We're concerned that as they ship cars in, we will lose that transportation market," O'Shaughnessy said.

Republicans and Democrats, he said, both fail to recognize that global competition is no longer between companies. Rather, U.S. companies compete against countries that align their trade policies to capture markets.

The free-trade debate gets bogged down in political labels, which O'Shaughnessy thinks misses the broader point.

"So you have got 'socialists' fighting the 'capitalists,' and neither side realizes the mercantilists are kicking their ass. Both of them, it doesn't matter whether you are on this side or that side, if you are dealing with a mercantilist society, and that's what we're fighting in China," he said.