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Ashton Udall

  • The game of taking products to market is rapidly changing for the better. Companies, organizations, and individuals, are reaching out to partners across the world to develop, manufacture, and market their products. This blog is about building your products, building your business, and building the Global Economy.

Global Sourcing Specialists

  • Ashton Udall is a partner with the firm Global Sourcing Specialists (GSS). GSS is a product development and sourcing (manufacturing) firm dedicated to helping businesses, inventors, and startups, tap overseas resources to succeed in the Global Economy.

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April 16, 2009

Sourcing Overseas Manufacturers to Save US jobs. Huh?

It's not an oxymoron.  As a great article in Forbes.com, which originated from a post by Dan Harris at Chinalawblog, explains, it's the way Douglas Smith, founder and owner of SmithCNC-USA, is working to save the US manufacturing sector.  SmithCNC-USA is a North Lawrence, Ohio firm that helps midwestern manufacturers get components and raw materials abroad.  Companies starring the neccessity of self-preservation in the face are finding that the path to staying alive is by sourcing and working with factories in other countries to create a business structured for competition in the global economy. 

As I noted in a previous blog post, Made in the USA isn't Dead, Just Different, companies are not simply shifting everything away, but instead adopting a more global supply chain, wherein they retain higher value-added tasks and jobs here, and contract out low skill, low-value work to more cost competitive sources.  Other companies are outsourcing tasks for cost purposes, but retaining local production for quick response purposes to hedge against difficulties in forecasting demand. 

Like SmithCNC-USA, our clients often grow the design, engineering, sales & marketing, and administrative departments in their businesses and add jobs to these areas, by outsourcing operational duties like sourcing, some engineering tasks, manufacturing, packaging, and logistics to companies like us and our network of suppliers. 

The Forbes.com article describes Smith and some of the results his clients have enjoyed:

The founder and sole owner of SmithCNC-USA is Douglas Smith, a chatty 50-year-old ex-machinist with both cost-cutting and patriotic streaks. He says he's doing his part to preserve the shrinking U.S. manufacturing sector, which since 2000 has shed 4 million jobs, or 27% of its workforce. (That compares with a 2.5% decline and a 2.9% increase, respectively, for the freshly gutted construction and financial industries.)

Smith's customers are U.S. manufacturers doing small and medium-size production runs, either for their own end products or as contract suppliers to other U.S. manufacturing firms. If they are lucky, they eke out gross profit margins between 20% and 30%. That is, after paying for labor and raw materials, they have at best 30 cents of the revenue dollar remaining to cover overhead and depreciation on their machinery. Smith says that by subcontracting some of the work abroad--for example, the intake manifold in a car's air system--these contractors can add 20 points to that gross margin, and that's after paying Smith...


These companies, who might have otherwise stagnated or folded, have been able to expand and hire in existing and new areas because of their overseas manufacturing partners. 

The impacts of global supply chains are not always rosy.  The dynamics are often more complex, and involve both positive and negative consequences, with an inordinate focus by pundits on the latter.  US companies surviving, and often flourishing, in the face of competition inevitably coming from all parts of the world, is positive.

February 19, 2009

Made in the USA isn't Dead, Just Different

Like me, you may have experienced surprise when you've purchased a common consumer product, found the Country of Origin label and read "Made in the USA"?  "Wow--look at that, made in the USA!" 

A great article put our by the AP on MSNBC.com, Made in the U.S.A. isn't dead, just different, helps to put the shifts in the U.S. manufacturing sector into perspective.  The common perception that virtually nothing is Made in the U.S.A anymore is inaccurate.  As the article points out, the question revolves more around what is no longer made in the U.S., and what is: 

It may seem like the country that used to make everything is on the brink of making nothing.

In January, 207,000 U.S. manufacturing jobs vanished in the largest one-month drop since October 1982. Factory activity is hovering at a 28-year low. Even before the recession, plants were hemorrhaging work to foreign competitors with cheap labor. And some companies were moving production overseas.

But manufacturing in the United States isn't dead or even dying. It's moving upscale, following the biggest profits, and becoming more efficient, just like Henry Ford did when he created the assembly line to make the Model T.

The U.S. by far remains the world's leading manufacturer by value of goods produced. It hit a record $1.6 trillion in 2007 - nearly double the $811 billion in 1987. For every $1 of value produced in China's factories, America generates $2.50.


Leading manufacturer?  Of what?USA factory worker

The U.S. sold more than $200 billion worth of aircraft, missiles and space-related equipment in 2007. And $80 billion worth of autos and auto parts. Deere & Co., best known for its bright green and yellow tractors, sold $16.5 billion worth of farming equipment last year, much of it to the rest of the world. Then there's energy products like gas turbines for power plants made by General Electric, computer chips from Intel and fighter jets from Lockheed Martin. Household names like GE, General Motors, IBM, Boeing, Hewlett-Packard are among the largest manufacturers by revenue.


The article illuminates an issue that is too often simplified and/or approached from a perspective that highlights our shedding of low-skilled manufacturing jobs and inefficient industries.  This is no doubt challenging to many. 

At the same time, America is advancing up the value chain and doing more with less.   US manufacturing is not only doing more with less, but also making supply chains more responsive and efficient.  Another advantage of US manufacturing which companies are becoming aware of is its utility in the reduction of risk.  The rise in lean and JIT manufacturing in the US allows companies to become more responsive to short-term demand fluctuations to hedge inventory risk (Inventory is a bad bad word right now), and speed go-to-market product cycles. 

We're losing.  We're gaining.  We're changing. 

December 05, 2008

China's Manufacturing in 2008: A Rollercoaster that Shows No Signs of Stopping?

Roller_coaster4

Looking back over the developments of 2008 in China's manufacturing base, they are quite astounding.  The signs of change began before 2008--probably the most notable being the Central Govt.'s elimination of VAT tax rebates in the summer of '07.  Consider this the long, first ascent of the rollercoaster.   Hope you have your seatbelt on.

We began the '08 with rapidly increasing costs across the board in most sectors: new labor laws, repealed VAT rebates in effect, increasing commodity prices, unprecedented growth in shipping, rising energy and material prices--a slew of factors raising the cost, and the perception of cost, of manufacturing products in China.  It is estimated that 10,000+ factories in southern China alone shut down due to an inability to compete amidst the changing conditions.  There were powerful winter storms blocking tens of millions of workers timely return home during the Chinese New Year Holiday.  Many workers returned late, and many more never returned at all.  Also, the mounting preparations and excitement over the Olympics also caused a lot of frenzy in manufacturing and logistics circles.  This affected the Shanghai and Beijing regions far more than the southern regions.

Now, with the mounting slump in demand becoming apparent in the second half of 2008, material and commodity costs have dropped, VAT rebates have been reinstated for a number of product categories, and capacity in shipping has quickly opened up.

I recently heard the claim (haven't been able to verify yet) that Dongguan, a region in Southern China long known as a manufacturing hub of the area, has had it's population (previously ~12 million people) cut in half over the last year.  Comprised largely of migrant workers from regions further west in China, approximately 6 million of these workers have returned home and not come back.  If the claim is true, which I believe there is at least a lot of truth to it, it's quite remarkable!  I think it's hard for Westerners to fully grasp the kind of challenges a shift like this can present to local governments, economies, etc.  Imagine if half the population of Los Angeles, New York, London, or Paris, simply up and left in a matter of a year! 

The challenge of retaining skilled workers in China is well known, but some are now questioning whether retaining unskilled workers in some key manufacturing areas like Guangdong, is going to heat up.

World demand for Chinese exports drop--and many of the short-term effects we've seen aren't hard to predict.  See my post here.  But they will no doubt have longer term effects--and there is a lot of talk, but no consensus, on what exactly they might be.  Elliot Ng, of CNReviews.com, has written a good summation of the challenges China's economy now faces amidst the world financial crises.  In the article, Elliot's Hong Kong Uncle summed up things rather concisely:

Uncle’s simple but powerful framework:  China is supported by a three-legged stool, but two legs are now broken

China’s economic growth is supported by three primary legs:

export-led growth
real property growth
government spending


The first and second legs are now broken.  Ng goes on to write:

Nouriel Roubini, the NYU economics professor that predicted many elements of this global meltdown, writes (at RGEMonitor, reprinted with commentary at JapanFocus) that there is strong evidence that China is facing a hard landing.  Roubini points out that a hard landing actually still means a 5-6% growth rate.  9-10% growth is needed to absorb 24 mm new entrants into the labor market, including 12-14 mm poor rural farmers.  A 5-6% growth rate means a significant risk to social stability and continued political control, so its clear that Chinese leaders are in a tough place.


China's growth model necessitated their domestic consumer market pick up the  burden of the export sector--basically meaning that the hope was Chinese manufacturers would be serving their own consumers as much or more than foreigners.  But for a number of reasons (maintaining an undervalued currency, very high savings rates, and maybe just not enough time), China hasn't reached this point.

Now, the government is forced to make up for the lack in spending through economic stimulus packages.  Whether this will be enough, no one knows.  Many bloggers and economists are speculating on the impacts of all of this on the next year or two: possible increased social unrest, a tougher stance by Beijing on social unrest, currency revaluation, export subsidies, and the list goes on.

I prefer to error on the side of "no one really has any clue what's going to happen", and to not make hasty judgments.  Some are predicting China will be just fine this year.  One thing is certain, if you're manufacturing in China, change is in the air.  I know--that's not rocket science.  The rollercoaster ride may have just begun, but this doesn't mean you can't find opportunities to thrive in this environment.  If you have time to tend to more than your challenges here, pay attention to your sources, pricing, shipping, and govt. policy in China.   New prices, better sources, more attention, faster shipping...  All worth looking into.


December 03, 2008

Treasury Secretary Paulson, the U.S. and China, Going Green One of the New, Few Safe Bets?

Sec paulson talking Yesterday morning, I watched U.S. Treasury Secretary Henry Paulson give a short speech and field some unforgiving questions from the audience before heading straight to the airport and on to China to continue the U.S.- China Strategic Economic Dialogue.  His prepared remarks were more or less standard with Washington's public position on the current challenges and issues facing the U.S. and China today.  I was particularly interested by the amount of attention Sec. Paulson devoted to environmental issues and initiatives.  While Sec. Paulson does have a personal interest in the environment and conservation, and perhaps he would rather highlight the ecological environment compared to the financial environment at this time, I believe it's an interesting sign of the times, that a Secretary of the Treasury is emphasizing environmental topics.   As you can see from the picture, he looks pretty happy about it.

As Sec. Paulson pointed out in his speech, with economic prosperity, comes environmental degradation--unless we do something about it.  The financial crises, trade and currency, will no doubt be the main topics of attention during Sec. Paulson's visit to China, but an action plan for air quality, and discussion of launching an initiative to establish eco-city partnerships among their cities, will also be on the agenda.

At a high level, with respect to the environment, China gets it.  With the new U.S. administration coming in, it seems we may be "getting it" real fast. 

In both countries, on a local level, it may be beginning to trickle in:

Greensburg yes
Greensburg, KS: This midwest, U.S. town, was leveled by an F5 tornado in early 2007.  As you can see from the picture, the town was destroyed.  Today?  The town has implemented a green rebuilding project that mandates all city buildings larger than 4,000 sq. ft. to be built to LEED-Platinum level and have an energy performance level at least 42% better than current building codes.  Talk about seizing an opportunity. 

Dongtan-2
Dongtan, China: Many have heard of China's work in building one of, if not the most, pioneering green city in the world, from scratch.  The first of four "eco-cities" slated for construction by the Chinese govt., the city will open in 2010 and offer residents zero-greenhouse-emission transit and complete self-sufficiency in water and energy. 

These are two small examples of local town/city implementions reflecting higher-level goals.  But as Sec. Paulson stated, the importance of the U.S.- China economic relationship, if not already, will likely become the most consequential for the world economy very shortly, and it's implications will reach every corner of the world.

There is a lot of turmoil out there and a lot of opinions on short-term and long-term developments.  But going green has gone from fringe issue, to popular lofty goal and topic for government, media and corporations, to perhaps one of the safest long term bets at this point in two of the most important countries in the world.


November 18, 2008

As Demand Declines, So do Prices

060227comet It's simple economics really...as demand drops worldwide, so too, do prices for a number of materials, products, and trade dependent services.  Purchasing.com reports that steel beam prices, polyuerethane, and ABS, materials used in large volumes in the slowing construction and automotive industries, are now falling in price. 

Shipping rates have also decreased quite a bit in the last few months.  Supply Chain Digest cites some reports claiming that 20' container rates from Asia to Europe have plunged from $2800 to just $700.  From Asia to the US, rates have fallen to $1500 per container.  Interestingly, the London-based consulting firm, Drewry Shipping Consultants Ltd., expects container volumes from Asia to the US to shrink by approximately 5% in 2009, after years in double-digit annual gains.  What seems to be a modest projected decrease in container volumes is actually quite a shift for the shipping industry, which had been ramping up capacity on expectations that double-digit volume increases would continue into the future.

It's unclear how long price reductions will hold.  Many producers are now cutting supply, but cuts have not kept pace with the fall in demand.  When equilibrium is reached, the decrease in prices will likely hold and then begin to pick up again as the global economy begins to emerge from the downturn. 

Thus, falling prices can be a short-term bright spot in an otherwise doom-and-gloomy economic time.  There are worries that the short-term challenges could inflict long-term damage on some industries.  Steve Dickinson, of ChinaLawBlog, posted an informative piece on the risks the credit freeze poses to the ship building industry.  In tough economic times, waves of consolidation in any industry are not uncommon, as weaker players either go under or are acquired by larger companies.  Just look at what happened in the US finance industry this year.  A good friend of mine, who is a financial advisor at Morgan Stanley, watched two of his major competitors disappear within a matter of weeks. 

The reduction in prices, as well as the economic challenges facing us, will likely not hold.  But, for the time being, enjoy the bright spots and negotiate appropriately. 

April 04, 2008

The Domestic Market in China: Are you an NBA Pro or an Average Joe? Part II

Chinabaggy So what if you're not the NBA in the Chinese market?  (Not that NBA jerseys are flying off the shelves in China anyways)

In southern China earlier this week, I had several conversations with locals about the domestic consumer market.  I also thought that several readers of ChinaLawBlog's post on this topic made solid comments worth reading.  The general consensus seemed to be that China's domestic consumer market is still nascent. 

Before we look to NBA viewership stats and firms selling services through marketing reports, a strong weathervane of the domestic market might indeed be Chinese companies themselves.

A logical key indicator, to me, in determining whether China's domestic markets are indeed on the rise, would be that their domestic companies and manufacturers would be more eager to sell locally rather than export to foreign markets.  This doesn't seem to be the case for a few very fundamental reasons.

  • Often, receiving payment from Chinese buyers is much riskier than foreign buyers. Many Chinese companies prefer to sell to foreign buyers because they have a strong likelihood of payment.  They may have to work on tough terms, but in the end, cash is king.  Late cash and/or some cash, is better than no cash.
  • Quality standards.  The overall purchasing power of Chinese consumers remains comparatively low to developed countries.  To sell into this market entails manufacturing poorer quality product to be profitable.  A well-run factory will not use the same production line to create product for export markets as well as domestic markets.  You will see a great many companies that make product for both markets.  But quality from these firms is to be watched.  It's unlikely that you'll see an export-oriented firm falling all over itself to lower quality and sell into the Chinese market.  I have yet to run into an export-oriented manufacturer that will send all of the quality control staff home at lunch on Thursdays and Fridays so they can get some lower quality product out into the local market.

For these two basic reasons (not including serious challenges of distribution), in my humble opinion, the Chinese market has not arrived and will certainly take quite some time to mature.  Yes, there is an upper class in coastal cities that is growing in affluence.  This, however, is still very small.

A concise and well-written article, Reality Check, by James Fallows (h/t Chinahearsay) at The Atlantic, brings great clarity to the situation.  His anecdotal observations create an image that, to me, is far closer to reality, than so many of the China-sized hype articles out there.  I highly recommend the read.  I've personally emailed this article to friends because it's important (to me) that America has an accurate perspective of China. 

The Domestic Market in China: Are you an NBA Pro or an Average Joe? Part I

Is the Chinese domestic market arriving?  That depends...are you the National Basketball Association?  Or, are you another reader of China-sized hype?

ChinaLawBlog recently covered an email/article by Shaun Rein of the China Market Research Group out of Shanghai.  The email discussed many points covered in a Business Week article entitled China's Rising Retail Market: Chinese youth intend to spend "considerably more" in 2008 than they did in 2007. Multinationals had better start thinking young,"

The email summary began with:

While retail sales are plummeting in the US, sales in China are continuing to boom, driven by optimistic shoppers largely shielded from the global economic malaise. China as a market to sell into rather than a place to source cheap products from has become a major engine for growth for even the largest companies worldwide.

In another recent report by Booz, Allen, Hamilton and the AmCham Shanghai (h/t AllRoads), the #1 reason US companies would stay in China despite rising costs is access to the domestic market.

What gets these companies salivating over the consumer market in China?  Consider the example of a regular season NBA basketball game.

The most televised TV sports event, a regular season NBA basketball game between two average NBA teams, which happened to have two native Chinese basketball players (Yao Ming of the Houston Rockets and Milwaukee's Yi Jianlian), drew an estimated 250 million viewers.  This figure that puts any SuperBowl to shame.  That's right, a regular season NBA basketball game trumps the Superbowl because of two Chinese guys.  That is significant.  In advertising, three digit numbers in front of the word "million" causes excitement.

If you're the NBA, you're happy.  If you're selling to a very small group of affluent Chinese kids in a handful of coastal cities, you're interested in reading the China Market Research Group's report.

But, unfortunately, NBA + 250 million viewers, does not equal 1.3 billion customers.  Not even by a long shot...

Part II is coming...

March 05, 2008

Is the World Flat? Or is it Spiky?

Fast Company's latest issue covered a great perspective on the "world is flat" idea, discussed by Richard Florida (originator and advocate of the "Creative Class"), in his book Who's Your City?.  The general premise?

The world is not flat, a notion widely popularized by Thomas Friedman, but rather spiky.  Florida proposes that the geographic regions of the world at large, can be classified into four general types or clusters, based on population and socioeconomic circumstances.  What are the four clusters?

Four kinds of places make up the landscape of our spiky world: first, the tallest spikes that attract global talent, generate knowledge, and produce the lion's share of global innovation. Second are the emerging peaks that use established ideas, often imported, to produce goods and services. Some of these cities, such as Dublin and Seoul, are transitioning into places that generate innovation, but most, from Guadalajara to Shanghai, function primarily as the manufacturing and service centers of the 21st-century global economy. The two remaining types of places are being left behind: third-world megacities distinguished by large-scale "global slums," with high levels of social and political unrest and little meaningful economic activity; and the huge valleys of the spiky world, rural areas with little concentration of population or economic activity.

A few interesting, additional observations made by Florida are that 1) the world is much more "flat" and connected for those in the "spikes", or areas of innovation and concentrated talent.  Thus, those that inhabit and frequently travel between cities like London, Paris, Shanghai, New York, San Francisco, Los Angeles, Chicago, Tokyo, Singapore, etc. are much more likely to be connected in the way that Thomas Friedman alludes to.  2) The divide between these areas and the bottom two areas, the developing world and rural areas, is growing dramatically. 

This spikey/cluster concept was first introduced to me a few years ago in a talk by a futurist at the Commonwealth Club.  I think Florida's depiction paints a much more accurate portrayal of the world with respect to socioeconomics.  I live in and frequently travel in cities that would be considered spikes, but I have also lived in and traveled through places that would be at the bottom of the rungs.  From a cultural standpoint, there is a shift in the way someone like myself might connect to people in the rural areas of my own country and people in the spikes of other countries.  It largely depends on context.  My ability to relate to a farmer in Nebraska might be much stronger in areas of politics, family, and issues that ring home in my American upbringing.  However, in certain contexts, my ability to connect with the young, technologically hip, professional in Shanghai is markedly stronger than a farmer in Nebraska.  This would be apparent on issues of business, lifestyle, and world affairs, etc...

This also helps to bring a more accurate description to the socioeconomic circumstances of very dynamic, emerging economies like China.  Many of the China-hype articles that have been published in top business magazines over the last few years, depict China as a country ready to challenge the world in areas like innovation, design, and other cutting-edge capacities.  These articles are most assuredly talking about an extremely small, handful of people and companies in the spikiest of clusters like Shanghai.  Articles like this often serve as a reader's only impression of China, if they have never done business there.  It's no wonder that hype like this has fostered fear and suspicion of China's imminent challenge to other economies in these areas.  In reality, China, in many ways, is still a country of rural peasants.  There are world-class talent and capabilities there, but believe you me, it's a relatively small group of people in the spiky clusters.

So many products today are often truly global when considering who and what places are involved in developing, producing, marketing, and buying them.  Not only does this process bring together people in different geographic areas, it involves adept management of people across several of the clusters at one time, to capture the benefits and strengths of each in the process. 

   

January 24, 2008

China Will Soon Overtake the U.S. as India's Largest Trading Partner

In my last post, Fort Payne, Alabama Shows How to "Git 'Er Done" When Challenged by Cheap Imports from Low-Cost, Overseas Labor, I covered a story regarding a U.S. town adapting well to the challenge that global trade and low-cost offshore labor poses to them.  I saw this article and I thought it would make a great follow-up, and highlight what's going on while the United States' debates whether freer trade or more trade barriers is the key to maintaining the United States' economic excellence.  I say "excellence" in the place of "dominance" because, as this news flash shows, there are two other would-be superpowers that may soon share the limelight with us. 

This news came to my attention by way of SpendMatters (Jason Busch, SpendMatters author, cited  World Trade Magazine and India's Economic Times).  Anil Gupta, of India's Economic Times, writes in his article, The Future of India-China Trade:

First, trade between the two countries has grown very robustly. Each country’s aggregate international trade is expanding by 23-24% annually. In comparison, India-China trade grew at a 50% rate during 2002-2006 and will increase by a further 54% during 2007 to reach $37 billion.

Second, after adjusting for partner GDP (i.e., bilateral trade divided by the trading partner’s GDP), India’s trade with China is greater than that with Japan, the US, or the entire world. After similar adjustments, China’s trade with India is only slightly below that with Japan, the US, or the entire world.

Third, China already is (or will shortly become) India’s number one trading partner. From China’s side, India already is one of its top ten trading partners. Also, China’s trade with India is growing much faster than with any of the other nine. Thus, India is rapidly becoming an increasingly important trading partner for China.

Fourth, India’s overall international trade is significantly below that of China’s, in terms of both absolute figures (for 2006, $306 billion vs $1,760 billion) as well as relative to GDP (34% of GDP vs. 65% of GDP).

Fifth, even if the growth rate in India-China trade slows down to 25% annually (a conservative projection) from the current rate of over 50%, bilateral trade between them will be almost $75 billion in 2010 and $225 billion in 2015, i.e., as large as China-US trade just three years ago. These are very large numbers. Political and business leaders need to start getting ready now for this radically different world.

There is still a lot left to unfold that could positively or negatively impact trade between these two countries.  China and India are dancing around various trading partnership deals (India-China Free Trade Agreement, India granting China Market Economy Status) which could foster increased trade.  In contrast, continued growth in trade depends upon these two countries not getting caught up in quibbles over trade issues and protectionist attitudes.

Currently, the United States, at large, seems to be debating clamping down on international trade (demonstrated by those with protectionist attitudes in Congress and certain presidential candidates) and those that promote increased trade between the U.S. and other countries (also demonstrated by certain members of Congress and the current administration).  While we think about these issues, we may want to take note of the growth in trade and relationship-building taking place between the two most likely candidates for shared, superpower status in the next 50 years. 

For my two cents, (which isn't as valuable in the global currency markets as it was one year ago), perhaps more open attitudes towards trade and more towns adjusting like Fort Payne, Al (e.g. increased focus on innovation, education, and higher-skilled jobs), are our best bet at maintaining the lead we've worked so hard to gain over the last 50 years.      

January 23, 2008

Fort Payne, Alabama Shows How To "Git 'Er Done" When Challenged By Cheap Imports From Low-Cost, Overseas Labor

As more low-skilled jobs work their way out of the hands of U.S. workers' and into those of low-cost laborers overseas, many in the U.S. shout "what's in it for us?"  Adaptation to circumstances like this has never been easy.  But, as anyone who has taken 6th grade biology knows, adaptation is critical to continued evolution and survival, whether you're a salamander, lion, or sock factory worker in Fort Payne, Alabama.

The following example of Fort Payne's sock industry dominance challenged by cheap imports from Honduras, China, and Pakistan, demonstrates that being edged off the factory floor by a low-cost labor force overseas doesn't always have to create a net loss to people in the United States.  It can, in fact, result in improved circumstances for our citizens here.  Fort Payne, Al, shows us that's not just crazy talk.

I caught wind of this story in a blog post at Marc Andreeson's blog.pmarca.com, and it seems it can be traced back to an NPR story found here.  Marc does a great job at putting the pieces together:   

The [US government] today announced it has [decided] to... apply a textile safeguard measure [i.e., protectionist tariff] on cotton socks imported into the United States [from Honduras]...

"[The US government] reached this decision after careful consideration of all available information and comments submitted by all interested parties. [What's that smell?] The substantial increases in imports of cotton socks from Honduras found during the investigation have led [us] to move forward with the safeguard [i.e. protectionist tariff] process..." said Deputy Assistant Secretary of Commerce Matt Priest...

[The US government] made a determination that a safeguard measure [i.e. protectionist tariff] is warranted with respect to imports of Honduran origin cotton socks based on the substantial growth in imports from Honduras. Imports of cotton socks from Honduras were 27.3 million dozen pairs through the first eleven months of 2007, an increase of 99% from the same period a year earlier. [The evil brown people are strategically swamping us with cotton socks!]

Based on the substantial level of imports of cotton socks, [the US government] determined that it will not, at this time, make a determination to apply a safeguard measure with respect to wool and man-made fiber socks. [The evil brown people are not yet strategically swamping us with wool and man-made fiber socks!]

Source: US government International Trade Administration.

The situation is grim for Fort Payne, Alabama, the "sock capital of the world", says NPR:

There's no question that globalization has been really bad for the sock industry of Fort Payne, Ala. Just a few years ago, the town called itself the sock capital of the world, and with good reason: Most of the town worked in the sock business.

There were more than 150 sock factories, churning out a big chunk of the socks worn in the U.S. But lately, there has been a flood of cheaper socks coming in from China, Pakistan and Honduras. It has devastated Fort Payne. Two-thirds of the town's sock mills have closed...

Jimmy Durham, the county economic development officer, shows just how grim things have been for the sock business here.

On street after street, he points to buildings that used to house sock mills, most of which are now gone.

Terrible, right?  Well...

With all these businesses shuttered, you might think [county economic development officer] Durham is in despair about the future of Fort Payne. He isn't.

Those closed sock factories are reopening as new businesses.

He points to Steadfast, which makes bridges; Ferguson, a major plumbing supply company; a distribution center for Children's Place; two new metal tube manufacturers; a high-tech label maker. For a town of only 13,000 people, this is a lot of new, good-paying employment. These jobs pay more than sock-making jobs.

In fact, most of 4,000 recently laid-off sock workers quickly found new jobs...

Durham says there has been a high-tech revolution in Alabama. Mercedes-Benz, Toyota and Honda have all opened plants in the state. And that means a huge influx of parts suppliers. BAE Systems, a major U.K. aviation company, opened an engineering office in Alabama.

Durham says there are now more high-paying, high-skill jobs in the state than there are people qualified to take them...

The unemployment rate has stayed the same, even as the population has increased. In other words, the number of jobs has gone up, even as thousands of sock-making jobs have gone away.

So why on Earth would the US government put a protectionist tariff on Honduran socks now -- particularly when Honduras is a fellow participant in CAFTA, the Central American Free Trade Agreement?

There's only one reason: a deal President Bush struck late one night in July 2005.

That July night, Bush met with Fort Payne's congressman, Robert Aderholt, to talk about tariffs and the sock business.

That meeting was, most likely, the moment Aderholt had more power than at any other time in his life. The House was voting on CAFTA, the Central America Free Trade Agreement. The vote was an exact tie. Aderholt was the holdout. And President Bush very much wanted CAFTA to pass. So, Aderholt offered the president a deal: He could get his big free-trade deal only if he rolled back free trade on one industry, the sock industry.

"I told him this was what I needed," Aderholt said. "This was the one thing I had great concerns about."

That night, President Bush agreed to Aderholt's deal. CAFTA passed. And the White House gave itself a self-imposed deadline of Dec.19, 2007, to put back tariffs on sock exports from Honduras [which they missed by about a month].

Globalization can be tough on those in jobs and industries that can be done easily, anywhere.  I'm sure if my job or function was outsourced within a year to someone in India or China, it would be a challenge for me to reassess my situation, pick up what I have left, and keep moving forward.  But, adaptation is critical to my survival and is an intrinsic element of a globalizing world.  If I sit on my haunches, I'm done for.   

The bright side is, like many workers in Fort Payne, I may find myself in a better position.  Trading out low-skilled/low-paying jobs for higher skilled/higher-paying jobs can be advantageous if tackled head on.  I have to extend kudos to an entire town that seems to be on their way to accomplishing this.  They're changing with the times and finding a better future for themselves, rather than throwing up their hands and saying "no fair".  The Honduran sock makers may have a better claim to "no fair", who are also honest, hard working people who want to provide for their families.  They are unable to compete to their full capability, not because of economic forces, but political wheeling and dealing on the part of our politicians.  Hopefully, they're just as resourceful as their Fort Payne counterparts.