Government incentives: Good for us, bad for them?
Thomas Russell, Associate Editor -- Furniture Today, February 25, 2007
There's been talk recently in the U.S. Congress about placing tariffs on products from China. That's hardly new. What's different is that the notion has gained more traction with Democrats, who now control both the House and Senate.
As usual, much of the debate centers on such legitimate issues as China's failure to curb the theft of intellectual property, its currency manipulation and its lack of environmental regulations of the kind faced by U.S. manufacturers. The overriding concern is that the playing field is not level, thus contributing to a huge trade imbalance and huge job losses among U.S. manufacturers unable to compete fairly.
Another big impetus for considering tariffs is what elected officials call China's unfair subsidization of exports. This also is a legitimate concern, considering that China's booming economy is creating huge government surpluses.
But before our elected officials race to criticize China and other countries for subsidizing exports, they need to look in their own backyard. For years, our government has heavily subsidized agriculture and operations like Amtrak.
In addition, state and local governments long have given tax breaks and other incentives to private companies for relocating or expanding in their areas. This has benefited such furniture companies as La-Z-Boy and Legacy Classic, which recently received incentives from the City of High Point to move from the surrounding county into the city.
Meanwhile, the North Carolina legislature is considering additional government incentives to North Carolina furniture, textile and apparel manufacturers that expand in the state. Proposed legislation would provide property tax exclusions for those companies, and also establish a $2 million training center for new furniture technology at Catawba Valley Community College.
The furniture incentives are aimed at helping an industry that has lost over 25,600 jobs between 1996 and 2006. At a January gathering of industry, state and local officials announcing the proposed legislation, this harsh reality cast a pall over the meeting.
Some critics say the incentives are too little, too late. Providing incentives also seems hypocritical, since we're against China and other countries doing the same thing, other critics say.
This doesn't mean the 50,000-plus furniture jobs remaining in North Carolina aren't worth saving. Companies represented at the January event, including Century, Hickory Chair and Linwood Furniture, are making strides by investing in their plants and making production more efficient. A state-sponsored furniture technology center will help these and other companies make further strides.
But the timing for additional incentives may be wrong. That seems especially true when we're criticizing China and other countries for subsidizing their factories, and talking about placing tariffs on them as a result.
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Govt. incentives: Good for us, bad for them?
Feb 23, 2007
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