WASHINGTON-When House Democrats take up legislation to strengthen “Buy American” rules in the coming weeks, no one will be watching more closely than Waterbury businessman John Barto.
Barto is president of Ansonia Copper & Brass Inc., the last existing U.S. manufacturer of a specially-sized copper nickel tubing used to build American submarines. Ansonia is a major defense contractor for the U.S. Navy, Electric Boat, and other defense interests.
But the company is also in dire financial straights. A victim, Barto says, of unfair foreign competition and weak American procurement laws that allow off-shore firms to snag an outsized share of U.S. taxpayer dollars.
Barto’s company faces two foes: The first is KME, an Italian-owned German-based company, which makes the same critical component for American submarines as Ansonia and which has, in recent months, significantly lowered its prices and put Ansonia in a tight spot. The second is the Pentagon, where federal contracting officials are looking for ways to trim costs in an ever-more-difficult budget climate and opting for KME products when making bulk purchases.
The result for Ansonia: “Our situation is … very, very dicey,” Barto says.
In Washington, with the economy in the tank and Congressional Democrats scrambling to tackle a 9.6 unemployment rate, the plight of Barto, and other struggling manufacturers, has catapulted to the top of the House agenda.
“There seems to have been an awakening of the congressional leadership of the importance of supporting American manufacturing,” said Rep. Chris Murphy, D-5th District, who is championing two bills that would alter the federal contracting playing field for companies like Ansonia.
With voter angst ticking up, the economy still sputtering, and their poll numbers slumping, Democrats unveiled a “Make It in America” agenda just before the August recess. The package, to be rolled out on the House floor in the coming weeks, includes a broad array of proposals aimed at reviving U.S. manufacturing. The bills range from well-worn ideas, like raising taxes on corporations that ship U.S. jobs overseas, to fresher issues, such as tackling Chinese currency manipulation.
Republicans say these measures are more about the looming elections than the stalled economy. And certainly, it has major labor unions-a key election-year force and vital political ally for Democrats-very revved up. Just after Labor Day, House Majority Leader Steny Hoyer, D-Md., touted the Make It in America legislative package in a conference call with AFL-CIO President Richard Trumka.
House GOP leaders, for their part, seem relatively nonplussed by this new Democratic push. Virginia Rep. Eric Cantor, the No. 2 GOP House leader, has called the House bills “more meaningless than harmful.”
Election-year politics or otherwise, there’s little question that American manufacturing has seen a steep decline in recent decades. Since 1990, the U.S. economy has shed more than 5 million manufacturing jobs. Right now there are more unemployed Americans-about 15 million, according to the September jobs report-than there are active workers in manufacturing jobs, about 11.6 million.
Murphy tells audiences in D.C. that he’s from a district that includes the Brass City, the Silver City, and the Hat City-all of which make “very little brass, silver, or hats anymore.”
He says there have been “disturbing trends” in recent years further stifling the U.S. manufacturing base, particularly for defense interests that dominate Connecticut’s business landscape.
There’s “increasing pressure within the defense budget to outsource” to foreign manufacturers, Murphy said. He pointed to data from the Department of Defense showing that from 2007 to 2008, there was a 450 percent increase in waivers granted by DOD officials allowing them to bypass Buy American laws and purchase products from overseas manufacturers.
“That’s tripling the amount of money that went out of this country in waivers,” he said. “We need to have some more information about why this is happening.”
After meeting with Barto last fall, as well as other Connecticut companies, Murphy has made strengthening Buy American rules a pet cause. He founded, along with GOP Rep. Walter Jones, of North Carolina, the Buy America Caucus, and has pushed several initiatives aimed at closing loopholes in what he says are antiquated contracting laws.
The Murphy-sponsored that’s proposal most likely to get a full House vote in the coming weeks is fairly straightforward. It would give U.S. manufacturers a chance to include, in any federal bids, a “jobs impact statement” that lays out how awarding that company a contract could benefit the U.S. economy, in terms of jobs created or kept at home.
“It simply says that federal agencies engaged in procurement can give an advantage to a company that commits to creating more U.S. jobs than another bidder,” Murphy said.
A second Murphy bill, which could come up in November or later, is more far-reaching. It would:
- require federal agencies to give preference to U.S. companies that agree to build “a large portion” of the contracted product in the U.S.;
- give financial assistance to U.S. companies that, like Ansonia, are the only remaining American supplier for a needed product;
- and force U.S. agencies like DOD to provide more information detailing why and when they get waivers from domestic sourcing requirements.
“That directly speaks to us,” Barto said of Murphy’s broader proposal. He said DOD and its submarine subcontractors, including Electric Boat, can easily sidestep current Buy American rules that might otherwise steer them toward Ansonia. For example, DOD is allowed to put key U.S. allies, such as Germany, on equal footing with American firms when making contracting decisions. Similarly, myriad U.S. trade agreements mean that Mexico and other countries enjoy the same preferences as U.S. firms when bidding for American government work.
“You can buy a Mexican product with 50 percent Chinese content and it counts as American,” said Lloyd Wood, a spokesman for the American Manufacturing Trade Action Coalition. Murphy’s proposals are “pure common sense,” he said. “When the U.S. government buys something, who pays for it? The American people.” If you don’t have American manufacturers helping to fuel and sustain the tax base, that’s a losing proposition, he said.
In previous debates, some major business groups, including the U.S. Chamber of Commerce, have come out in opposition to Buy American provisions. Take last winter’s debate over a provision in the federal stimulus bill that would have required government agencies to purchase American steel and other domestic products for public works projects. Some big U.S. companies like General Electric said the measure could incite a “trade war,” prompting other countries closing their markets to U.S. firms-a contention that proponents disputed.
In this latest debate, opposition has so far been muted. The biggest obstacle, somewhat ironically, may be the Nov. 2 elections, which will make lawmakers eager to wrap up legislative business in Washington quickly and get back home to campaign. That means, even if the House passes Murphy’s proposals and others, they are unlikely to make their way through the Senate anytime soon.