Global trade wars breed uncertainty in S.C.
GREENVILLE, S.C. — Glen Calder sees dollar signs in Walmart parking lots, driveways and new housing developments — and demand for his company’s asphalt-spreading machines has boomed with this fastgrowing region of upstate South Carolina.
Once called the “Textile Capital of the World,” Greenville has been a center of sweeping economic transition that has lured multinational companies, highly automated factories and corporate headquarters. The trend is similar to the Pittsburgh region’s shift to health care, education, banking and technology industries after the decline of steel in the 1980s.
Yet Mr. Calder’s business has suffered in recent years: His costs have risen after the Trump administration slapped 25% import tariffs on the heart of his machines: a 110-horsepower Cummins diesel engine.
“Our biggest obstacle have been the trade challenges with China,” said Mr. Calder, whose his 25-year family business employs about 75 people. “It’s been hard to plan for and adjust, and as a result our margins have taken a beating.”
As the Palmetto State prepares to hit the polls this Saturday for the Democratic presidential primary election, much of the attention has been on the racial diversity of the state. Candidates have courted black voters, and for good reason: Roughly 60% of Democratic voters in South Carolina are black, a contrast to other early-voting states like Iowa and New Hampshire, which are overwhelmingly white, and Nevada, which is largely Latino.
But the “First in the South” primary will also feature the first major manufacturing state to vote, providing an early test for how much Mr. Trump’s trade policy will factor into the 2020 race.
Mr. Trump has staked much of his re-election bid on his trade agenda, driven by tariffs imposed on hundreds of billions of Chinese imports, including Mr. Calder’s engines. The bulk of his “foreign policy” section on his re-election website is dedicated to his trade actions.
Few other states are better examples of how Mr. Trump’s trade barriers have scrambled the politics of trade. Though Mr. Trump carried South Carolina by 14 points in the 2016 general election — and won the 2016 Republican primary, too — the state hews to free trade ideals that Mr. Trump despises. Thanks to a growing population of consumers, South Carolina has embedded itself in global supply chains after attracting foreign companies with tax incentives, cheap land and non-union workforces.
“We are a global gateway,” said Jack Ellenberg, an administrator at Clemson University and former executive with the South Carolina State Ports Authority. “Imports go toward population growth, while exports leave from where you make things. South Carolina is at the center of both of those things.”
The booming trade has led to significantly bigger ships. Bigger ships have demanded deeper ports and taller cranes to handle the cargo.
The Charleston Harbor, home to the second-busiest container port on the East Coast, is deepening its seafloor by 7 feet, a $558 million project that will make it the coast’s deepest port upon completion next year. The port also is purchasing 15 cranes that reaching 155 feet, 40 feet higher than the current ones.
During a busy afternoon on Tuesday, the port’s crane operators unloaded containers from three docked ships. Trade with Asian countries makes up 43% of the port’s volumes, a bigger chunk than Europe, according to port data.
While the port’s volumes have remained strong, growing “the overall impact of tariffs is broader reaching,” said Jim Newsome, president and CEO of the South Carolina Ports Authority.
“The Southeast is historically a rich area for foreign direct investment, and uncertainty stymies such projects,” he added. “We support free trade and hope to see the trade issues resolved soon to enable a thriving global supply chain and economy.”
Luring multinational producers
Much like steel, textile production grew to a fever pitch during World War II, with 65% of canvas for the U.S. Army being made in Greenville and 3 in 4 Greenville residents touched the textile business in some way, according to the city’s Upcountry History Museum.
Mr. Calder said he remembers watching the gradual loss of the textile industry moving to offshore locations like China and Southeast Asia — first the mills shuttered, then the equipment companies that supplied them.
South Carolina has turned to the automotive, airline and health care industries, attracting primary manufacturers like BMW, Volvo, Boeing, Daimler, Honda, Bosch and Siemens. Those companies also support a deep supply chain: factories that make electronics, seats and even textiles for automobile interiors, he said.
In 1985, Michelin, the French tire maker, opened its North American headquarters about a 10-minute drive down the road from Mr. Calder’s factory. Michelin operates a dozen plants in the state and employs nearly 10,000 people. It operates the world’s largest rubber processing plant in nearby Sandy Springs.
Driven by demand to ship auto parts and aircraft components, the GreenvilleSpartanburg Airport District opened a $33 million, 110,000-square-foot cargo facility last year. Total trade figures at the regional airport were up by 38% in 2019.
“The upstate has a lot of ties to Europe,” said Scott Carr, vice president for commercial business and communications for the airport. “We’ve positioned ourselves well.”
South Carolina economic development officials stressed that the state’s manufacturing powerhouse has not been measurably dampened by the trade wars. Exports increased by 19% to $41.5 billion in 2019, driven by high-value Boeing planes sent as part of a deal with the United Arab Emirates. Imports totaled $42.3 billion last year.
“They’re sophisticated companies,” said Alex Clark, a spokesperson for the South Carolina Department of Commerce, which has written letters of support for companies filing for exclusion from the Trump administration.
“They can be flexible, seeing some of the uncertainty,” she said. “I think they can look and make adjustments.”
On Thursday, Mr. Calder showed off the assembly of his paving equipment from heaps of steel components to a gleaming, freshly painted machine. Mr. Calder said his company, Calder Brothers, has paid nearly $100,000 in tariffs but hasn’t filed for an exclusion from the tariffs because the company doesn’t have the resources to go through the process.
A Republican who voted for Sen. Marco Rubio, RFla., over Mr. Trump in the 2016 primary election, Mr. Calder had mixed reviews on the president’s economic policies.
“If I had to say one way or another, I would say he has been a positive to the economy,” Mr. Calder said. But he added, “I think we need to keep pushing on that probusiness, pro-manufacturing policies that help us be competitive in a very global market. That means putting this trade war behind us.”