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Thursday, August 12, 2004

Free Trade? Customer Loyalty? (Don't make me laugh)

These days money doesn't just talk, it's the be-all and end-all of the lexicon (and to hell with the peasants, too!):
ELYRIA, Ohio -- In theory, Dan Imbrogno shouldn't be a voter George W. Bush has to worry about. Imbrogno, a lifelong Republican, Ohioan and business executive, looks like central casting's idea of the model Bush voter.

Imbrogno is president and chief executive of Ohio Screw, a precision-parts manufacturer located in this working-class suburb of Cleveland. In newer and more upscale suburbs, office parks may dot the landscape, but in Elyria, small factories were plunked down in residential neighborhoods many decades ago, and, whether open or shuttered, there they remain.

Ohio Screw is emphatically open, and if you had to have a factory next door, Imbrogno's is the one you'd ask for. The plant -- employing 75 workers, chiefly highly skilled machinists -- is in an attractive building on almost manicured grounds. It produces an array of distinctive metallic little thingies that Imbrogno places on the conference table for my inspection.

Imbrogno calls my attention to one thingy in particular, a hollowed-out cylinder about an inch in length. His company had been supplying that part to Cooper Power for years when, in 2002, Cooper announced it would be buying its parts in China. Ohio Screw responded by developing new machinery that cut the price of producing the part to just one penny-per-part more than the Chinese estimate. Cooper then asked its Chinese contractor to bring down its costs still further, which the contractor did -- to the level of the cost of materials, a level where Ohio Screw could not follow.

"It cost us $500,000 a year -- a big chunk out of our $8 million in total sales," says Imbrogno. In 2000, before the recession hit, Ohio Screw was doing $10 million in sales. It has won new contracts now that the recession is easing, and Imbrogno says the company would be nearly back to $10 million today were it not for its clients' decisions to do their shopping in China. "I was a tried-and-true free-trader," Imbrogno says. "But you put details into the theory and it falls apart. When the Chinese government manipulates its currency and subsidizes its manufacturers, the theory doesn't work. Now I believe in managed trade. It's how we built our country; it's how European and East Asian nations built theirs."
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