Maine Small Business Wins Federal Ruling in Fight Against Chinese Trade Cheating

Kathie Leonard of Auburn Manufacturing, Inc.

An Auburn manufacturer has won a major victory in its fight against Chinese competitors following a federal determination that will crack down on unfair trading practices by Chinese state-backed manufacturers.

Following an investigation requested by Auburn Manufacturing, Inc. (AMI), the U.S. Commerce Department issued a Feb. 3 report that said Chinese businesses were circumventing anti-dumping and countervailing duty orders.

“It’s one more victory, but whether it takes you to the finish line or not is another question,” said Kathie Leonard, president and CEO of AMI.

“We’re not winning the war here. It’s a battle,” she said.

AMI is a Maine-based company, started in 1979, that manufactures heat resistant fabrics, and their customers range from independent welders to major U.S. defense contractors. AMI started as a producer of asbestos alternatives, and over the years they’ve carved out a niche as a supplier of silica-based fabrics. Their customers include ship builders, aerospace companies, and nuclear power companies.

Around six years ago, the company noticed a decline in domestic orders. They soon learned that the products undercutting their business, though sold by U.S.-based distributors, were coming from China.

At first, AMI couldn’t understand how the distributors were able to sell Chinese-made products so cheaply, as much as 30 percent less than AMI, as manufacturing silica-based heat resistant fabrics is an expensive process. But federal investigators working on the case discovered that the Chinese government was not only subsidizing the manufacturers of the products, but they were also having the products manufactured in state owned-facilities.

In other words, a 50-person family business in Auburn was competing against the industrial might and wealth of a rising communist superpower.

Workers at AMI inspect heat resistant fabric.

As a result of that competition, AMI had to let go of some employees, and they’re still suffering from the lost business.

“By 2016, it was pretty bad,” said Leonard. “So we finally decided to file an anti-dumping case against China for subsidizing these products.”

In 2017, the Commerce Department sided with AMI, ruling that China was engaged in unfair trade practices.

“The Chinese government was actually making the raw material that these companies were making the silica fabric from,” she said. “They all use the same government-owned facility. 70 percent of the product was made by the Chinese government.”

Even U.S. defense contractors had begun opting for Chinese-made products, though they may not have been aware they were buying a foreign made good. The distributors and importers aren’t required to pass along information about a product’s origin once it has been imported into the U.S.

“There’s no “Made in China” tag for industrial products sold in the U.S.,” she said.

AMI’s 2017 victory meant that state-subsidized Chinese imports would face a 200 percent to 300 percent duty upon importation to the U.S., a move Leonard hoped would level the playing field. But the new findings suggest Chinese exporters have been circumventing the tariff by moving the products into the U.S. under false labels.

The products in question are silica-based fabrics valued for their thermal resistant properties. AMI’s products are more than 90 percent silica-based and must have that composition in order to function properly, but some Chinese manufacturers have been taking a similar product and claiming it was 70 percent to 90 percent silica-based in order to avoid the duty.

The new Commerce Department order will require U.S. Customs and Border Protection to apply the anti-dumping and countervailing duty orders to Chinese products that claim to have the lower silica content.

Leonard said Maine’s congressional delegation, in particular Republican Sen. Susan Collins and Independent Sen. Angus King, were sympathetic to their plight, but there really wasn’t much they could do beyond supporting the Commerce Department’s investigation.

For Leonard, the entire ordeal is a microcosm into the tensions in American politics over free trade.

For most of AMI’s existence, support for free trade has been a near-universal political value, but she believes it has come at the cost of America’s manufacturing base.

She credited former President Donald Trump with bringing about a major shift in how Americans think about trade with foreign nations, especially China.

“We are always encouraged to see progress from a public policy perspective, but our fight goes on,” she said. “Manufacturers like AMI cannot rest on their laurels as China continues to engage in unfair and illegal trade practices, putting American companies out of business.”

“In addition to serving our valued customers, we will continue advocating for fair, rules-based trade while holding the wrongdoers accountable,” she said.


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