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April 4, 2012

California Taxpayers Financed A New Chinese Competitor!

-- by Dave Johnson

American tax dollars should employ American workers and build American companies. But the Bay Bridge project not only didn't do that, it paid to build up a new Chinese state-owned competitor that will bid against American companies on future projects! Let's not make that mistake again. Jeeze!

Should Be Made In America

Last week I wrote about the Should Be Made In America project. A coalition of American companies and labor organizations has launched this campaign to let taxpayers know when their state sends jobs out of the country. This is an effort to get state governments to buy steel and supplies from American companies when they do infrastructure projects. If they do not, there will be a PR campaign to shame the elected officials and state procurement agencies who made the decision to outsource American jobs with taxpayer dollars.

The New San Francisco Bay Bridge Project

The new San Francisco Bay Bridge is underway. The eastern span of the new bridge is called the self-anchored suspension span (SAS), which will have a single 525-foot-tall tower and uses a single mile-long cable to support the deck, which is two side-by-side steel roadways. The cable is made up of 137 strands of steel which are being pulled across the bridge one-by-one right now. The 1,542 ft span is the largest span of its kind in the world. (Lots of info is available here.)


They Turned Down Federal Dollars So It Could Be Made In China!

The cable and key sections of the tower and deck were outsourced to China. Governor Arnold Schwarzenegger's administration wanted this done in China, saying the low wages and lack of environmental regulations would lower the cost. Federal procurement rules require that taxpayer dollars be spent here, so Schwarzenegger turned down federal funds for the job, in order to be able to outsource the work. Never mind the cost of lost tax revenues, unemployment benefits, food stamps and other "safety net" programs for the lost workers and bankrupted companies that resulted. And never mind the cost to the larger economy and country from the foreclosures, closed businesses, lost jobs, etc. Those larger costs to the larger economy and country were not Schwarzenegger's problem

Built Up A Competitor!

Shanghai Zhenhua Heavy Industries got the job -- even though they had never done a job like this before. Until now the company manufactured cranes and ship loaders. But, thanks to California's tax dollars, they can now. California paid for this Chinese state-owned company to build its capacity to do major infrastructure projects like this one. And they will be bidding against American companies on project in the United States and around the world from now on.

Here is Scott Paul from the Alliance for American Manufacturing, talking about the Should Be Made In America project, on KQED's show Forum. Skip to around 16:00.

"What it has done now unfortunately is established a competitor to these American firms, that has been subsidized by the taxpayers of California, that will compete on future infrastructure projects. And California taxpayers have given this state-owned firm in California China the knowledge and the know-how to do this. And that is not fair to other private-secotr firms in the United states."

(Note, at 16:18 Scott says the Bay Bridge project has "given a state-owned firm in California" the obviously meant to say China.)

So one agency of California "saved money" by outsourcing a project to China. But the state government overall probably lost money when you add in all the costs to other state agencies who lost tax revenue and have to pay out "safety net" expenses. And the national government and larger economy certainly lost out from the lost jobs, closed businesses and loss of steel and manufacturing capacity. American businesses certainly lost out.

At least now as other states look to future infrastructure projects the Should Be Made In America project will be there to remind them of the larger costs that come from "saving money" by sending taxpayer dollars out of the country.

P.S. here is the video from the Should Be Made In America launch event:


This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF.

Sign up here for the CAF daily summary.

Posted by Dave Johnson at April 4, 2012 8:45 AM


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