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Local officials hopeful Trump’s tariff plan will help keep jobs at Massena Alcoa plant

Posted 3/10/18

By ANDY GARDNER MASSENA -- Local officials are optimistic that the president’s proposal to impose a tariff on aluminum imports could save smelting jobs at the Alcoa West plant. Aluminum giant …

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Local officials hopeful Trump’s tariff plan will help keep jobs at Massena Alcoa plant

Posted

By ANDY GARDNER

MASSENA -- Local officials are optimistic that the president’s proposal to impose a tariff on aluminum imports could save smelting jobs at the Alcoa West plant.

Aluminum giant Alcoa, which operates a plant in Massena has struggled to keep its local operation viable over the past decade. The company has went through massive downsizing including the shutdown of the East Plant.

In 2015 the company threatened to eliminate 487 jobs but agreed to maintain 600 full-time positions for three years after the New York Power Authority as well as the state and federal government came up with a plan to provide $78 million in electric power and monetary subsidies.

But now some are hopeful a proposal from the president could help make the plant viable again.

President Donald Trump’s administration is proposing a 10 percent tariff on foreign-made aluminum and 25 percent on imported steel. Blue-collar voters helped carry Trump into the White House in part on his promise to be tough on imports.

Steve O’Shaughnessy, Massena’s town supervisor, said he has been talking with employees and management at both Alcoa and Arconic and he’s hearing optimism.

“It’s a good thing for Massena. We’ve talked to the union leadership, the union staff. They’re all for it. They think it’s going to bring more jobs and productivity to the Massena plant,” he said. “I’ve talked to the management side of Arconic, who buys different levels of alloys. They think they’ll be able to get more competitive pricing from the Alcoa side.”

Massena Mayor Tim Currier said he thinks the tariffs are a good starting point to protect local manufacturing jobs.

“I recognize that tariffs can create a number of issues, however we have to start the serious discussion of dealing with this country’s trade deficit, and stop the bleeding of jobs and closing of plants. I’m hopeful, that will happen and if it has to start with a discussion and consideration of tariffs on aluminum and steel, so be it!” he said in an emailed statement. “The playing field is not level, and it is time for Washington to protect American workers! When American workers are given a fair chance, they compete very well in terms of skills, abilities and the quality of the products they produce.”

Tom Sullivan, executive director of the Massena Business Development Corporation, said he thinks the tariff could be a local boon, but cautioned that it must be done properly.

“I think one of the important things is if we can level the playing field for Alcoa, that obviously helps us. We have to be very cautious that Canada is a significant trade partner with us,” Sullivan said. “I believe the Alcoa facility here does receive metal from Quebec and we don’t want to put a tariff that’s going to hurt us.

“Done the right way, it could be a positive … We have to be sure we’re not putting undue stress on Alcoa on anything that would be coming out of Canada … If we can create manufacturing we can create jobs and that’s the biggest challenge is trying to create job growth in our region.”

An official with another local business group, the St. Lawrence County Industrial Development Agency, says it’s critical that the government act to restore local aluminum jobs.

“Aluminum production has been core to St. Lawrence County’s economy for over 100 years, so we are very interested in anything that can be taken up at the national level that helps that industry have a better future and brighter future,” county IDA executive director Pat Kelly said. “We are hopeful the final trade scenario that develops is one that is beneficial for the local aluminum industry in the county.

“The country has to have the capacity to manufacture certain products whether its for national defense or a successful economy, and aluminum is one of those things.”

Alcoa’s stance on the matter is that Canada should be exempted from any aluminum tariff.

“We appreciate the attention the Administration has placed on the aluminum industry. We believe vital trading partners, including Canada, should be exempt from any tariff on aluminum. The aluminum industry has an integrated supply chain and actions should not penalize those that abide by the rules. We will continue to work on solutions that create a level playing field and address Chinese overcapacity,” Alcoa spokesman Jim Beck said in an emailed statement.

However, not everyone is supporting the proposal. North Country Congresswoman Elise Stefanik, a Republican, is criticizing the president’s plan. She has concerns it could spark a trade war that would increase prices for businesses, including Alcoa, that would be passed on to consumers. In a worst-case scenario, businesses may flee the district while other countries may implement their own harmful tariffs, she said. The European Union (EU) on Wednesday proposed their own set of tariffs, while Britain and Canada have also expressed concerns. And Trump's top economic advisor, Gary Cohn, recently resigned his post because of his opposition to the tariffs, Stefanik said.

“I have concerns that this tariff will increase costs on consumers and that it possibly invites retaliation from other countries, which will hurt our ability to export,” Stefanik said in an emailed statement. "It’s obvious China is dumping steel, and we need to work with allies in the EU to have a much more targeted approach to make sure our ability to export continues to grow and we’re addressing the problem … and not penalizing counties that we partner with like Canada.”

United Steelworkers Local 420 president Mark Goodfellow did not return phone calls seeking comment. The union represents laborers at Massena West.

Economists have been saying that Trump’s proposed tariffs could provoke an international trade war, where American exports are taxed in retaliation.

“Most economists believe that imposing barriers to international trade is, in general, a bad idea. It has long been recognized that by trading with other countries each nation can specialize and use its resources in a more efficient manner. As a result, all trading partners can enjoy increased economic activity, higher national income, lower prices, and greater variety of goods and services,” according to Dr. Deigo Nocetti, a professor of economics and financial studies at Clarkson University’s David D. Reh School of Business. “In addition, greater protectionism by one country usually results in retaliatory actions by its trading partners (i.e. a trade war), reducing economic activity beyond the direct negative effect of tariffs. For example, when President Herbert Hoover signed the Tariff Act of 1930, increasing sharply tariffs on hundreds of imports, Canada and other trading partners increased tariffs on U.S. goods, marking the beginning of a worldwide movement towards protectionism which exacerbated and prolonged the Great Depression.”

However, he agrees with the notion that Massena stands to benefit.

"Of course, economists have also long recognized that the imposition of tariffs has distributional effects: Some people lose and some people gain from higher tariffs. For example, the proposed tariffs on aluminum will likely benefit ALCOA workers in Massena and may even have a positive impact on some businesses in the North Country. At the same time, tariffs on aluminum and steel will increase the cost of production of many goods and the rising costs will result in higher prices paid by consumers and possibly job losses in some industries (e.g. domestic car manufacturers have complained that the higher costs will make it more difficult to compete with foreign car manufacturers)," he said. “By most accounts, the proposed tariff increases, by themselves, are likely to have a miniscule effect on the US economy, on aggregate employment levels, and on the distribution of income.”