Trade Crusade

By Colton M Scrudder

Small businesses are the single greatest driver of innovation and growth within the United States.

Millions of small businesses help make this great nation what it is. In light of this more Americans need to stand up and voice their support for small businesses and their success

• Language: English
• Publisher: New Degree Press
• Release date: Dec 11, 2020
• ISBN: 9781636760667

Book preview

The World Factory

The world is like a factory. Based on my experience working in a factory making cabinets, free trade is crucial to this factory’s success. Free trade, innovation, and small businesses will ensure that the United States’ citizens reap trade’s benefits.

Two Brooms, A World Apart

Sweeping the floors, fortitude, and flying to China.

It’s hard to beat a person who never gives up.

—Babe Ruth, legendary baseball home-run slugger

Are you up? my dad hollered upstairs to my room on the first day I got to go to work with him at Heartland, the cabinet shop our family had just bought.

You know it! I responded from the kitchen. I was smiling and ready to go. It was a hot May day in the summer of 2013. School had just finished, and I finally had my chance to work. We got into Dad’s truck and drove, listening to George Strait’s country hits on the radio. As we pulled into the parking lot, I had no idea this shop would be the backdrop for many summer days and life lessons, like grit and perseverance.

I had seen my grandfather’s workshop at his house, but this was categorically different. The building was about 150 yards long. The exterior walls were cement with small pebbles embedded in the concrete. There were three big garage doors and a massive metal structure on the roof. My dad later explained this was a vacuum to collect the truckloads of sawdust our shop would produce. After a quick tour around from Dad, my new coworkers showed up. They got to work, and because of their example, I felt compelled to work too. I asked my dad what I could do. I expected he’d tell me to grab a hammer and make a cabinet, supervise a department of lazy employees, or maybe file papers in the office. Instead, he gave me one of the greatest gifts: a broom.

I hesitated. I thought I was going to make cabinets.

You don’t know how to do that yet, he told me.

Admittedly, I thought I was entitled to something more exciting and enjoyable. Dad quashed that assumption quickly, showing me I’d work just like my coworkers. I wouldn’t get a cushy job just because I was his son.

I was a stubborn kid, so I thought, Fine, if I’m going to have to sweep, these are going to be the best dang floors he’s seen before. I swept and swept that morning. Dad frequently checked on me, making sure I was doing okay, but I was excited to keep working. As the Texas summer sun turned our shop with a metal roof into an oven, I wore blisters on the insides of both my thumbs. Painful? Sure. Proud? Absolutely.

As we rode home from work that day, I felt proud I had worked and, at least in my opinion, held my own with my coworkers. Dad told me our shop floor manager told him my work surprised the other guys in the shop. After that summer, I kept coming back a few days a week since I took pride in working for our family’s small business. But, as any small business owner can attest, there is both pain and pride in owning a company.

When working for a family business, you feel pressure to do as much as you can, since the company provides for your family. It puts food on the table. When installing cabinets in a high rise five years after I started working, I felt this motivation to achieve, since our customer would fine us if we fell behind. This mixture of tension, excitement, and achievement drew me in and compelled me to come back summer after summer. I learned to love working for our small business. Over the next years, however, my family would experience the highs and lows of small business ownership.

Small Businesses

The impact of small businesses like ours is often understated, yet their result is hard to overstate. In 2019, there were 30,700,000 small businesses in the United States, accounting for 99.9 percent of all companies and employing forty-seven million Americans.¹³ Still, they are more important than the number of people they employ. Small businesses help keep the American Dream alive and innovate.

While the American Dream may mean different things to different demographic groups, self-employment through a small business remains a constant thread. Most Americans still feel if they have a good idea and work hard enough, they can start and grow a business, leading to the American Dream. The opportunity to start a business is a manifestation of individual freedom. Entrepreneurship and starting a small business allows individuals to break free from corporate bondage and work for themselves. If an employee of a large firm feels unheard when proposing a new idea, they can strike out on their own and start a small business.

Small businesses also create competition for incumbent corporations. We must not forget that some of the most disruptive companies had humble beginnings. Sam Walton founded Walton’s 5&10, a small dime store in Bentonville, Arkansas. He was driven to provide great value products and top-notch customer service. His store sold products customers would have previously had to go to different stores to purchase. He recognized the benefit of consolidating a variety of products into one store.

Today, Walmart, which delivers excellent value and a wide range of products, is the largest retailer in the United States. Apple was founded by Steve Jobs, Steve Wozniak, and Ronald Wayne. They started as a small business that has now revolutionized communication. It challenged incumbent technology companies and prevailed. Patent-seeking small companies earn thirteen to fourteen more patents per employee than larger firms, a study found.¹⁴ Small businesses create competition that fuels growth and economic progress.

The United States Small Business Administration categorizes a business as small based on its employment, depending on the industry. While this definition works for generalizations, it does not pertain to this book. For this book, I define a small business as one that does not have any significant budget for lobbying or hiring high-caliber trade lawyers to intercede on its behalf. Any trade or basic lobbying work, like meeting with members of Congress or writing letters to public officials, is handled by people in the company with other primary roles.

For example, our company is small in both ways. After seven years of growth, our company employs around eighty to 100 people. However, we do not have any type of lobbying budget, nor do we have extra cash to hire a trade lawyer, since even they may be unable to help. When my father and I went to Washington to talk to congressmen, we did it ourselves. In contrast, Weyerhaeuser, a sizeable American plywood manufacture we will meet later, is so large it spends around half a million dollars on political donations each election cycle.¹⁵ As a result, small businesses, as I define them, cannot lobby or fight trade laws to any significant extent. Rather than influence laws, individual small businesses are at their mercy.

Small Businesses in the Big World

As Heartland grew, we looked to lower costs to enter new markets in the United States. Multi-family housing units, like condos, duplexes, and apartments, generally have cabinets made in China. The cabinets are made in predetermined sizes, like 12 in., 15 in., 18 inch., etc. Because the cabinets are standardized and of lower quality, they are cheaper than custom cabinets made in the United States. However, we found that if we could lower our plywood materials costs, we could compete with these imported cabinets. While China has lower labor costs, it still has to ship them to the United States. By making them in the US, we would save on shipping. We just had to figure out how to buy our plywood at a lower price.

Since the company’s beginning, we have bought most of our plywood from China through a wholesale importer. This intermediary company served as the go-between. We realized, however, we could work directly with the Chinese plywood manufacturer, cutting out the middle man, and save enough money to start building cabinets for multi-family housing units. My dad and I did our research, packed our bags, boarded a plane, and thirteen hours later, arrived in Hong Kong.

As the plane neared the runway, I marveled at all the apartments. They were tall and precisely placed close to each other. We drove toward mainland China from the airport, and I grew increasingly more attentive. My family’s house is about fifteen minutes from our airport. We have space. Our backyard is big enough for my Labrador retrievers to run laps. But even an hour away from the airport, the apartments were as densely packed. After pondering this difference and being apprehensive about what to expect at our first factory tour in the morning, I fell asleep, exhausted from traveling around the world.

After a few days of meetings and factory tours, we toured a company called Naafi. Its factory stood out to me because it exemplified professionalism and industry. We arrived in our van and met Denglu Jiang, the factory owner. He took us into his showroom, where we meet a group of six other managers. They would be our guides around their factory and office building. Like our factory in Texas, Naafi produced high-end cabinets. I was impressed by its space-conscious designs and trendy paint colors. Their showroom felt like an IKEA, clean and contemporary.

After the showroom, we went into the factory. It was after-hours, so they weren’t producing, but even the static machines were enough to make my jaw drop. They had machines I had only seen at the woodworking trade show in Las Vegas. For a carpenter like me, it was simply incredible. At the end of the factory, they had floor-to-ceiling vacuums that sucked all the sawdust out of the air, leaving the factory nearly dust-free. When I saw a broom set up against the wall, I smiled, thinking back to my first day at work. The employees must have used it to clean up after their shift, and even with the vacuums, I was impressed the floor was so clean. The factory’s owner offered to take us out for a traditional Chinese dinner after walking around his factory. We got back into our van and drove through the town.

Parking on a hill, we walked down an outdoor stone staircase. It was damp, slightly mossy, and noticeably old. At the bottom of the stairs was an elevated cobblestone path above a stagnant canal. As we walked down the channel to the restaurant, we passed people fishing and washing their clothes in the canal. We approached a boxy, stone building. The stone was gray, but the building was a shade of green from the moss. I noticed the front step was worn away in the middle from visitors’ shoes. As we passed this threshold, Denglu, the factory owner, turned to me and said, This restaurant is four hundred years old. It’s been here much longer than your country.

As we sat down, course after course came. Our gracious hosts wanted us to try everything, and I happily obliged. My favorite food from the evening was the fried cow jawbone. The only meat was the little ligament connecting the jawbone to something else, but it was tasty, kind of like fried beef jerky. As my dad and our host began to talk about business, I reflected on how professional and industrialized trade with China has become.

What are your shipping terms? Do you ship partial containers? What happens if products are damaged? my dad probed. Our host spoke Mandarin and English, and knew every answer because he was accustomed to working with American businesspeople. At first, I was surprised by how seemingly easy it was for our company to connect with Chinese manufacturers. I soon lost interest in the conversation, though, as I was tried all the delicacies at dinner. On further reflection, the ease of connecting with manufacturers around the globe shouldn’t be surprising, given how important small businesses are to global trade.

Businesses of all sizes can benefit from trade. Small businesses can gain both from exporting an importing goods. Trade gives small businesses access to global markets. If they can find a buyer, they can sell their goods around the globe. Trade creates an immense opportunity, as the United States population is only 4 percent of the world population.¹⁶ Trade gives small businesses the opportunities to grow and reach these markets; however, only 1 percent of small businesses decide to export and focus on selling domestically. Instead, more companies buy materials or parts from overseas.¹⁷

Many small businesses import goods from other countries. Kent International, a bike manufacturer we will meet later, imports bike components, just as our company imported plywood. Importing materials achieves two purposes. First, small businesses cannot do every part of the supply chain because it is unwieldy or unprofitable. Most of all, owning the whole supply chain would require many more employees, making them no longer a small business. Heartland, our cabinet shop, could not plant its trees, wait a few decades, cut them down, mill them, and press them into plywood. Instead, we buy the plywood already finished. Trade allows us to buy the plywood from another company, even if it is in another country. International supply chains are especially crucial for single-owner companies that do not manufacture at all. MinkeeBlue, whose issues with tariffs we’ll analyze later, sources its bags from China instead of producing them. Trade enables small businesses to access the global networks larger companies