How TPP Would Rev the Engine of America’s Automotive Small Businesses | U.S. Chamber of Commerce
May 20, 2016 - 9:00am

How TPP Would Rev the Engine of America’s Automotive Small Businesses


Senior Director, Strategic Communications

When we think of America's automotive industry, we tend to think about Detroit, and we tend to think about large companies like Ford, Chrysler and General Motors. However, every vehicle built in the United States and many of those manufactured abroad are chock full of parts made by small automotive businesses located across America. In fact, for every two workers employed by a U.S. carmaker, another five are employed by a U.S. auto parts producer, most of which are small businesses.

 

And those small businesses have a lot riding on a potential new trade deal across the Pacific.

 

“We have high hopes for TPP,” Yannick Greiner, director of international sales at Owosso, Michigan-based Rugged Liner, said of the Trans-Pacific Partnership, a major trade and investment deal between a dozen nations on either side of the Pacific. “Once a trade agreement is in place, we witness less red tape, less bureaucracy and an overall simplicity in doing business.”

 

A leading manufacturer of pickup truck bedliners, trailer liners, wheel wells and bed mats, Greiner’s company began exporting its American-made products six years ago and now sells to customers in more than 60 countries, including Australia, New Zealand, Chile and Peru. The firm’s exports now account for about 25 percent of sales and support approximately 30 of the company’s 130 jobs.

 

Greiner says that deals like the TPP – which was signed earlier this year but still requires approval from Congress – would help ensure that those numbers continue to tick higher.

 

“As we grow our export business, we’re able to hire more people here in Michigan,” Greiner says, later noting that the TPP would remove trade barriers like tariffs and ease regulations in some of the world’s fastest growing economies. “And as we are able to create new jobs, more money is put into our local economy in ways that benefit other local businesses and workers."

Some 700 miles due south, Tess Winningham, CEO of Alignment Simple Solutions, has similarly high hopes for the trade agreement. Started as a hobby in 2010 and based in Birmingham, Alabama, the company now employs 10 workers and produces top-of-the-line wheel alignment tools. Winningham’s business is already exporting the products to customers in 95 markets around the world, which helps smooth out the ebbs and flows in demand her company sees for its products domestically.

 

“We see a decrease in the enthusiast customer when the weather gets cold,” Winningham explained. “But the U.S. fall and winter are when Australia and New Zealand–both members of the TPP–experience spring and summer. So when enthusiasts are planning their next year’s project, our Kiwi friends and Australian mates are ready to work on theirs, which gives us a more steady revenue line.”

She later added that the TPP would make it easier for her small company (whose QuickTrick alignment tool is pictured below) to both expand its presence in those two countries and look to break into additional markets across the Pacific.

“Over 95 percent of your potential customers are outside of the United States,” Winningham said. “There is absolutely no reason not to broaden your market to sell outside the U.S.”

In nearby Montgomery, Regitar USA is also counting on the TPP to help accelerate the company’s international growth and help it create more jobs in Alabama. A small manufacturer of automotive electronics, the company currently employs 30 people and has plans to add 20 more by the end of the year, spurred largely to its growing export business. International sales now account for about half of the firm’s revenue, and Regitar USA President YT Tsai expects global sales to double in the next four years.

 

Regitar USA’s primary export markets include Mexico and Australia, as well as several Middle Eastern and South American countries. Meanwhile, the company is hoping to expand its presence in the Asia-Pacific region, which would be much easier under the rules in the TPP, Tsai said. “More reasonable, concise, and clear trade agreements would allow us to bring our products to many more countries,” he added.

 

In Sullivan, Missouri, Ace Manufacturing and Parts Company has been manufacturing and shipping American-made clutches for 50 years, specializing in heavy-duty clutches for semi-trucks and race cars. Its products are well respected around the world, and as a result, roughly 30 percent of the 100-person company’s sales are international. Ace’s main export markets include Canada, Mexico, Chile, Colombia, Costa Rica, Guatemala and Nicaragua, all of which have free trade agreements with the United States. Those agreements have allowed the small business to sell its clutches at competitive prices without cumbersome regulations or high tariffs, which has in turn fueled sales growth and job growth.

And in Boise, Idaho, Alison Kelsey is closely monitoring the TPP deliberations, as well. Kelsey is the export manager at Rekluse Motor Sports, another small business specializing in auto-clutches, though her firm’s are built for motorcycles, not trucks. Rekluse’s clutches (including the Harley-Davidson specific models pictured below) are developed, engineered and manufactured in the United States, but they’re sold in more than 40 countries, with exports currently accounting for about 30 percent of the company’s sales.

Rekluse employs 55 workers, and as the company continues to expand its international customer base, Kelsey says her team plans to add more jobs in its sales and marketing divisions. How quickly those sales accelerate and how quickly those jobs are created depend on how simple it is to break into new overseas markets and expand in existing ones, though. While the company is optimistic about the opportunity international markets provide, it has also encountered significant barriers to trade.

 

“It is always difficult to understand the many different sets of standards and tariffs different countries have,” Kelsey said. She later added that the company has a small research and development division and only limited resources with which to protect its brand and innovations abroad. “We would welcome the greater protection of intellectual property provided by trade agreements, as well as common product standards between countries and recognized patent registration,” she added.

 

Kelsey also pointed out that the TPP would reduce tariff costs for Rekluse in important Pacific markets, including reductions of up to 32 percent in Vietnam, 25 percent in Malaysia, and 20 percent in Brunei.

 

“Any reduction in the costs to import our product that can be passed on to the end-consumer makes us that much more competitive,” she said.

 

About the Author

About the Author

J.D. Harrison
Senior Director, Strategic Communications

J.D. Harrison is the senior director for strategic communications at the U.S. Chamber of Commerce.