NAFTA Helps Small Business Manufacturers Grow | U.S. Chamber of Commerce
Aug 16, 2017 - 12:00pm

NAFTA Helps Small Business Manufacturers Grow


Senior Director, Strategic Communications

iwp40745.jpg

Workers load a segment of drilling equipment onto a truck at Ellicott Dredges.

Nearly two decades ago, Drew Greenblatt purchased a small manufacturing business in Baltimore, Maryland. Since then, he has nearly doubled the number of employees at Marlin Steel Wire Products. Over that same period, he doubled the firm’s sales. Then he doubled that. Then he doubled it again.

In large measure, Greenblatt’s success and Marlin Steel’s growth have been fueled by exporting the company’s wire baskets, wire forms and sheet metal products to customers abroad, with more than a quarter of the company’s revenue now stemming from international sales. Looking at it another way, seven of the Marlin Steel’s 29 workers’ jobs are directly tied to the company’s exports.

 

Greenblatt would like to see that number continue to grow.

From a business perspective, the foremost goal of U.S. trade policy should be to tear down barriers so companies like mine can start exporting to new markets … Free trade agreements have helped us accomplish this in the past and will help our business grow in the future.

No trade deal, Greenblatt adds, has been more critical to the company’s success than the North American Free Trade Agreement, commonly known as NAFTA.

Signed a few years before Greenblatt purchased his company, NAFTA stripped away trade barriers between Canada, Mexico, and the United States, making it much simpler for American companies like Marlin Steel to sell products across our northern and southern borders. Greenblatt credits the deal with helping his team break into key markets in Mexico and Canada, which are now responsible for approximately 15 percent of Marlin Steel’s total annual sales.

Notably, the company’s largest client operates a facility in Mexico that uses Marlin Steel’s products. Greenblatt is currently in discussions with the client over an order that would allow him to effectively double the size of company, and in the process, create many new jobs back in Baltimore.

“These are middle-class, good-paying jobs,” said Greenblatt, whose company sells its products to automotive, aerospace, telecommunications and pharmaceutical companies:

They’re the type of jobs that pull people out of poverty, that can lift people into the middle class, that can pay for their kids to college. These are the type of jobs that our community needs.... NAFTA is a good thing for our country. It added new markets that we want, and now it’s a piece of cake to do business with Canada and Mexico.

Greenblatt’s company isn’t alone. Many small businesses across the country have benefited – and continue to benefit – greatly from NAFTA, which essentially created a tariff-free North American trading zone. Today, trade with Mexico and Canada supports nearly 14 million American jobs spread across all 50 states, with roughly 5 million of those jobs directly attributable to the boom in trade that resulted from NAFTA. Today, Canada and Mexico buy about one-third of all U.S. manufactured goods — more than the next 10 largest markets combined.

This week, negotiators will begin meeting in Washington to modernize this important agreement, which was enacted more than 20 years ago, long before the existence of e-commerce and the emergence of the digital economy. With that in mind, it’s certainly reasonable to look for ways to bring the agreement into the 21st century – but it’s also important to remember the boost that NAFTA continues to give companies large and small across America.

Related: Bringing NAFTA Into the 21st Century

Less than two miles up the road from Marlin Steel is another company that counts on NAFTA. Ellicott Dredges, the country’s leading manufacturer of dredging equipment (used to deepen waterways), and its employees were vocal supporters of the trade agreement back when it was being debated in the early ‘90s. Ellicott President Peter Bowe says the trade deal immediately gave his 100-plus-year-old business a boost – and it continues to pay dividends to this day.

 

One month after NAFTA was signed into law, a Mexican road construction firm bought two dredges from Ellicott (the company would go on to name the dredges after then U.S. President Bill Clinton and Mexican President Salinas). Fast forward 20 years, and Ellicott continues to do more and more business in Canada and Mexico, and right now , Bowe is competing for major business deals with customers in Canada and Mexico that would elevate profits for 2017 and allow Ellicott to continue adding jobs in Maryland and Wisconsin.

NAFTA, Bowe emphasized, “continues to make America a magnet for jobs.”

Staying in Maryland, about 40 miles to the west in the town of Gaithersburg, Bobby Patton tells a strikingly similar story about the impact the agreement has had on his small business. Patton, the CEO and president of Patton Electronics, and his 170 employees design and manufacture an array of data and telecommunications electronics, including routers and mobile surveillance systems, which they now sell to customers in more than 120 countries around the globe.

Not surprisingly, Mexico and Canada were among Patton’s first few export markets, and they continue to be among the company’s most profitable. Also not surprisingly, those products started flowing across our northern and southern right around the same time NAFTA was enacted.

“Before NAFTA, we had very little sales to Mexico and Canada,” Patton said, adding that the provisions of the deal made it easy to conduct transactions with America’s neighbors. Between 1992 (when the deal was signed) and 1994, the company’s sales to Mexico and Canada more than doubled, from around $100,000 per year to more than $250,000 annually.

While the company’s exports and domestic sales both hit a speed bump following the last recession, Patton Electronics has bounced back in the past five years, in large measure due to a rebound in revenues coming in from Canada and Mexico.

“Since 2012, we’ve returned to growth,” Patton explained. Most notably, he pointed out that his firm “has sustained four years with an average 17 percent compound annual growth in revenues from Canada and Mexico between 2013 and 2016.” Patton added:

NAFTA continues to be a powerful engine for growth and job creation for our company.

Take Action: Tell Washington to protect and preserve the benefits of NAFTA

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.