Made in America?

Author:Doherty, Brian
SUMMARY

Television sets made by Zenith Electronics Corp. Zenith Electronics Corp claims that it is the only US-owned company that manufactures color televisions in the US. However, Zenith has only one minor assembly plant in McAllen, TX, in which a small crew is engaged in putting together television kits manufactured in Mexico.

 
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Zenith Electronics Corp. claims to be the only American-owned company that manufactures color TVs in the United States. In 1985 it began assembling Tvs in Mexico. During the next eight years, it moved almost all of its TV-assembly operations there. But it continued to maintain a minor assembly plant in Springfield, Missouri. A worker recently laid off by the plant says managers told employees there that "Zenith will always maintain one assembly line at the plant so Zenith can claim to be an |American manufacturer of color TVs.'"

This is not simply a matter of advertising slogans or patriotic fervor. Because of U.S. anti-dumping laws, there are definite advantages to keeping that assembly line going. Under anti-dumping laws, a U.S. manufacturer can ask the Commerce Department to fine its foreign competitors for selling goods to Americans at a price that's too low.

The idea is to stop foreigners from establishing an unbreakable monopoly by driving American producers out of the market through predatory underselling. Since there is no historical or theoretical reason to think this is likely to happen, the main effect of the laws is to make a range of products, from forklifts to pistachio nuts, more expensive. This is bad for consumers but good for companies like Zenith. The catch is, you can't file an anti-dumping complaint unless you're an American producer.

Zenith has been bringing anti-dumping complaints against its foreign competitors for decades. Japanese TV manufacturers have been coping with anti-dumping orders since 1971. Zenith's Korean and Taiwanese competitors have been operating under them since 1984.

After the Commerce Department receives a complaint, it has to decide whether dumping has occurred. This involves looking at prices in the company's home market or calculating a "constructed value" for the foreign-manufactured item--essentially, a price high enough to be considered "fair." Commerce estimates the foreign company's cost of production, adds 10 percent for administrative overhead, and throws in another 8 percent, the department's notion of a "fair" profit. If the selling price in the United States falls below the constructed value, the company has to pay extra import duties. Commerce adjusts the amount in an annual administrative review.

These reviews and the court appeals they generate can drag on for years or even decades. Because of undecided court appeals, none of the Taiwanese TV companies--AOC International, Tatung...

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