ALLIANCE LAUNDRY SYSTEMS’ 2,042 employees, three of whom are shown here working on the domestic dryer line in 2004, are renowned for building laundry equipment that, due to its durability, is of great value to consumers and commercial laundries.                Tim Lyke photo
ALLIANCE LAUNDRY SYSTEMS’ 2,042 employees, three of whom are shown here working on the domestic dryer line in 2004, are renowned for building laundry equipment that, due to its durability, is of great value to consumers and commercial laundries. Tim Lyke photo

     The Trump administration’s decision in January to impose a steep tariff on washing machines manufactured abroad, and the president’s announcement last week to impose a 25-percent tax on steel importers, are consequential measures for a community whose largest employer is a home- and commercial-laundry equipment manufacturer.

     Alliance Laundry Systems, however, is publicly stating it will stick to its knitting in the midst of market forces and government decisions it cannot control. It remains, after all, the world’s leader in commercial-laundry equipment manufacturing and sales. And its 2,042 employees rightly are proud to make products known for their durability, perhaps making them less vulnerable to fluctuating costs and retail pricing necessities because consumers expect to pay more for quality.

     Still, might a washing machine tariff spawn a trade war that could hamper exports, or might a tax on steel imports affect costs to the point that Alliance has a more difficult time competing in markets abroad?

     Yes, said Soren Hauge, Ripon College’s John Barlow Murray and Nellie Weiss Murray professor in economics. That “Barlow” name is apt, and not just because Hauge lives a few houses north of Barlow Park. It was Joe Barlow who, working with John Seelig, founded a Ripon company in 1911 that became  Alliance Laundry Systems.

     Hauge observed a proposed steel tariff will “substantially” raise the price and cost of U.S.-made steel mill products, as this country imports about 27 percent of its steel (source: Department of Commerce’s International Trade Association). Prices may not rise by 25 percent, Hauge said, “but the U.S. is not a large enough share of the world market to greatly depress world steel mill product prices by restricting its imports, so the increase is likely to be closer to 25 percent than to zero.”

     A consequence of such a dramatic price increase is that laundry equipment will become less affordable here at home and make Alliance’s distributors abroad have a harder time offering its washers and dryers at competitive prices, no matter their durability. ...
 
     Other claims of benefits from calls for U.S. tariffs on imports of manufactured goods such as steel and withdrawal from trade agreements such as the Trans-Pacific Partnership and the North American Free Trade Agreement have national security implications, which Secretary of State Rex Tillerson and National Security Advisor Jim Mattis have warned against in terms of breaking up America’s strategic alliance, as well as economic consequences.

     “An economic claim with more support in theory and data is that freer and growing international trade has hurt the livelihoods of American workers with education levels and skills similar to those of the majority of workers in countries such as Mexico and China, where wages are much lower,” Hauge said. “There has been a huge increase in income inequality in the U.S. and many other countries around the world over the past four decades. The economic pie has been sliced in more and more unequal pieces over that time. Global wage competition has contributed to that inequality, along with other causes such as the information technology revolution (automating manufacturing, etc.). President Trump spoke to the concerns of American voters about this more during the last election.”

    The danger of trying to reverse that trend with trade restrictions, Hauge added, is that trade generally contributes to economic growth in several ways. “Alliance Laundry Systems would not be such a large a company and employer in Ripon without a global market in which to sell the products it makes in Ripon. ...”
                                  — Tim  Lyke

     To read the entire editorial, see the March 8, 2018 edition of The Ripon Commonwealth Press.