Is China to blame for collapse of Blue Heron Paper Company?
El Hispanic News
Oregon City, OR — On either side of the river at Willamette Falls, rows of industrial plants monopolize the river’s banks. On the west side, steam rises from the rooftop pipes. On the east side the pipes emit nothing.
The empty steel hulks on the east bank formerly housed the Blue Heron Paper Company. Since the closing in February, none of the workers have been there. In the near future, the machinery will be dismantled and shipped to China.
In mid-October Sen. Jeff Merkley, D-Ore., and two former Blue Heron employs convened on a roadside scenic pull-off to evaluate the death of the 100 year old enterprise. The company had been employee-owned since 2000. It provided incomes for 175 union and non-union employees.
Ron Milton, a machine operator at Blue Heron, said that not only had he lost his house, but his family is facing a stack of medical bills.
With pressure on the company from overseas competition, Milton had not received any pay raises for years.
Bob Herr, another former worker, had similar problems. “My retirement is completely gone,” he said. In addition to wage cuts, the company also raised healthcare premiums.
Herr attributed the mill’s closing to an inability to compete with foreign companies willing to pay much higher prices for raw material needed for making paper.
Closing on a bitter note, Herr said that in closing down, “Bankers got paid, lawyers are getting paid, but employees get nothing.”
Merkley said, “China has been using subsidies to create unfair advantages. China has continued to peg its currency to the U.S. dollar. This gives them an unfair advantage. Our paper industry is being wiped out. If we don’t have jobs in America, we won’t have a middle class in America,” he predicted. “We are not going to have a middle class without factories.”
According to Merkley, China is destroying the paper industry across America. “More mills will fail in the near future,” he added.
“China has not gone by the rules of the trade agreement,” Merkley charged. Although China is obligated to report their subsidies annually, he said, they have reported them only once.
The senator estimated that China is giving $30 billion in subsidies to its companies.
Asked if company mismanagement was at fault, Merkley said no. There’s a pattern: China outbids local mills and raw materials go to China. That is followed by subsidies.
Subsidies from another perspective
According to the USDA 2006 Fiscal Year Budget, $8 billion in subsidies went to American farmers in 2004. Virtually all went to corporate mega-farmers such as Archer Daniels Midland.
Last year, a research paper on international trade was published in Prospect, Journal of International Affairs at the University of California, San Diego. It examined how U.S. corn subsidies affected Mexican corn farmers. It reported, “[Mexico] cannot economically compete with highly subsidized corn produced in the United States.”
If China is engaging in evil subsidies, what is the United States doing?
Merkley said that most Mexican small scale farmers cannot compete with U.S. machine intensive farming.
GuerillaSticker.com came to another conclusion, saying, “… farmers in Kansas and Nebraska sell their own corn in Mexico at prices well below those of the Mexicans. This is not primarily due to higher efficiency. The Americans’ real advantage comes from huge taxpayer-provided subsidies that allow them to sell overseas at 20 percent below the actual cost of production.”
The EWG Farm Subsidy Database website says that commodity subsidies in the United States totaled $6 billion in 2010. Of that $6 billion, half went to the top 6 percent of companies. The top 10 percent of companies received 63 percent of commodity payments.
According to Wikipedia, “Farm subsidies have the direct effect of transferring income from the general tax payers to farm owners.”
Wikipedia notes that although subsidies “… can provide cheap food for consumers in developing countries, low prices are harmful to farmers not receiving the subsidy.”
Wikipedia concludes, “So local farmers, instead of improving the agricultural and economic self-sufficiency of their home country, are instead forced out of the market and perhaps even off their land.”
In this case, many cross the border to earn a living. There they are then labeled as illegal immigrants and criminals.
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