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How one U.S. company is trying to surf the tides of foreign trade

September 8, 2016 at 6:25 PM EDT
Trade has become a major theme of this year’s presidential race -- how it affects jobs, wages and manufacturing in the United States. Economics correspondent Paul Solman takes a look at one California-based surfboard company that has been bruised by its Chinese competition, and how the effects of foreign trade have impacted politics.

JUDY WOODRUFF: But, first: a different take on the fallout from trading, and particularly with China.

That issue has been, of course, one of the major ones we have heard about throughout this election season.

Our economics correspondent, Paul Solman, has the third in his series of stories reported from the waves of the California shore and beyond.

It’s all part of Making Sense, which airs on Thursdays.

PAUL SOLMAN: In San Clemente, California, Brad Parks and Shad Eischen, confined to wheelchairs since their teens, about to shred the surf.

SHAD EISCHEN, Surfer: I figured, if I’m still alive now, you know, this is the least thing that’s going to worry me.

PAUL SOLMAN: OK, sit-down surfing on a waveski, but plenty of challenge if you’re paraplegic.

BRAD PARKS, Surfer: I’m having just a blast out here just meeting new guys and being down here and surfing.

PAUL SOLMAN: The man who designed and shaped their waveskis is surfing legend Steve Boehne, who regular viewers might recall complaining about unfair trade here on the “NewsHour” three years ago.

STEVE BOEHNE, Founder, Infinity Surfboards: Ninety-five percent of the boards being sold in the world weren’t made by us in California, who started the surfboard industry. They’re being made in other countries. And so my workers are competing for a job against a guy in another country who’s making a 10th of his wages.

PAUL SOLMAN: This has become a main theme of this year’s presidential campaign. But it turns out Steve Boehne was ahead of the curve, or at least ahead of most economists, who have argued since Adam Smith that trade is the key to economic growth by spurring competition and thus lowering prices, and arguing that, in our era, technology replaces jobs, not cheap foreign labor.

GORDON HANSON, Economist, University of California, San Diego: But as we went into the 2000s, with the rise of China, the situation changed.

PAUL SOLMAN: It’s what economist Gordon Hanson learned from a soon-to-be published academic study he co-authored: that Chinese imports really did hurt U.S. wages and employment, but selectively.

GORDON HANSON: What we were surprised by was that those effects were not distributed kind of broadly and evenly across blue-collar workers in the United States, but really concentrated on industries and workers and communities that produce goods that compete in the same arenas that China does.

PAUL SOLMAN: Clothes, furniture, low-end electronics, in blue-collar strongholds and key battleground states like Pennsylvania and Ohio.

GORDON HANSON: Those workers in those regions are the losers of globalization in the United States.

PAUL SOLMAN: You look as if you’re a painting from the 1950s or something on the floor.

DAVE NAYLOR, Surfboard Maker: It’s an abstract that’s created by accident.

PAUL SOLMAN: And while our surfboard makers are a long way from trade’s losers in the Rust Belt, they feel their pain. Dave Naylor, who coats the boards with fiberglass, told us back in 2013 that he was earning less, in real dollars, than he made 20 years before. Today, Naylor says he’s doing better, but:

DAVE NAYLOR: Only for the reason that, instead of just working one job, I got a little part-time job too. But it’s — I’m still not making a lot more money, you know?

PAUL SOLMAN: And how much is that?

DAVE NAYLOR: I make about 40 a year. I have a tough time living on it. I mean, I have a tough time.

PAUL SOLMAN: What are you doing, David?


DAVE BOEHNE, Marketing Manager, Infinity Surfboards: I’m Snapchatting this monumental, historic moment.

PAUL SOLMAN: And while the boss’ sassy son Dave is doing fine — he’s Infinity’s marketing manager — most of his friends are not.

DAVE BOEHNE: They have jobs now, but it’s not nearly as what they were making before. So, the future, I’m not sure. It has seemed to be that way for quite a while.

PAUL SOLMAN: So who did Dave Boehne favor for president?

DAVE BOEHNE: I was a Bernie guy.

PAUL SOLMAN: And that brings us to the second surprise of Gordon Hanson’s study.

GORDON HANSON: Areas that initially leaned Republican, when they were hit harder by import competition from China, moved hard to the right.

DONALD TRUMP (R), Presidential Nominee: Because China has our jobs.

GORDON HANSON: But areas that leaned initially Democratic leaned harder to the left.

SEN. BERNIE SANDERS (I-VA): We have lost millions of decent-paying jobs. That has got to end.

GORDON HANSON: So we’re at this complicated moment in American history, where economic polarization and political polarization are interacting.

PAUL SOLMAN: Meanwhile, your economics correspondent was interacting with a wet suit, prepping for a surf session with Steve Boehne, a moderate Republican until the advent of Donald J. Trump.

STEVE BOEHNE: Finally, all the politicians are talking about the free trade agreements and getting jobs back in America. And Trump was the first guy. So, I was pretty gung-ho Trump. But on his social issues, I have a few problems. And so, you know, I voted for someone else in the primary.

PAUL SOLMAN: Who did you vote for in the primaries?

STEVE BOEHNE: I voted for Bernie.

PAUL SOLMAN: Well, you can’t vote for Bernie anymore.

STEVE BOEHNE: No, so I’m voting for Hillary.

PAUL SOLMAN: Seventy miles to the southeast, Bob Grande, founder and CEO of Quality Controlled Manufacturing in Santee, California, remains a Trump supporter.

BOB GRANDE, Founder, Quality Controlled Manufacturing: Absolutely. I don’t condone all the rhetoric and everything that goes along with it, but you know what? I think our country needs a little bit of a wakeup to where we can really start marching and being more competitive in the world. Fair trade is so important to being a healthy business nation.

PAUL SOLMAN: One casualty of unfair trade, says Grande, is the decline of the American work force. To find employees for his high-end machine shop, he has to train them, since so few young people have the skills or even think of manufacturing as a career option.

MICHAEL NIEMEYER: Well, to be honest, machining never came to mind.

PAUL SOLMAN: But Grande’s training academy, six months and then a job starting at $15 an hour, was better than Michael Niemeyer’s alternatives.

MICHAEL NIEMEYER: Before this, I was bouncing around minimum wage jobs, cooking food, deliveries, cleaning, maintenance type stuff.

PAUL SOLMAN: James Halladay worked in a rental yard.

JAMES HALLADAY, Trainee, Quality Controlled Manufacturing: I was working from 7:30 in the morning until 2:00 in them morning, sometimes six days a week.

PAUL SOLMAN: Seven-thirty a.m. to 2:00 a.m.? How can you live like that?

JAMES HALLADAY: You don’t. And the problem is, is a lot of the people I know are working like that. And that’s just their day-to-day life, get up, go to work, go home, go to bed. Get up the next morning, do the same thing.

PAUL SOLMAN: Grande’s machine shop is booming, but only, he says, by making high-end parts for airplanes, for example, that foreign competitors still can’t match.

BOB GRANDE: The reason that we’re here now, still in business, is because we do the most complex machining there is. And China isn’t there yet.

PAUL SOLMAN: Same story we heard from the king of custom surfdom, Steve Boehne.

STEVE BOEHNE: We do it by making the latest design. The good surfer, you know, this is his sport. He wants the best surfboard he can buy, just like the best golfer wants the best golf clubs.

PAUL SOLMAN: And it’s not just he, because I’m looking out there and there are an awful lot of she’s out there.

STEVE BOEHNE: That’s right. They’re all on boards made overseas. And they’re all beginners. Well, in a couple of years, they’re going to be getting boards from me, because they’re going to want a better board.

PAUL SOLMAN: Better boards, and new ones like the waveski, which work for the disabled and those of diminishing ability as well. It’s not for nothing this stretch of coast is called Old Man’s Beach.

But back to business. How long can Steve Boehne survive if trade deals don’t address supposedly unfair advantages, like cheap Chinese boards that glide into U.S. ports duty-free, while other countries try to block U.S.-made boards with tariffs?

The proposed Trans-Pacific Partnership, a giant free trade deal with Pacific Rim countries, but not China, would actually kill those tariffs. But, for now, Boehne says he’s forced to import and sell cheap Chinese boards in his shop, and for export to Australia and Japan, make Infinity boards in Vietnam.

STEVE BOEHNE: I’m playing the game the way I’m given it, given the rules.

PAUL SOLMAN: So, I put the question to economist Gordon Hanson.

Trade barriers, tariffs against Chinese goods would preserve the jobs of American workers, wouldn’t it?

GORDON HANSON: That would bring manufacturing production back to the United States. There’s no guarantee it would bring manufacturing jobs back. As that production came back, it would be much more automated, much more capital-intensive.

PAUL SOLMAN: So we’re not going to get the jobs back, no matter what we do?

GORDON HANSON: Realistically, we’re not. Lower-end jobs in manufacturing, jobs that were part of the American middle class in the 1950s, and 1960s and 1970s, those jobs are gone. What we have got to be doing is looking forward.

PAUL SOLMAN: Riding the waves, gingerly, from Southern California.

If you turn me into a surfer, I will never forgive you.

Paul Solman for the “PBS NewsHour.”