Prescription for a Small-Town Disaster

There is a casualty of Donald Trump’s tariff/tax increase and it may end up being an entire town.

Poplar Bluff, a small, Missouri town, was thriving a year ago because the biggest business in town was selling its product, nails, all over the world. Today the outlook isn’t as rosy. Singularly and specifically due to Donald Trump’s ill-advised tariff/tax on steel, that nail company, Mid-Continent Steel and Wire, has already lost over 60 jobs with more in the immediate future and if the tariffs continue, a complete shut-down by Labor Day 2018.

Mid-Continent was doing great. The largest manufacturer of nails in the country has been a solid, family owned company for 31 years. In 2012 it was sold to Deacero, a Mexican company, that was interested in the U.S. company because NAFTA (North American Free Trade Agreement) offered fewer restrictions on shipping steel into the U.S. After the purchase, Deacero changed nothing within the management, keeping the president and CEO, and little of the workforce. They did pick up the pace of production and doubled the nail output. Demand was there due to the economy and promise of infrastructure projects from the government. They also paid higher wages due to lower U.S. energy costs than in Mexico and offered full health insurance benefits. What could possibly go wrong?

Suddenly, sales dropped 50% in two weeks after the tariffs caused a 25% increase on steel, driving up nail prices. Today, sales are down 70% over one year ago. Foreign companies can now sell cheaper nails. The doors at Mid-Continent are closing.

Poplar Bluff is a town of about 17,000 residences. Mid-Continent employed 500 workers, nearly 3% of the entire town. If Poplar Bluff has average unemployment of 4%, by Labor Day that number will jump to 7%. Looking closer, the 2010 census lists 24% under 18, too young to work, and 12% over 65, too old. So that means the effective unemployment rate would be over 9%. Those are Recession era figures–crippling numbers, unnecessary during a thriving economy. But, unemployment from Mid-Continent is just the tip of the iceberg.

A typical small town, especially one with manufacturing as a core, has a wide variety of small, often family owned businesses to serve the community. There are usually cafes that serve lunch and taverns that cater to the after work “Happy-Hour” crowd that will immediately lose a big chunk of regular business because the nail-makers won’t be out going to lunch or stopping for an after-work beer. Those income losses will increase because the lunch-counter owner won’t be able to afford his after-work beer and the tavern owner won’t be out eating lunch or having coffee. The movie theatre and other entertainment venues will suffer the same fate when the town’s people can no longer add date-nights or family outings to their budgets.

Even more pain will occur when 1,500 to 2,000 people lose healthcare in the city (500 workers plus two or three others who depend on each of those workers). The local hospital will have to incur costs when uninsured people come for healthcare and treatment. This can close a small hospital. At minimum costs will be passed on to all citizens at a time when they can least afford to pay more. The schools will lose local tax revenue and have less to spend on the education of those 4,000 town-kids. Town rejuvenation will not occur as young people will not stay and none will move in to start a career making nails or serving Poplar Bluff’s citizens lunch or a beer.

It is more than likely that Poplar Bluff will become a Ghost Town.

Big cities are not immune to this scenario. Detroit, Michigan was historically the auto industry world epicenter. In 2008 a perfect storm of automation and technology crashed into a Great Recession and set the industry on its tail. The companies themselves have been revived, but the factories are functioning without anywhere near the cache of human workers required in the heyday 1950s and ‘60s. Unemployment remains high. The Detroit story is quite different from Poplar Bluff’s, but the impact on support businesses and services around the city is the same. The national economy is back, but Detroit still struggles.

Poplar Bluff is an innocent victim of presidential error. All this pain due to this Republican Administration deciding to challenge the 25-year-old NAFTA treaty and add a truly unnecessary tariff/tax on steel will replicate the domino effect of what happened in Detroit in Poplar Bluff.

The 4.1% yearly economic growth shown over the last quarter is reason to cheer, but it’s not the whole story. Poplar Bluff will not stand alone. State infrastructure projects are already being cancelled due to the increase in steel prices. Farmers will get a subsidy that may get them through harvest, but will not pay off the yearly loans that typically come due on January 1st. There will be countless other stories of companies, small businesses, and farms much like Mid-Continent Steel and Wire to more than offset any job creation in U.S. steel.

Farmers don’t want subsidies, they want to sell their crops. They certainly don’t want them rotting in the fields. And, Mid-Continent wants to sell nails around the world and help support the economy of Poplar Bluff, Missouri. The mostly Republican area still supports the man they helped vote into office, but voter after voter, time and again have looked into a journalist’s camera and said, “Mr. Trump, you need to fix this–now!”

 

All editorials, Letters to the Editor, columns and comments are the sole opinions of the authors and do not reflect the views or opinions of Mesquite Local News.

Comments

  1. David M Shapera says:

    On the whole, our trade treaties are very one sided. That is quite obvious and that is why many countries are whinning. They know full well that our past administrations have opened up our markets but others closed theirs to our goods. I support President Trump in trying to even the trade field. Yes, one can always find some place where the fairness is questioned. Frankly, I don’t give a hoot about Mexico’s economy whatsoever. Anything subsidized by a government will always beat out American manufacturing. Time will tell if President Trump is right. I hope he is and that our crazy unfair trade agreements are a thing of the past.

    • David Petrillo says:

      Please stop reading one sided news stories or watching Trump TV. Our trade treaties have led to a world economy, which has not only made us the wealthiest country in the history of the world but has led to the creation of the middle class in a lot of what used to be third world countries. Mexico, China, and India are just a few of these countries. Fewer people from Mexico are heading to our border as a result. More middle class people in the world are people who can buy our products and travel to Las Vegas. All in all, a win for both sides. Economics is a tough profession to understand so I can understand why you do not understand the global economy. One tariff increas can have thousands of unintended consequences. Our President does not have the intellect to understand that fact.

      • mike young says:

        David – I think Donald Trump just might know a little more about economics then you think. Countries subsidize or just sell under cost to gain business and we lose steel jobs for example, our workers lose their jobs and we have to depend on others for steel which is a strategic material. This makes us very vulnerable to suppliers. Yes, we may lose a few jobs here and there but our steel jobs will come back because we now can compete against subsidized steel production. I think steel workers will make a little more money than nail makers. This will happen in many industries but it is better for us to be steel producers than nail producers. We have given other countries more then a leg up so now its about time we help our own people. I care about other countries but we have given them enough of our resources. Now it is our turn to put our people back to work. Our government’s job is not to give away our jobs but to make American lives better, not people in China or India. If you feel it is your calling to help people in other countries, then send your money or move there and start a business but don’t give them some American’s livelihood.

        • David Petrillo says:

          Would you, or anyone else, invest billions of dollars based on the word of Trump? I doubt it. The global economy is here to stay. If we ignore it or go into our shell, the world will go on without us. Every company of any size is a global company. That includes steel and aluminum companies. And the auto companies are all global. Our economy is doing great, due of course to our wonderful President, so I see no need to bail out of the global economy. However, if you and your friends have the money, maybe you could build a new steel mill out on the Virgin River.

  2. Derek Drahlmann says:

    As a citizen of Poplar Bluff I can say this is beyond a stretch of the truth. So in all your elaborate research I assumed you traveled here and didnt see our new high school, new hospital, new commercial development including several large box retailers new highway infrastructure and countless other new developments around town?! Poplar Bluff does have a city population of 17,000ish; however, Butler County is close to 50,000 most of whom consider Poplar Bluff their home. It is unfortunate Midcontinent nail was closed. But I can assure you it is not turning Poplar Bluff into a ghost town. Next time you decide to write an article on a small town over 1000 miles away, dont rely on internet stats and assumptions. Do your homework. Travel here. You are as qualified to write an article on Poplar Bluff as I am about Nuclear fusion…..Btw I’m in real estate business here in Poplar Bluff in case you are wondering my qualifications….

    • Josh Flory says:

      I have seen the new development and it is very exciting to have that coming to completion in town! I do worry though, if that many people lose their jobs it can’t be good for all those new retail locations? Working in real estate would you say a lot of your customers work at the nail factory? Do those workers rent more than buy? I really hope the growth we are seeing in town over the last few years continues. Those new retail and hospital locations were planned sever years ago, before any of these layoffs 🙁

      • Terry Donnelly says:

        I have not been to Poplar Bluff as you suggest, but I did talk to three Missouri residences who are all familiar with Poplar Bluff and they paint a different picture from yours, Mr. Drahlmann. I certainly hope my prophecy doesn’t come to pass in your town or any others, but history and economics suggest some difficult times ahead.

        • It is not our largest business or factory one and two we all knew the tariffs were coming. Exactly what President Trump stated as part of his bringing jobs back to America. He ran on this promise. We voted him in hoping finally to get the change we had been promised with the previous do nothing administration. But American steel, invest in your neighbours and they will in turn invest in you. Bring jobs back to America. Make America great again. Mid Continent Nail had 15 months to change their trade practices. However they would rather keep profits higher and feed into people’s emotions to affect change. Be part of change. Invest in AMERICA. it’s easy.

      • Derek Drahlmann says:

        I should be more clear on what I posted earlier. The nail factory did not close. It laid off part-time employees. The full time employees still have their jobs. The article refers to the fact that the entire plant would lay off all their workers. While I do not like to see anyone losing their jobs, this is not going to affect the overall economic condition here in Poplar Bluff. Poplar Bluff draws from many neighboring small communities for it retail and commercial businesses. Poplar Bluff is continuing to grow and thrive. This article was a poor attempt to try to discredit the President’s economic policies and written by someone who has no idea what they are talking about. The article was an attempt as a shock factor to those in his local community and is not based on facts or any actual evidence, only assumptions and poor internet research.

  3. Brandon Francis, a proud teacher says:

    The NAFTA was a poor deal for America. Why should this country pay more simply because we can afford it? President Trump has been vocal about these tariffs and taxes hurting American business since the 90’s. President Trump is using our economic influence to level the playing field for American business. If you could see past the end of your nose, you would realize he is pushing for free global trade or a true free market. And for the record, I work in Poplar Bluff. The individuals I have spoken with who have been affected by these tariffs have received a government kick back and are doing just fine. They’re still going to “happy hour” and getting a good laugh at self proclaimed economists such as yourself.

    • Josh Flory says:

      Can you please elaborate on the government payment the people who were laid off received? I had not heard about that, is that standard unemployment or something else?

      • Brandon Francis says:

        I don’t know about the lay off’s. But some framers have reported they received reimbursement on the extra taxes placed on their crops.

  4. Aaron Lampe says:

    Ok. I’m guessing you vote democrat. Fair enough for you to call into question the policies of our president since he is ideologically opposite to your view points…For future reference realize that what jobs are being lost at the factory are “seasonal and temp” jobs. If the factory did shutter another would soon move in and fill the void. I don’t know anything about Mesquite other than it’s in Nevada and is partially liberal. I have no idea if you have factories that could close..Here’s a thought research your theories before posting what three people from Missouri who may or may not be “familiar” with Poplar Bluff. I’m familiar with going to the doctors office but that doesn’t make me a physician.

    • Brandon Francis says:

      I have a theory. Here we have a loyal democratic with his marching orders to go after Trump. The drive by media is going bananas because, despite everything, they can’t separate Trump from his base supporters. So we see puff pieces like this painting a grim picture of what the Trump policy’s are doing to his core supporters. This is designed to scare and shock Moderates, Libertarian, and low information voters. The message is simple, vote Democrat. If Trump will is willing to do this to his base, what is he going to do to you? These pieces are popping up all over blue states. Don’t doubt me folks.

      • David Petrillo says:

        Are you going to be on the “right side of history”? You admit that Trump could shoot up 5th Avenue and you would not care You agree with taking children from their parents. You agree that it is Ok to grope a female. You agree that it is OK to discriminate against blacks and Jews when renting apartments. You agree that we should make our friends in Europe and North America our enemies and make Russia and North Korea our best friends. And as for your theory, I think it is a bunch of crap. Your President is the first atheist and the most immoral President in history. He has no foundation based on honesty and integrity. All in all, a complete idiot.

        • Aaron Lampe says:

          Your response had nothing to do with anything I said other than saying Trump…If you commit a crime and your children are with you would the police take your kids and put them in protective custody?…I don’t care who the man did or didn’t grope or rent to…look just say you hate trump and go on…I didn’t care for most of the obama presidency or the Clinton presidency..but of course I wasn’t constantly being up his birth certificate or some superficial unrelated useless talking point.

  5. Beth Fletcher says:

    Hey Terry,

    I guess we democrats shouldn’t talk about Trump anymore just sit back and watch the economy explode cause I am sure it will. If one person loses their job because of Trump it is appalling. It will get worse before it gets better but Trump will just LIE his way through it and come up with some excuse.

    • Aaron Lampe says:

      See counter productive..Democrats and their unwillingness to accept that Global Economic Policy paid for by American Unemployment is a bad idea. What do we need a middle class for in the United States? Here’s a thought. All of your socialist, communistic liberal policies have price…if Democrats want these policies then from now on we should boycott Democrats. Don’t buy from their businesses, don’t hire them( not like they work anyway), if you must buy from them just take it..it should be free by their reasoning.

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