Brewing trade battles complicate North Dakota exporters' business
GRAND FORKS—It was dusty on the Odra LLC manufacturing floor, but, given the mission of the place, that was kind of fitting.
Odra, a U.S. subsidiary of a Canadian firm and named after a Polish river, builds street sweepers in a shop not far from the Canad Inns and waterpark in Grand Forks. Despite the complexity that becomes apparent when standing next to a sweeper, a bulk of hydraulic lifts, flexible brushes and operator controls, the vehicles don't often get a spotlight—Odra managers say they're doing their jobs best when they go unnoticed.
Karla Ulloa is an Odra manager. A Canadian national living in the country on a visa designed for managers and executives, Ulloa says the fact the sweepers are made in the U.S. is a boon for sales, giving her firm a lift over those based overseas.
"The value is added in the U.S.," Ulloa said of the manufacturing process, "so it becomes more and more American as we go on."
But, as with the sweepers themselves, the work of being made in America has a lot of moving parts. Like many manufacturers in border states, Odra makes its way in regulatory spaces created in large part by the North American Free Trade Act, or NAFTA, a broad trade agreement that eases the flow of goods and services between the U.S. and its continental neighbors of Canada and Mexico. That agreement is now being renegotiated under the eye of President Donald Trump, who has in the past dismissed the agreement as unfair to U.S. interests.
That process of revision has recently overlapped with a tit-for-tat escalation of tariffs between the U.S. and China. The exchange has caught the attention of North Dakota's soybean farmers, who export the majority of their crop to Chinese markets and could now be subject to newly imposed fees.
The sum total of the tariff tension and NAFTA shuffle have dredged up anxieties around a two-word phrase that could shake up exchange routes the world over—trade war.
The president expressed an early willingness to go to the mat on trade, tweeting last month that trade wars are "good, and easy to win," and adding that the U.S. has been taken advantage of in its agreements with other nations.
David Flynn, University of North Dakota professor and chair of the university's economics department, briefly summed up his own feelings about the trade rhetoric coming from the White House.
"I think it's a lot of bravado," Flynn said, "and I think there's not really a set of metrics to say you've won. What says that we've won a trade war? That is sort of up in the air and questionable, which is another concern of mine."
Flynn was generally favorable to reassessing the nation's trade agreements for the purpose of updating to fit a changing world. But, for the most part, he said the agreements already in place have worked well for North Dakota with their emphasis on promoting U.S. agriculture. When analyzed over the long term, Flynn said the state has a "trade surplus with the rest of the world," with more than 85 percent of its exports bound for Mexico and Canada.
He's not alone in supporting the continuation of that agreement. The North Dakota Chamber of Commerce released a public statement in January announcing its support of NAFTA, as have agricultural advocacy groups representing many of the state's farmers.
Politicians representing rural agricultural districts, while generally supporting the president's agenda, have joined that line to varying degrees. North Dakota Gov. Doug Burgum, a Republican, announced Wednesday, April 11, that he'd be joining a group of other governors and congressional leaders to meet with the president Thursday in the White House to "discuss issues impacting the agricultural community, including trade."
Odra's bristly machines are bound more for the city than the field, but the company's leaders on both sides of the border are still watching to see what will come to the trade environment. Ulloa said the flow of goods and labor now used by her firm has been fine-tuned over the years to make the most of the company's assets while minimizing the amount it pays to duties, tariffs and other financial hurdles between nations.
That math extends to each part and component in a street sweeper, most of which is sourced from producers in the U.S. and Canada. It wasn't long ago that all the company's sweepers were produced entirely north of the border.
Today, the chassis of the sweepers come from Japan, where they're manufactured by a major automotive producer. Once imported, a chassis is brought to Grand Forks, where workers at the Odra facility off South 48th Street modify it for future use. The crews also build custom racks from raw steel with the help of the contracted welders next door.
Sometime during this process, they're also sending major components up for work in the Winnipeg area before trucking them back into the U.S. for final wrap-up in North Dakota.
"In between each of those (steps) is the border," Ulloa said, adding that her crews "interact with the border at least twice for every sweeper, if not more."
Such is the business today in many places along NAFTA borders. And though the final text of that rewritten agreement is still in the works, Ulloa said Odra is already feeling the rumbles of new U.S. tariffs on steel put in place against the Chinese.
"Some of our vendors are already telling us the prices are going up," she said.
It remains to be seen how much of that cost will trickle down to the nation's streets.