Dick Locke on the Dangers of Protectionism (or is it Cluelessness?)

Editor’s Note: This is Dick Locke‘s second post as a regular contributor on Sourcing Innovation. (His previous guest posts are still archived.) Dick, who has delivered seminars to over 100 companies across the globe, is a seasoned expert on International Sourcing and Procurement who wrote the book.

There was a letter in today’s New York Times from Thomas Gibson of the American Iron and Steel Institute that said, in part,

Steel imports are taking historically high market share while the domestic industry is producing at half its capacity. American mills are on hot idle waiting to produce quality steel for America’s needs. Let’s stop being apologists for foreign protectionists and put Americans back to work!

It would be nice if Mr. Gibson said why US industry is at half capacity. Is it Quality? Flexibility? Price? Overcapacity? I certainly don’t know. Maybe he doesn’t either. It must be….(cue the ‘Satan’ music from Saturday Night Live)… Protectionism!

I do know that if the Institute tries to force buyers of steel to use a more expensive or otherwise less desirable steel because it’s made in the USA, it puts users of steel at a competitive disadvantage to their foreign competitors. That hastens the departure of users of steel (for example, the auto industry) to other countries. This isn’t a zero sum game. Protecting a US manufacturer of a basic product hurts higher level industry and the ultimate consumers of that product.

Let’s not go down that path.

Dick Locke, Global Procurement Group.