Atlas Tool Works, the precision manufacturer Zach Mottl runs with his father and sisters, was founded by his Czech great-grandfather in 1918 in Chicago.
The company once supplied the US telecoms equipment industry, before it began sourcing from China, earlier this century. After remortgaging the father’s house to keep the company alive, Atlas moved into new markets, making precision components for the aerospace and medical equipment sectors.
Now, having struggled to survive for a number of years, the company has a strong order book in the US and is raising workers’ wages. And Mr Mottl is counting on President Donald Trump’s policies — from tariffs on Chinese imports to tax cuts to regulatory reform — to keep it that way.
Based in a down-at-heel, working-class suburb south-west of Chicago, Atlas has annual sales of between $7.5m and $9.5m but less than 5 per cent of its products go for export. And Mr Mottl points to what he believes is a disconnect between the small business community and the boardrooms of big US industry.
“We forget that most of the companies that are leading the charge screaming about tariffs make up a very small bit of the economy,” says the dapper 40-year-old. “But it is small businesses like mine that make up the major part of the economy and I am in favour of tariffs.”
While the conversations among many bankers, chief executives and policymakers in New York and Washington are permeated with the threat of a trade war with China, for many of the people running businesses in parts of America’s manufacturing heartland, any negative impact from the tariffs is paling in comparison to the boost they feel they are receiving from tax cuts and a loosening of regulations.
The promise to restore US industry to its former glory gave Mr Trump slim margins in swing districts of the industrial midwest in 2016, delivering him the presidency. Now, as he faces a referendum on his first two years in office in the US midterm elections in November, he is counting on optimism in the rust belt states to help prevent a Democratic backlash reversing the balance of power in Congress.
President Trump, who believes in leaving no superlative untweeted, has been assiduously courting this constituency. His recent Twitter feed reads like one long celebration of animal spirits of the US economy: the lowest US unemployment rate in nearly half a century; manufacturing confidence at its highest level since records began two decades ago; and the highest small business optimism ranking in history, topping even the morning-in-America days of former president Ronald Reagan.
The White House’s efforts to sell the image of the businessman-president reached its most bizarre moment earlier in October when Mr Trump chatted about industrial policy in the Oval Office with the rapper Kanye West, who then dubbed him a “master of industry”.
Many in the US business establishment would laugh at that honorific. Corporate leaders from both coasts have made dire predictions about the president’s decision to declare a trade war on many of its biggest trading partners, most notably China. Retailers cannot be sure what tariffs will apply to the goods they are importing for Christmas; technology companies do not know whether they can continue to rely on cheap Asian contract manufacturers to hold down prices; carmakers bemoan the impact of tariffs on input prices.
But Mr Mottl, former chairman of the board of the Illinois Technology and Manufacturing Association, says he is “grateful for the president’s ‘enough is enough’ approach on tariffs”, which will help him compete with subsidised imports from China.
He describes himself as an “independent voter”, but adds: “I think the election of this president was part of a positive vibe. Then there was tax reform and now tariffs, a lot of small businesses get it, it’s about bringing the supply chain back here . . . There is a sense of optimism, a sense that the US is the place to do business again.
“We turned 100 this year and it has been our busiest ever. We have seen significant accelerating demand, particularly in the third and fourth quarters. And our order books are full,” he adds.
Mr Mottl works alongside his father and two sisters — one is head of engineering and the other manages the production department. Formerly called Atlas Tool and Die, the family changed the name because “we don’t want to sound antiquated”. He gestures at component parts that Atlas makes for hospital sterilisation machines, for the radar and guidance systems of aircraft, and brackets for telecommunications equipment, all of them mounted on the wall of its conference room, sharing space with grainy black and white photographs of the company down the decades.
Atlas is offering cost of living allowance rises for the first time in years, and matching retirement contributions up to 3 per cent of pay, Mr Mottl says, adding that US tariffs could make the business even stronger. He refers to a long list of components targeted by the three latest rounds of US tariffs imposed on Chinese products: he and some of his customers, he says, will benefit, because overnight their products should seem cheaper.
“These [tariffs] are all part of a perception game as much as reality. Little micro-decisions are being made and people are weighing into their thought processes things like tariffs. People are starting to say, if we are going to make a new product, maybe we should make it in America.”
Plenty of large companies do not share this rosy outlook. Ford, Fiat Chrysler and General Motors cut profits guidance because of the probable impact of tariffs when they reported second-quarter earnings in July, following earlier downbeat statements by Daimler and Harley-Davidson.
A string of third-quarter results this week from industrial groups including 3M, Caterpillar and United Technologies have highlighted higher costs caused by tariffs, spooking US investors worried about the impact of a trade war.
However, Scott Paul, president of the Alliance for American Manufacturing, a lobby group that supports the Trump- inspired “Made in America” campaign, says profit warnings from big global companies do not tell the whole story of the trade war.
“Tariffs are much more a topic of conversation in political circles than on the factory floor,” he says, adding that so far they have had “only a really benign effect on the manufacturing economy.
“Any job losses — and there have been very few actually documented . . . are being more than offset by the strength of the factory economy,” he adds.
Jay Timmons, head of the US National Association of Manufacturers (NAM), says his members have a lot to be grateful for”.
“From a height of 30,000ft, manufacturers are incredibly positive and optimistic about the economy today and the future for their business . . . more optimistic than they have ever been in the history of our survey,” Mr Timmons says. Companies like an environment where “the regulators are actually talking to business” about issues, he adds.
“In the 1950s and 1960s, people took for granted the place of manufacturing in our economy and our society.” Since then, the status of manufacturing had eroded, and “regulatory and tax issues started slamming us”, he adds. But now “manufacturers don’t feel they are constantly having to look over their shoulders, they can look ahead to the future”.
Nicholas Pinchuk is chief executive of Snap-on, which designs and manufactures high-end tools for use in automotive repair and other transport industries. He hosted Mr Trump at an event promoting Made in America manufacturing at the company’s headquarters in Wisconsin last year, where the president posed for pictures against an American flag made of interlocking Snap-on tools. But Mr Pinchuk did not vote for the president: “I wrote in for Paul Ryan,” he says referring to the Republican Speaker of the US House of Representatives and a hometown candidate who did not stand in the election.
He disputes the notion that Mr Trump’s tariffs should be treated as a “hand-wringing event” for global companies such as Snap-On, which manufactures in China and around the world, and produces 80 to 85 per cent of its tools in the markets where they are sold.
“I was asked: ‘Boy, isn’t this a risky time?’, and I said: ‘Risky versus what?’ We just got, for us, 600 or 700 basis points of tax relief, so versus a year ago, is it risky? I don’t think so,” he says. “That is much better than we were a year ago, from a profitability point of view.” Tariffs are just another issue that companies have to manage, he argues, like currency movements.
Lighter regulation under the Trump administration is also boosting manufacturing optimism, he says, noting that NAM estimates the cost of regulatory compliance for US manufacturers at nearly $20,000 per worker a year — or $35,000 for smaller companies.
“Part of the animal spirits that are in the land right now come from the fact that while there may not be any one regulation that most people can point to and say, ‘I have been delivered from evil’, they have a belief that there isn’t going to be a further [regulatory] burden, and that in itself is great.”
While Snap-on in Wisconsin will be a century old in 2020, Goldens’ Foundry & Machine Co in Georgia, which makes parts for trucks, farm equipment, railway stock and other industrial equipment, is already 136 years old. The company was founded by George Golden Boyd’s great-great grandfather and his family.
Chinese competition has decimated the foundry industry, says Mr Boyd, adding that industries such as his will be “completely lost” without politicians like Mr Trump fighting their corner. “We need to move away from this Washington consensus that it’s OK for manufacturing to leave our country,” says Mr Boyd. Mr Trump would not even need to maintain tariffs against China forever, he says, “just long enough so that I can raise the issue of the overvaluation of the dollar at a cocktail party without being treated like I have a third eye in the middle of my forehead”.
He too welcomes the positive psychological impact of the Trump presidency on US manufacturing, lauding “the feeling that we are going to stand up for American manufacturing, we are going to be open for business again” — whatever happens, in the end, about tariffs.
Burl Finkelstein, vice-president of operations for Kason Industries, another Georgia company, which makes components for walk-in refrigerators and latches for delivery trucks, says there is a bottom line for small manufacturers in the US.
“Not everybody loves Trump but they can’t deny they are doing well” under his presidency, he says.
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