Along with running a 200-employee manufacturing company, Al Lubrano spends about a third of his free time advocating for manufacturers, especially in terms of U.S. trade policy, which he says puts domestic companies at a disadvantage in the global marketplace.
Lubrano works not only at the state level, but also nationally. He is on the National Association of Manufacturers’ steering committee for small and midsize manufacturers, and more recently, he joined NAM’s U.S.-China Business Relations Task Force, which met this month with senior Bush administration officials in Washington.
PBN: What was the purpose of the May 8 meeting?
LUBRANO: This was primarily being driven by the currency imbalance. The issue that we’re trying to drive home as manufacturers … is first and foremost the currency issue. … Instead of free-market forces allowing the [Chinese] currency to be where it should be, it’s manipulated to keep it pegged to the dollar at a rate that is very advantageous to China. There are estimates from various economists … that the China yuan is undervalued anywhere from 20 to 40 percent … that means that they have a 20- to 40-percent advantage on top of everything else.
PBN: This was your second meeting. Do you think the meetings have been fruitful?
LUBRANO: Yes, I do, and some evidence of the fact that they’ve been fruitful is the recent comments by the Chinese … they are feeling some of the heat. Whether or not they do anything is another matter, but I am very impressed by [U.S Treasury Secretary Henry Paulson, Commerce Secretary Carlos Gutierrez and U.S. Trade Rep. Susan Schwab]. They understand the issues. I think within the political system that we have to work in, they are trying to get things done.
PBN: What does that mean?
LUBRANO: It’s a political system that we work in. And they have to do things in that system to the best of their ability. I think the real risk here is that if significant progress is not made, we will see legislation, and legislation is not necessarily the right way to go.
PBN: Why might that be bad for U.S. manufacturers?
LUBRANO: Because at the end of the day you could get hurt. … Let’s take steel, for example. Let’s say the Chinese steel industry manipulates steel and begins dumping steel in the United States. That begins to hurt our steel producers. Our steel producers now go forward and get legislation passed to protect them. So we now apply artificial duties to steel. Now we’ve got a medium-sized manufacturing company that needs steel to manufacture its product and compete in the global market. Their ability to buy inexpensive, market-driven steel product is gone, so they have to buy higher priced steel … they lose business.
PBN: What are the major issues in the fight to level the playing field for U.S. manufacturers?
LUBRANO: The real driving issues with China are currency manipulation, intellectual property … and then rules and regulations. … Labor costs aside … when you look at the structural costs [U.S.] manufacturers have to deal with, those costs include … litigation, they would include energy, they would include taxation, they would include employee benefits. … About four years ago [a NAM study] said we were a bit over 26 percent disadvantaged when compared to our top 10 trading partners. … They updated that recently and it was 31.6 percent.
PBN: Why is that significant?
LUBRANO: We’re going the wrong way. If you take that 31.6 percent and you add it to the 20 to 40 percent that the Chinese currency is undervalued, manufacturers come out of the box with a minimum 50-percent disadvantage without even considering labor. There has never been an industrial country that didn’t have a strong manufacturing base that was a world power. If we lose our manufacturing base, so many things are at risk, including our national security.
PBN: What else could be done?
LUBRANO: We have a tax structure … that was put in place prior to the global economy. When we negotiate free-trade deals, all the other countries we deal with have something called value-added-tax. We don’t. So a free-trade deal is not really a free-trade deal. … Let’s take China. We export into China and immediately our goods get hit with another 17-percent VAT. When China exports into our country, that does not happen. … We need to look at our tax structure here … we need to go to a VAT-type system.
PBN: These are things that have been brought up many times, right?
LUBRANO: Yes, but nothing is getting done. And that’s why this international task force on trade was created … in the meetings this time around I brought up the VAT tax, but if we have a Congress that refuses to make any changes, they are going to kill the manufacturers. … I’m very worried about my children. I really am.
PBN: Are things improving?
LUBRANO: The difference in my mind right now is that we’ve got some really intelligent people … who are really listening and trying to effect some change. But look at these people. They aren’t going to be there much longer. We’re going to have to start all over again.
PBN: What can manufacturers do?
LUBRANO: My advice to the manufacturing community is get involved. We represent millions of votes. I think there are 16 to 17 million Americans employed in manufacturing … and I would say we owe it to our employees to get involved. Even in Rhode Island, every manufacturing company in Rhode Island should be a member of RIMA … people need to get involved. If you get involved you can make a change.
Interview: Al Lubrano
Position: President, Technical Materials Inc.; co-founder and chairman, Rhode Island Manufacturers Association in Lincoln; board member, National Association of Manufacturers
Background: Lubrano’s first job out of college was in marketing, then in finance, at Texas Instruments, now Sensata Technologies, in Attleboro. After that he served on marketing and new product development at Elmwood Sensors Inc. in Pawtucket, since absorbed by Honeywell. Then he spent 10 years at Engelhard Corp., purchased by BASF last year, as manager of the metal joining business in Massachusetts and then manager of the group platinum metals businesses in New Jersey. He joined Technical Materials Inc. in 1992 as vice president and general manager and became president in 1994.
Education: B.S. in management, 1971, Rensselaer Polytechnic Institute, Troy, N.Y.; MBA, 1973, Boston University
Residence: Barrington
Age: 57
