Samsung Executives Testify at USTR Section 201 Presidential Action Hearing
Today, John Herrington, Senior Vice President and General Manager of Home Appliances for Samsung Electronics America, and Tony Fraley, Plant Manager for Samsung Electronics’ South Carolina home appliance facility, testified in front of the U.S. Trade Policy Staff Committee in Washington D.C. on the global safeguard (Section 201) investigation into imports of large residential washers. Below is the full text of their testimonies.
Testimony of John Herrington, Senior Vice President of Home Appliances at Samsung Electronics America
Thank you for the opportunity to testify today. I am John Herrington, Senior Vice President of Home Appliances at Samsung. I hope my testimony today will help you understand the dire impact that tariffs would have on our Newberry South Carolina factory, our retailers, and our consumers.
For over 40 years, Samsung has had a significant presence in the United States, investing billions of dollars and today providing for more than 20,000 jobs. We know what it means to be an American manufacturer — we are an American manufacturer, and we are in it for the long run.
In 2006, we saw an opportunity to expand into the home appliance business.
Fortunately, U.S. consumers embraced our innovative approach. As our customer base grew, it was only a matter of time before U.S. production of home appliances would make good business sense. So, earlier this year, we finalized plans to establish home appliance production in Newberry, South Carolina.
As my colleague Mr. Fraley testified, this is a fully integrated manufacturing facility that will employ nearly 1,000 workers and produce over 1 million washers next year.
Because we are moving washer production to Newberry, we do not object to the TRQ unanimously recommended by the ITC, even though this action would cut imports in half.
While we intend to supply the vast majority of washers for the U.S. market from Newberry, we cannot do this overnight. It took Whirlpool three years to move its front-load washer production from Europe to the United States. As we ramp up in Newberry, we will need to import some washers to supply a full range of products to our retailers and consumers.
If we are unable to offer our full range of products to retailers and consumers during our ramp-up, we will lose floor space and sales, impacting the success of our South Carolina operation. So the ultimate impact of any tariffs would be a lose-lose scenario for U.S. production, U.S. employment, and U.S. consumers.
As Sears has testified, blocking imports through tariffs would also give Whirlpool enormous market power and control, leading to higher prices and less choice for consumers.
During the Adjustment Period, Samsung will be a member of the domestic industry and should be treated equally. Any tariffs would unavoidably help one domestic industry member over another.
Because we are committed to supplying the U.S. market from Newberry, no remedy is necessary. If a remedy is selected to “lock in” our commitment, it should be a TRQ like the one unanimously recommended by the ITC that would — in the ITC’s own words — “facilitate transition from importer to domestic producer over the course of the remedy period.”
Testimony of Tony Fraley, Plant Manager for Samsung Electronics’ South Carolina Home Appliance Facility
Good morning, my name is Tony Fraley, I am the plant manager for Samsung’s Newberry South Carolina appliance factory.
This $380 million investment in South Carolina is Samsung’s most efficient and modern appliance plant anywhere in the world.
We have done a tremendous amount in a few short months. Essentially, the plant was an empty building with a slab of concrete when we started. For the last six months, hundreds of construction workers have transformed the site by adding 151,000 square feet. We will install two manufacturing and assembly lines with 20 stamping presses and 30 injection molding machines to produce all major washer parts. The ribbon cutting will be on January 12, 2018.
We have already hired 504 employees – 90 percent of them are local hires from Newberry and surrounding counties.
This is not a screwdriver operation. I’ve been in a lot of washer factories in the United States and elsewhere, and this is a fully integrated operation.
We have already installed 4 injection molding machines, and two of those are producing key washer parts, such as front and back tubs, outer tubs, top covers and other parts. By March, 11 machines will be installed, with more following each month until we reach full capacity.
We have installed heavy duty metal stamping equipment. Those presses are now up and running, bending and forming metal for the washer cabinets, drums, fronts, backs, tops and other parts.
For most of the past month we have been doing test and training runs on all of the equipment. It is very important that we ensure the first commercial washers that roll off the line meet all of Samsung’s high quality standards.
The entire manufacturing process for washers will occur right here in Newberry. We are converting blanks of steel into washer cabinets with the stamping equipment. When you look inside the washing machine, you see a shiny drum inside. That starts as a piece of steel. We produce that drum on site in Newberry. A lot of the other parts that you can’t see are injection molded parts, and we make many of those on-site as well. We’re starting with pellets of resin and blanks of steel, and it’s all coming together inside the factory to go out the door as fantastic washing machines.
Today we are ready to start producing front-load washers for commercial sale. In a couple of months we’ll finish the testing and training on the Top Load manufacturing equipment. Top Load washing machines will be produced by Q2 of 2018.
By the end of 2018, when both lines are running, we plan to have 1,000 employees, working two shifts on each of the lines. But the transition will not be immediate. You can’t just cold open a factory at full capacity producing 1 million washers a year — that’s about 4 washers every minute. A huge facility like this needs time to come on line. We are bringing one production line up at a time. We’ll start with one shift to work out any bugs and quality check all of our processes. By the end of 2018, we expect to be running a normal rate, with two shifts per line.
We will produce covered parts in our factory. We have been qualifying suppliers to produce some smaller parts in the U.S. And eventually, we expect some suppliers to locate alongside our factory or nearby.
Our factory will generate a network of additional suppliers and expand the local economy. It has already had significant impact on the local community.
It is important for you to understand that we are moving as fast as we can to launch this factory. Duties or quotas will not speed up the process. Until we get up and running, some washers will have to be produced abroad and imported to meet demand. A tariff that cuts off Samsung’s imports will undermine our ramp-up and transition strategy for South Carolina.
Give us a chance to get this factory up and running, and let our US production compete on a level playing field with other US producers. Don’t handicap us while our facility is getting off the ground. South Carolina jobs are at stake.