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Kone Versus President Trump’s USMCA: The Battle to Stop Outsourcing to Mexico

The opinions expressed by columnists are their own and do not necessarily represent the views of Townhall.com.
AP Photo/ Evan Vucci

Yesterday, in the middle of the hyper-partisan impeachment circus, the House of Representatives ironically proved that bipartisanship still has a pulse in our nation’s capital.


On a 385-41 vote, lawmakers approved President Trump’s United States Mexico-Canada Trade Agreement (USMCA). As most readers already know, the dealer replaced Bill Clinton’s disastrous NAFTA pact, which both sides of the aisle detest for causing widescale outsourcing of U.S. jobs to Mexico.

NAFTA permitted the south-North American country to suppress the collective bargaining rights of its workers as a means of keeping their wages roughly 90-percent lower than those in the U.S. Analysts have estimated that this toothless agreement eroded between 500,000-750,000 American jobs. That’s the furthest thing from free trade. President Trump’s USMCA, on the other hand, allows the U.S. to file complaints on any Mexican factories it finds are denying their workers’ collective bargaining rights. These complaints can ultimately result in investigations from independent labor experts, which could spell bad news for the country should their findings prove troubling.

Make no mistake: USMCA is a major step in the right direction, and it’s always picture-worthy when Nancy Pelosi and the rest of the Democrats come to the negotiating table with the current president. At the same time, however, the new trade agreement is not the be-all, end-all to preventing Mexico’s anti-competitive labor practices that hurt U.S. industry. The NAFTA resolution panel’s labor probes will be time-consuming, and it’s unreasonable to think that it will crack down on anywhere close to 100-percent of violations. That’s why it’s so important for Washington decision-makers to continue monitoring companies that are seeking to capitalize on the unfair playing field created by Mexico.


Take Kone, for example. The company seems harmless enough – manufacturing, installing, and servicing elevators in the U.S. That is, until one looks at the company’s unrepentant history of rigging the marketplace against U.S. industry by taking advantage of Mexico’s artificially low wages.

Oddly enough, Kone actually seems to be proud of its outsourcing past. In a 2006 Konepress release titled “Kone’s new factory in Mexico to take over all elevator manufacturing operations for North America,” it came close to bragging about the jobs it has shipped overseas. When discussing its move from McKinney, Texas, the company stated unabashedly, “Torreón [Mexico] offers an excellent logistics network and pool of qualified labor to serve the new factory” and that “most of the management and personnel have been recruited locally.”

It’s quite unusual for a company to be so honest and transparent about its anti-America First intentions. Congress and U.S. antitrust officials should use that to their advantage when reviewing Kone’s recent proposal to acquire Elevator Technology (ET), which is owned by a major competitor, Thyssenkrupp. If the combination goes into effect, the new mega-company will control close to half of the entire North American market, threatening the success of President Trump’s USMCA.


Horizontal mergers like this one tend to drastically reduce U.S. jobs as it is. In this case, however, given the company’s rich outsourcing history and its track record of paying fines to regulators for engaging in anti-competitive activity, it is all but guaranteed.

Congress would be foolish to let this merger go unquestioned – especially at this time and under these conditions. It still remains to be seen how effective the USMCA will be at curtailing Mexico’s wage undercutting that has eroded significant sums of business for American companies. Until all of the kinks, loopholes, and enforcement nuances, are working out of the trade deal, the last thing the North American economy needs is a major test from a new company that already has proven to detest everything that the USMCA stands for.

Thankfully, however, one U.S. senator whose state has the most to lose from an ineffective Kone-Thyssenkruppmerger couldn’t be in a stronger position to act. Sen. Marsha Blackburn (R-Tenn.) sits on the Judiciary Committee, which reviews merger cases like these regularly. This possible merger means a lot to some of Sen. Blackburn’s constituents given that, as of 2017, Thyssenkruppemployed 1,000 people in Middleton, Tennessee –more than the entire population of Middleton as of the last census that was recorded seven years prior.  


Here’s hoping that Blackburn, as well as other senators whose states would be at risk from more outsourcing, like Sen. David Purdue from Georgia (where at least 1,000 jobs are at stake), speak up and make their voices heard. The last thing American workers and businesses need is more sour grapes and interference in their interests immediately after the singing of a ground-breaking trade deal that promised to protect them.

David Wallace, a former Republican nominee for Congress, is president of the FAIR Energy Foundation, a leading Maryland Tea Party activist, and a freelance journalist.

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