Jon DeArment is the president and chief operating officer of Channellock, Inc., a worldwide leader in the manufacture of high-quality pliers and assorted hand tools, including the iconic, American-made CHANNELLOCK® tongue-and-groove plier, which can be found in quality retailers around the world. All Channellock pliers and 94 percent of all Channellock products are made in the USA.
The Tax Cuts and Jobs Act of 2017 was the biggest tax reform law passed since the Tax Reform Act of 1986. As a U.S. manufacturing company in northwestern Pennsylvania, we are seeing the benefits of this law in many ways, and we support the current administration’s efforts to help American manufacturers to grow and compete in the global economy.
In the past two years, the pro-business agenda by our current administration has sparked growth of more than 10 percent per year for Channellock, after eight years of less than 2-percent annual growth under the prior administration. Reducing the federal tax rate from +30 percent to a flat rate of 21 percent in the Tax Cuts and Jobs Act has provided us with a bigger
bottom line to reinvest in new technology and workforce development.
This combination of increased sales volume and lower tax rates means we have been able to increase our capacity and continue to grow. We have been able to make big, new investments in Laser Heat Treating and automated forging systems, as well as ongoing investments in advanced CNC machine technology. Our employment is up considerably as well, and that means more jobs here in our local community of Meadville, Pennsylvania. The Tax Cuts and Jobs Act’s provision for bonus depreciation on new equipment has also reduced the financial impact of depreciation on our financials, which makes investment decisions much easier.
Today’s challenges as a U.S. manufacturer are hard enough, with changing consumer demographics and the need to compete for brand preference in both the traditional bricks-and-mortar channel and the omni channel universe worldwide. We need all the help we can get, and the passage of the Tax Cuts and Jobs Act is one time we can say that our government has stepped in and done something to help us be more competitive.
Another example of our government helping us to be more competitive is the tariffs based on the current imbalance in trade between China and the United States, which includes hand tools, and we support it. The United States exported $100 million in hand tools and cutlery to China in 2017 but imported $3.3 billion from China. As an exporter, we see major obstacles to doing business in China, and imposing these tariffs is a step in the right direction to addressing the lack of a fair-trade deal.
Tariffs can be removed when we get better or easier access to Chinese markets, better protection of U.S. Intellectual property, and a reduction in Beijing’s subsidies to Chinese companies. These tariffs are an effective tool the administration is using to get the other party to the table.
At Channellock, our vision is to continue to grow as a fifth-generation, family-owned business in northwestern Pennsylvania and continue to make sure we are providing the highest possible quality and value to our customers. With a pro-business administration and pro-growth tax law, we see continued growth going forward. Let’s just hope our Commonwealth can follow along and start enacting pro-business, pro-growth reforms to make our state more competitive.
Pennsylvania is home to some of the best universities in the country, a wealth of natural resources, solid manufacturing infrastructure, vibrant cities and unquestionably hard-working people. These are assets any state would be happy to have, and they should be generating economic growth, family-sustaining jobs and widespread prosperity.
The truth is, job creators and the hardworking and skilled workers they employ are the fuel for Pennsylvania’s economic engine. By reforming our tax structure to ease the unreasonable burden Harrisburg imposes on individuals and businesses, we will enable Pennsylvanians to enjoy the highest quality of life, provide for their families and plant roots in this amazing state.
The Tax Cuts and Jobs Act has already proven the benefits of simple, fair and long-term tax relief. It’s time for state leaders to recognize that we can never tax our way to prosperity, but by following the federal government’s lead on tax reform, we can unleash opportunity for all Pennsylvanians in 2019 and beyond.
