Factories and Free Trade

 

Vocabulary

grind	average	thoroughly
plug	rigorous	inspection
dizzy	code (2)	regulation
CEO	standard	furnace
array	require	turnover
initial	certified	authority (2)
ship (2)	approve	quarter (3)
tangle	coating	announced

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Video

 
 
 
 

Transcript

Schutter grinders are shipped all over the world — up to 80 machines a year.

Of course, each machine is thoroughly tested before shipping. But the testing is particularly rigorous when the destination is the United States: the imported machines have to conform to a dizzying array of US standards.

Carl Martin Welcker, Schutte CEO: “The Germans have the CE Norm; the Americans the UL Plug Standard. The Germans have different cable-coating regulations, different color-codes. We have, of course, metric threading. The Americans use Woodwear thread standard, or threads measured in inches.

Every amount of detail requires an enormous amount of work.”

Seven thousand kilometers away in the US state of Illinois, industrial furnace maker Ibsen faces similar problems. Whenever the mid-sized firm ships its products to Europe, its engineers have to deal with a mountain of EU regulations.

Jake Hamid, Ipsen Chief Operating Officer: “The Europeans require that the grounding cable on control panels have a 70-30 percent color separation.

The North Americans do not require that.

And just learning that, or understanding those regulations require many hours of engineering and research.”

The firm has a turnover of some €170 million a year. It could be a lot more if Ibsen didn’t have to make different models for the American and European markets.

Like many other companies, they hope a free trade agreement between the EU and the United States will mean fewer regulations.

Another example, PWM makes electronic price signs for petrol stations. A third of its production goes to the United States.

PWM’s chief executive officer adds up the cost of getting his signs certified for import by US authorities.

Max Krawinkel, PWM Chief Executive Officer: “We pay an average of $10,000 for the initial testing, and that’s just to get the product approved for import.

Afterwards, we have to pay $2,000 every quarter, so they can make unannounced inspections and verify that we are really using officially approved parts.”

And any change — no matter how small — can cost another $2,000.”

Machine manufacturers on both sides of the Atlantic are tangled in a jungle norms, codes and regulations.

TTIP could make trade between the US and EU a lot easier.

Questions

1. Are Schutter grinders simply mass produced and delivered to clients, or are they tailored to different buyers and regions?

2. Is it easier or more difficult to deal with different standards, codes and regulations?

3. What would happen if there were a free trade agreement between the EU and US? Would turnover and profits increase?

4. PWM is an American-based manufacturer. True or false?

5. The PWM CEO likes to undergo testing and approval of his price signs. Yes or no?

6. Is there a lot of industrial inspections, standards, codes and regulations? According to the manufacturers, is all entirely necessary?

7. Do manufacturers support or oppose TTIP (Trans-Atlantic Trade and Investment Partnership) or a free trade agreement between the EU and US?

 

A. Do manufacturers in your country support or oppose free trade? How would free trade benefit manufacturers?

B. Would governments (and government testers, inspectors and other officials) like free trade?

C. Does your CEO favor free trade? Why or why not?

D. Would free trade benefit you and your friends?

E. What will happen in the future?