Commerce Dept. Report Says Sugar Policy Pushing Jobs Overseas
Study suggests high sugar costs are a major factor in U.S. companies' decisions to relocate to other countries. ASA says it's another attempt to wrongfully blame U.S. sugar producers.
Published: Feb 15, 2006
A new report from the U.S. Department of Commerce, Employment Changes in U.S. Food Manufacturing: The Impact of Sugar Prices, reports that more than 10,000 jobs were lost between 1997 and 2002 at sugar-consuming companies, such as confectioneries. The study suggests high sugar costs are a major factor in U.S. companies' decisions to relocate to other countries.
The American Sugar Alliance says the report is another attempt by multimillion dollar companies to put the blame on U.S. sugar producers.
"We are seeing U.S. jobs move to countries that don't have the competitive disadvantage of high sugar prices that we face in the United States," says Under Secretary for U.S. Trade Franklin L. Lavin. "To compete and win in the world economy, we must lift the price burden for U.S. businesses that use sugar as a product ingredient."
Findings in the study include:
- For every sugar growing and harvesting job saved through high U.S. sugar prices, approximately three confectionery-manufacturing jobs are lost.
- For the confectionery industry in particular, evidence suggests that high U.S. sugar costs are a major factor in relocation decisions. In 2004, the price of U.S. refined sugar was 23.5 cents per pound compared to the world price at 10.9 cents.
- Many U.S. sugar-containing products manufacturers have closed or relocated to locations where sugar prices are less than half of the U.S. price.
The House report accompanying the Commerce Department's fiscal year 2005 appropriations bill directed the Secretary of Commerce to conduct a study on the relationship between jobs and the differential between the U.S. price and world price of sugar.
American Sugar Alliance says companies abandoning U.S.
Last week the American Sugar Alliance sent Congress a detailed briefing paper, Candy Companies Flee U.S. Workers, Not U.S. Sugar Prices, to give their take on the situation.
"Hundreds of American manufacturers from all sectors are leaving the country because of high-priced U.S. workers and worker benefits," says Phillip Hayes, a spokesman for the American Sugar Alliance. "Yet, candy companies that relocate hide those factors and use America's efficient sugar farmers as the scapegoat."
The American Sugar Alliance briefing paper cites a study of business expenses conducted at candy manufacturing locations by a former career USDA sweetener analyst.
That study found that wages in U.S. candy factories were 27 times higher than Mexican wages and 20% higher than Canadian wages. Healthcare costs, tax rates, energy costs, and rent were also much cheaper in Mexico and Canada.
On the other hand, wholesale sugar prices were nearly identical. According to the briefing paper, "U.S. candy companies paid 23 cents per pound for sugar in 2004, compared to a 22-cent-per-pound weighted world average and a 25 cent-per-pound North American average."
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