Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-11-15

vertising campaign now being carried
on in this country by leading British
railway, endeavoring to induce the
establishment of American factories
along its lines so as to avoid anti
American trade propaganda"
Disadvantages Listed.
But as against these evident advan-
tages there must also be considered
| very substantial disadvantages inher-
ent in the movement
l. 1t is bound to have numerous I'M
| favorable reactions on our commerce
1t is true that in many cases the loss
of our exports of the given finished
product may be compensated by in
creasing shipments of essential raw ma
terials, parts and equipment for the
new plant abroad. But even after max
ing allowances for these admitted COM
pensations, We are likely to encounter
an all too frequent development which
falls in the wake of such foreign plants
namely, the stimulation of their eX-
ports to markets beyond the boundaries
OF their new homeland, in competition
with other shipments from home. This
arises from the fact that mass produc-
ton is such an inherent essential in
American industry that the relatively
smaller markets in practically all for
| e1gn countries soon prove inadequate for
! the American-owned branch plant and
| an export trade for it thereupon be-
comes essential for its survival This
means competition with American ex-
porters, which may be disastrous for
our trade as a whole
To take specific example of this.
| we seem to be in fair way toward
| losing a greater part of our Latin
! American tire trade to American plants
! in Canada. The latter find that for
climatic and other reasons an excess
sive seasonal variation must be main
tanned Yin their operations They there
| fore look for markets below the equa-
tor to counterfeit this factor. And al
though the results may benefit the own
ers OF these American-Canadian plants,
they certainly do not help the employ
! ment situation in our rubber manu-
| featuring districts, nor do they con-
| tribute to the peace of mind of the
! already haraSsed American rubber
manufacturer who does not have a Ca
madam establishment
2. We cannot overlook the possibili-
ties of diplomatic or political compli-
cations which are very likely to arise
| from any such overseas enterprises on
the part OF American capital 1t is
| true that we already have some S15,-
600. 100000 or more invested in all va
| riettes of overseas COMMUNICATIONS
to governments, provinces and munich
palities, as well as these branch factory
obligations. With such n heavy stake
beyond our borders there seems to be
no escape from the possibilities of en-
tanglements in foreign diplomatic and
political issues
Obviously it is not within my prov
ince to analyZe these prospects here
but 1t does seem pertinent to suggest
that before any American organizations
definitely launch upon the establish
ment of such branches abroad, this sig
nif1cant angle of the question should
be given most careful consideration.
With political unrest and social upheav-
ais diSrupting the old order in many
parts of the world, certainly no hap
hazard decision should be risked on
such an important matter More than
one American enterprise in the Far
East and certain troubled areas of the
Old World today is repenting the in
clination of its founders to take
chance and gamble on the possibilities
of making a killing and getting out
before the storm broke.
Utmost Caution Advised.
3. The immense possibilities of swift
| ~ changing tariff schedules in foreign
countries, as already indicated, deserve
far more consideration than has been
given them In many instances, even
! though the rates are retained there are
often subtle changes in classifications
and definitions which are likely to put
foreign branch factory in an unten-
able position
4. A similar instability in labor legis-
| lation has imperiled and even de-
stroyed American enterprises which had
been launched under most suspicious
circumstances. The strength of social
/ tat. H.
than one foreign industrial district
these days makes the decision of indus
| trialists, both native and foreign, &C.
cidedly precarious. The supposed adj
vantages of low wages should, there
fore, be carefully scrutinized to see
whether they are nullif1ed by other fea
lures Of the labor situation.
5. The adaptability to mass produc-
| ton of the given market where the
branch factory is to be established is
all too frequently overlooked. In these
days, with nationalistic prejudice still
at high pitch, the barriers that hem
in each country may become unex-
pectedly embarrassing to an ambitious
American branch factory manager ac-
customed to the broad expanse of the
unhampered American market.
In conclusion, then, it would seem to
be impossible to make any off-hand
| answer to the question of whether the
branchfactory movement is wholly
good or bad. The reply must vary-not
only with each industry, but with each
individual plant Above all, it seems
urgently necessary to counsel the ut
most caution, in these troubled days,
to consider with the greatest care every
one of the many factors, some of which
have been summarized above These
are certainly no times for thoughtless,
haphazard adventures anywhere in the
field of business, least of all in foreign
parts, where there are likely to be so
many strange, unexpected elements to
complicate the situation. Undoubtedly
some opportunities for profitable enter
prises of this sort do exist, but they can
be sought out and exploited only after
| prolonged and thorough-going analysis.