File | The Roanoke Times

Martinsville-based Hooker Furniture closed its last domestic wood furniture factory in March 2007. One reason, the company said at the time, was a rising demand for cheaper, imported furniture.

A study released this week suggests that 39,500 Virginians lost their jobs between 2001 and 2007 because of the national trade deficit with China.

The job losses included 6,300 jobs in Virginia last year, according to the Economic Policy Institute.

Nationally, the study says, 2.3 million jobs have been "lost due to the China trade gap since Beijing's 2001 entry into the World Trade Organization."

It also reports that a weak dollar and growing exports have caused wages to drop nationally for many manufacturing workers because continuing trade deficits with China are shifting jobs from higher-wage manufacturing to lower-wage work in commodities such as scrap products and agricultural goods.

EPI suggests U.S. workers displaced by China trade lost an average of $8,146 in wages last year because they wound up in lower-paying jobs.

The institute, based in Washington, D.C., is a nonprofit think tank. It describes itself as nonpartisan but has been occasionally described by others as "left-leaning."

Bill Mezger, chief economist for the Virginia Employment Commission, said he has seen no evidence of such a wage trend in Virginia's shrinking manufacturing sector but agreed it could happen.

He said exports of nondurable goods -- products that tend to be quickly consumed -- seem to have increased over durable goods -- products such as automobiles, appliances and manufacturing equipment.

'Brightest light'

Hank Cox, a spokesman for the National Association of Manufacturers, disagreed with many of EPI's conclusions.

NAM, also based in Washington and also a nonprofit, has been described occasionally as "right-leaning."

"There is no question that China has burst into the global marketplace since 2001 in a big way and in the process taken over large segments of the [U.S.] manufacturing sector, in particular those that emphasize low-skill jobs," Cox said in an e-mail.

"China's advantage has been in low wages, currency manipulation, subsidies of domestic industry, rampant piracy of intellectual property and indifference to environmental concerns and worker safety."

NAM remains committed, he said, to supporting free trade, noting that the United States remains the world's largest exporter.

"Today, rising export of U.S. manufactured goods is the brightest light in our economic arsenal," Cox continued. "Our exports are rising much faster than imports. Our overall trade deficit is largely a function of our addiction to foreign oil."

'Standard attack'

Paul Grossman is director of international trade and investment for the Virginia Economic Development Partnership in Richmond. He described EPI's report as "a standard attack on globalization."

Many manufacturing job losses in Virginia can be linked to production-related technological advances that require fewer workers, he said.

Also, many Virginia jobs are tied to imports, including those at Virginia ports and Dulles International Airport, as well as jobs related to transporting the imports, said Grossman.

He said state exports to China totaled $721 million in 2005 and $1.1 billion in 2007. Without that billion dollars in exports, Virginia would have been without about 25,000 jobs, he said.

"China is now Virginia's second-largest export destination after Canada," said Grossman.

The most recent estimate of the U.S. trade deficit with China puts the number at $96 billion, according to the U.S. Department of Commerce.

On July 11, the department reported that U.S. exports to trading partners had increased more than 18 percent to $768 billion for the year-to-date through May compared with the same period in 2007.

Exports alone won't do it

Tom Danjczek, president of the Steel Manufacturers Association, said the U.S. is "not going to export our way out of the current trade deficit."

The domestic steel industry is having better days but many other manufacturers have been hard hit by international competition and the slowing economy, he said.

"Even though our economy is in recession, these are good days in production and profitability for the steel industry," Danjczek said.

He estimates domestic steel production this year will be about 110 million tons, up about 4 million tons from 2007. He anticipates steel exports will increase by about 2 million tons, up from a range of about 8 million to 9 million tons.

"Two million tons is a real contribution to our industry but it's not what's driving the bus," Danjczek said.

At Steel Dynamics Roanoke Bar Division, formerly Roanoke Electric Steel, "business conditions remain very strong," said Joe Crawford, vice president and general manager.

"Our operations continue to run 24/7, with all current output from Roanoke going to domestic customers," he said. "Employment, compared to the same time last year, is steady at approximately 450, and wages have increased, as production rates and incentive pay have continued to increase."

EPI reported that workers in advanced technology jobs have suffered too.

Growing imports of computers and electronic parts accounted for nearly half of the $178 billion increase in the trade deficit between 2001 and 2007, the institute said. It said 200,000 scientists and engineers within the manufacturing sector have lost jobs.

'Pathetic schools'

Meanwhile, Cox said China is "finally hitting its own rough patch," citing a host of contributing factors, including increasing wages and demand for better environmental controls and safer workplaces.

And he emphasized that American manufacturers face challenges generated domestically -- including "runaway litigation," a high corporate tax rate and the rising expense of health care benefits.

"Last, but not least, U.S. manufacturing suffers from our pathetic schools," said Cox.

He said high school students do not graduate with the math, science and communication skills necessary to work in modern manufacturing.

Jay Foster is president of Roanoke-based SoftSolutions, a company whose products include software that helps manufacturers monitor and measure production. Foster has been active in regional efforts to support high-tech manufacturing.

He said progress is occurring regionally in education and that such training will help manufacturers remain competitive in the global economy.

"One critical component to a viable strategy will be an engaged, skilled work force that actually wants to work in the manufacturing sector," Foster said in an e-mail.

He said Virginia Western Community College has developed promising work force development programs and is working with local high schools "to build a pipeline of next generation skilled workers."