U.S. opts out of purchasing American condoms; Job losses expected
The town of Eufala, Alabama is giving the term 'protectionism' a whole new meaning. Alatech Healthcare, a condom manufacturer based in Eufala, was devastated to learn that USAID, who had been buying Alatech condoms for years, decided to switch suppliers. Recipients of the USAID handouts will now be protected by Asian-made condoms, in a move that could potentially result in the loss of 300 jobs in Alabama.
Larry Povlacs, CEO of Alatech, recoiled at the thought of breaking the bad news to his workers.
"I will be forced to tell employees, whom I have worked with in some cases for over 30 years, that they will no longer have a job," said Povlacs.
The bottom line is that Alatech just couldn't compete. The Chinese and Korean made condoms USAID is planning to purchase cost only 2 cents per condom, whereas the ones made by Alatech cost 5 cents. USAID also claimed that Alatech had supply issues, which Povlacs disputes.
"We did have delivery issues," Povlacs said. "But we resolved them years ago. Privately, USAID staffers will confirm this, but they continue to make this statement publicly."
Though USAID initially claimed that low Asian prices and Alatech's problems filling orders led them away from Eufala, a USAID spokesperson claims that there were more reasons behind the switch.
"Alatech faced several well-documented quality problems and/or reports of perceived quality problems from field programs relating to condom appearance, condom feel and smell, packaging delamination, and partially filled cartons," said the spokesperson. "By 2007, USAID Missions in twelve countries, accounting for approximately 38% of USAID's programs, requested that they no longer receive shipments of Alatech condoms."
Povlacs, however, disputes these allegations as well, and wishes the international philanthropy agency had let the company know about its perceived shortcomings in advance.
But even considering Alatech's "well-documented quality problems," and the fact that the money saved on Asian condoms can be used by USAID on other HIV/AIDS prevention programs overseas, the agency's initial response to this condomtroversy has raised a few...eyebrows. Initial reports in the press suggest that USAID made the claim that Alatech was somehow the "sole supplier" of U.S. condoms. Surely a company the size of American-made Trojan would be able to give USAID a deal.
The entire condom debacle stemmed from a change last month when Congress dropped a requirement that the government buy American-made condoms whenever possible. Up until then, USAID was directed to use American suppliers for the hundreds of millions of condoms it sends abroad each year.
The timing of the requirement couldn't be worse. As the country suffers from the worst economic crisis since the Depression, why is Congress intentionally leveling the playing field for foreign companies when it should be supporting American manufacturers? Wasn't the entire point of the Stimulus Plan to stimulate job creation here in America instead of outsourcing work?
And then there's the issue of quality. The Chinese don't exactly have the greatest reputation for quality control in its products. After the slew of recent recalls, ranging from dog food to toys, should the U.S. be gambling that the country can produce hundreds of millions of safe and effective condoms? It's quite a risk to take with the lives of the millions depending on them.
In 2007, a year China's manufacturers would like to forget, health clinics in Washington, D.C. returned Chinese made condoms to the D.C. Department of Health. Even though the condoms were being given away free of charge, and D.C. has an HIV/AIDS rate worse than many developing countries, patrons were still refusing to take them, citing concerns about the condoms' reliability.
Furthermore, certain sexually transmitted disease rates have been increasing in the United States since the year 2000. China formally entered the World Trade Organization in 2001. Although it is doubtful that this is primarily due to Americans importing shoddy Chinese condoms (President Bush and Evangelical America's brilliant abstinence plan couldn't have helped), it would not be a shock to learn that imported Chinese condoms played a role.
There is also an irony in an agency whose sole purpose in eliminating hardships around the world purchasing products from a country like China which maintains substandard work conditions and suppresses labor unions.
USAID should not be put on the rack over their decision to import Asian condoms. They made the switch with the intention of not only saving the American taxpayer more money, but freeing up funds to afford other aid programs overseas.
Congress, however, should be ashamed of themselves for allowing any jobs to drift overseas during these tough times, and for protecting the interests of multinational corporations that operate by exploiting cheap labor. Stipulating that American agencies should purchase American products wherever possible does not constitute protectionism. It's simply good governing. And unlike the Chinese, who have nurtured an export economy and widened the trade gap with the U.S. to Grand Canyon proportions through currency manipulation, the U.S. would still maintain a competitive business environment in all other areas of the economy.
"Energy, electricity and other infrastructure is provided by the [Chinese] government," said Povlacs. "Even raw material costs can be controlled by the Government and, again, the real costs are often hidden."