Crystal Lake Manufacturing A NAFTA Dilemma - Essay Example

Crystal Lake Manufacturing - A NAFTA Dilemma Brooms have existed for centuries to sweep and clean gardens and houses but the broom as we know it today, was invented in 1797 by Levi Dickenson. He then developed a machine in order to consolidate the broom he produced: the broom machine was invented in 1810. Shortly after that, in the mid-1820s the Shakers who were a religious order changed the design of Dickenson's broom and turned it into the flat broom that we know today. In the 19th century the U.S. broom industry was so developed that it started to export brooms all around the World.

The west conquest even helped in finding new places to grow broom corn as it appeared to be very fertile. This finally led to the exportation of both U.S. brooms and making equipment which today can be found worldwide. The U.S. broom industry was very successful until 1994 when foreign brooms were allowed into the U.S., duty free. The largest competitor to U.S. corn brooms is Mexico. The decision taken in 1994 lead in 1996 to a debate regarding the "invasion" of Mexico corn brooms and its disastrous effects on the U.S. broom industry (the loss of 49 jobs over 4 years).

Consequently, measures were taken by the President to reinstate tariffs on Mexican corn brooms to give time to the domestic industry to implement adjustments to foreign competition. The main differences raised by this dispute inside NAFTA are the production processes used by both industries. On one hand in 1995, 84 per cent of broom corn brooms were produced using the wire-wound process, which is a very labor intensive process and requires skilled craftsmen. The learning of such a technique in order to be fully proficient may require several years.

The other 16 per cent were produced using the nailed-machine method, an automation of the broom production process. The wire-wound process using corn broom is the production process used in crystal Lake Manufacturing. Continuing the broom debate, the 1996 issue was not only a matter of import/export but also a problem of "like product". The plastic brooms, which are mainly produced using the nailed-machine process, were considered as if they were broom corn in this matter which finally led to this dispute.

Plastic brooms are less expensive to produce as the raw material and the production process are cheaper. As stated earlier, the plastic (or synthetic) broom production process is an automation process. The production process of the broom corn is mainly wire-wound i.e. hand made. And these two types of brooms were in cause in the dispute because they were considered interchangeable in the marketplace. Though broom corns are often considered superior in many applications because of its handling and sweeping characteristics, it is usually side by side to the plastic broom on marketplaces.

Even if some customers purchase plastic brooms for a specific use, it I widely admitted that customers prefer the broom corn because of its image of resistance and effectiveness in any task of sweeping. This dispute shows inside a minor industry, the problems linked to NAFTA. As a free trade agreement it shall develop exchange between countries but as one domestic industry could be endangered or seriously injured by such an agreement, the need to reinstate the tariffs raises immediately. What is even more stunning in the broom example is that, for once, United States were endangered by a foreign industry because brooms in the U.S. are still hand made and in consequence not competitive enough.

Sources:http://www.broomshop.com/history/http://www.sice.oas.org/DISPUTE/nafta/english/us97801a.asp