ORLANDO, FLA. (April 3, 9 a.m. ET) — Jon Huntsman Jr. — presidential candidate, plastics executive, U.S. ambassador to China and Utah governor — kicked off the NPE trade show in Orlando by telling a hall of industry executives that rising costs in China give U.S. manufacturing a unique opportunity to regain some lost ground.
Huntsman, who worked in his family firm Huntsman Corp. before launching his career in politics, mixed sharp critiques of the state of American politics and thoughts on the rise of China with memories of spending time as a young man in his father's plastics factory in Fullerton, Calif.
But the politically moderate Republican, who speaks Mandarin Chinese and served as President Obama's ambassador to China, spent much of his time talking about Asia.
He said that labor costs in China jumping 15-20 percent a year, and other prices rising, create openings for American manufacturing firms.
“It's a huge opportunity for the United States to recoup our manufacturing prowess,” Huntsman said. “I believe we're going to do that if we're smart enough to get on the ball and I believe we're going to do that because China will become less attractive.”
“Prices will go up, the cost of labor will go up and the cost of manufacturing [in China] will go up,” he told the audience of several hundred at the April 1 awards ceremony for the Plastics Hall of Fame.
Huntsman's father, Jon Huntsman Sr., who developed the plastic clamshell container for fast food and started Huntsman Corp., was named to the Plastics Hall of Fame in 1994.
Former Gov. Huntsman did not describe in detail how American manufacturing should be revitalized, and while he mentioned plastics as the third-largest manufacturing sector in the United States, he also did not directly speak to the sizable job losses in recent years.
Plastics industry employment fell from about 1.1 million in 2005 to 900,000 in 2010, the last year figures are available, according to the Washington-based trade group the Society of the Plastics Industry Inc.
There are some big changes coming in the U.S.-China economic relationship, he said, including much more investment from China to the United States and rising concerns about cyber security.
“Outbound investment will be enormous coming into the United States,” he said. ‘If there's one other trend besides cyber security that will change the nature of our relationship it will be the three trillion dollars in foreign exchange reserves they have.”
The Chinese are earmarking about 10 percent of that to foreign investment and about 5-10 percent of that 10 percent will likely wind up in the United States, he said. Still, the Chinese have concerns.
“They are very timid about moving into the United States because they don't want the backlash that occurred 25 years ago against the Japanese [investing in America],” Huntsman said.
He told the audience that in spite of the attention that is paid to China's rapid economic rise — it's now the world's second-largest economy and has 10.4 percent of world merchandise exports, larger than any other country including the United States — China has ascended the world stage 20 years faster than its leaders expected.
That's in part because of the economic troubles in developed economies in North America, Western Europe and Japan, he said.
“We in the West look at China and we see $3 trillion in the bank, the second-largest economy, the largest consumer of electricity, the largest emitter in the world, increased spending on military and maritime capability,” he said.
“They look at themselves and say 700 million poor people, 99th in per-capita income, somewhere between Armenia and the Democratic Republic of Congo in terms of per-capita earnings, [with] vast disequilibrium in terms of earnings between the central provinces and the coastal provinces.”
The speech had its lighter moments as well.
Huntsman joked he “probably inhaled more styrene monomer” than he should have in the family's polystyrene processing factory in the 1970s, and that contributed to his move into politics.
He spoke of how one of the evening's hall of fame inductees, Daniel Maguire, founder of resin distribution firm General Polymers, had participated in early customer meetings that the Huntsman company held in the 1970s in the family living room.
And he joked about his recent quick exit from the Republican presidential race, saying that his wife Mary Kaye, a native of Orlando, was the reason “we did so miserably in the campaign.”
“She said ‘I will leave you if you pander, if you sign those silly damn pledges,' ” Huntsman said. “I said, ‘Fair enough. We may not go far enough in this campaign.' ”
He took some jabs at his Republican opponents for offering what he said were unrealistic comments on China.
Without naming them, but noting that he was referring to people still in the race, he criticized one for saying at a Republican presidential debate that he would declare war on China if elected, and another for saying he would immediately impose trade sanctions on China for “manipulating its currency.”
At the debate, Huntsman said, those statements generated loud applause in the audience.
Huntsman then followed up with a more rational answer, saying that he agreed that China is manipulating its currency — but he made no mention of trade sanctions. The audience did not applaud, he said.
“I started to get the idea, the hint, that this is not a year for sane rational discussions about the issues we face,” he said. “The barriers to entry into presidential politics are pretty low.”
The United States needs to tackle some serious problems, including its government deficit, which he termed a “metastasizing cancer” that will become a national security problem, and rebuild trust between government leaders and the public, he said.
But he also noted that China faces serious problems, and said the two countries must make their relationship work because they will be the two strongest countries of the 21st century.
He predicted that the next few years will bring more openness in China politically, even if right now the government is clamping down on free expression.
It will be driven by the new generation of leaders in China who take power this year, the first generation to be influenced less by China's trauma of the Cultural Revolution and the Great Leap Forward, and more by the fast economic growth and economic opening up of the last 30 years.
“They understand technology, they understand what the Internet generation is bringing them,” Huntsman said. “We will see political reform and additional market openings and respect for the role of the Internet in society in greater measures in the next 10 years. If they don't go in that direction, we'll see a spring of 1989 all over again.”
He also urged the audience of mostly American business executives not to forget the country's strengths, including an ability to assimilate immigrants and make the nation stronger, and an ability to innovate.
He said while he was looking at the United States during his ambassadorship in China, he sometimes was disturbed by what he saw and was struck by the contrast with attitudes in China's business centers.
“You walk the streets of Beijing, Shanghai and Guangzhou, there is energy, there is confidence, there is blue sky, there is a sense that their time has arrived,” he said. “And then you look at this country, the greatest that ever was, from 10,000 miles away and you can't help but think we're in a bit of a funk.”
“We are dispirited, we are a little dejected, and this isn't who we are,” he said. “We're a bunch of blue sky, problem solving, optimistic people.”