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Changes that disrupt the flow of those goods, or the supply chains up and downstream, could adversely affect companies around the region.

Changes that disrupt the flow of those goods, or the supply chains up and downstream, could adversely affect companies around the region.

For Waupaca Foundry, a division of Hitachi Metals and a global leader in the production of cast iron parts for the auto industry, about 10 percent of the company’s exports are to auto and truck assembly facilities in either Mexico and Canada.

It may not be the company’s largest market, but it’s significant.

“As part of Hitachi Metals, we are part of a global player,” says Michael Nikolai, president, CEO and COO of Waupaca Foundry. “Less regulation and fewer tariffs helps our business. Any change might be good for some in the short term, but it could cause long-term reorganizations that are less so. Our product is heavy and expensive to ship, so our manufacturing footprint needs to be as close as possible to the customer.”

Nikolai says it’s uncertain how any changes to NAFTA, or the collapse of negotiations, would affect the company’s ongoing discussions of opening foundry facilities in Mexico. It’s been a discussion point for several years, but a plant has yet to be built.

But, if it were to get more expensive to ship castings to Mexico, it would make sense to locate facilities closer to the automakers based there. While the foundry’s own supply chain is local, it is part of a global supply chain for the auto industry.

“A lot of companies’ supply chains have become global,” says John Wiesbrock, executive vice president, sales, marketing and supply chain management for Waupaca Foundry. “But it’s fragile. A collapse of NAFTA could affect a lot of supply chain decisions in ways we may not like.”

A collapse of NAFTA could affect a lot of supply chain decisions in ways we may not like

For Wisconsin Manufacturers & Commerce President Kurt Bauer, any changes that make it more difficult to move components and finished products across the Mexican or Canadian borders threaten the continued growth of the Wisconsin economy. He also worries about the supply chain implications.

“It’s not just the direct exporters who are threatened,” Bauer says. “It’s the supply chain and it’s how it would affect our trade relationships around the world.”

It’s not just the direct exporters who are threatened. It’s the supply chain and it’s how it would affect our trade relationships around the world.

For all the negative rhetoric that has surrounded the ongoing negotiations, most still think NAFTA will survive, though it may emerge with a few new wrinkles. The bottom line assessment is that the economic gains of the past 30-plus years outweigh the economic negatives.