Sony is squawking, and two U.S. senators are listening. The media giant says it will move thousands of jobs from its Pittsburgh factory to Mexico unless Congress zaps nearly $100 million in import duties on components for new plasma screens. Closing the assembly plant, which produces some of Sony's new HDTV products, would darken a rare bright spot in America's set-manufacturing sector.
To prevent jobs from fleeing their home state, Pennsylvania Senators Rick Santorum and Arlen Specter are pushing legislation that would eliminate import duties on electron guns for cathode ray tubes, LCD panel assemblies, and flat-panel screen assemblies. With the tariff suspended, "Sony may be able to manufacture flat-screen plasma television sets in the United States," Santorum wrote in a recent letter to Deanna Tanner Okun, chairwoman of the U.S. International Trade Commission.
The components covered by the legislation are currently saddled with import taxes, ranging from 3% to 5%. Because the North American Free Trade Agreement imposes no duties on sets assembled in Mexico, they would have a big price advantage in the U.S. retail market. "The goal is to have parity with NAFTA," says Sony spokesman Michael Koff. "This is one of the few television-manufacturing facilities left in the U.S., and we need to make sure it remains competitive."
In fact, Sony's sprawling 650-acre plant in Mount Pleasant has bucked the trends. Even as manufacturers like Zenith and Thomson have shut down U.S. operations and others have scaled back dramatically, the Pennsylvania facility has maintained payroll levels at more than 3,000 since opening nearly 15 years ago.
But to keep the plant viable as consumers switch to digital sets, Sony needs assurance that tax breaks will apply to the latest high-end models. "Our first priority is preserving jobs here, but the tax breaks could potentially add jobs, depending on demand" for the $5,000 and higher-priced plasma sets," says Koff.
Congress won't vote on the new tax breaks until the USITC reviews the legislation and receives input from the industry and the public. USITC officials said last week they had not received copies of the bill but expected to post it on the agency's Web site.
Sony already enjoys import-duty breaks for components of other products, which include the 36-inch Wega, a variety of projection sets, and glass for picture tubes. State officials are also planning a $35 million highway project, nicknamed the "Sony Connector," because it would provide a direct route from the plant to the Arnold Palmer Regional Airport on the other side of the county.
Despite congressional estimates of a $93 million cost to the federal Treasury over the next decade, Santorum insists the payback will be worth it-at least to his constituents. "Suspending the duty may save a significant number of manufacturing jobs for hard-working Pennsylvanians."