UP CEO: 'I see how international trade benefits our country every day'

Lance Fritz defends NAFTA, free trade; tells reporters he's a 'Thomas' not a 'Sir Topham Hatt'
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Union Pacific CEO Lance Fritz addresses the National Press Club today in Washington, D.C.
Union Pacific via Twitter
WASHINGTON — Free trade is necessary for railroads, the economy, and the nation to thrive, Union Pacific CEO Lance Fritz told the National Press Club on Thursday.

“I see how international trade benefits our country every day,” Fritz said, citing several examples.

UP hauls Iowa-grown soybeans to Mexico, where they are processed into vegetable oil and wind up on the shelves of U.S. grocery stores. Ohio autoworkers make plastic dashboards that railroads ship to assembly plants in Mexico and Canada, which are then exported as finished vehicles to dealers in the U.S. And UP handles shipments of recycled glass to a bottle factory in Texas, which makes bottles that Mexican brewers fill and ship to American consumers via rail.

“That cycle happens over and over, every day,” Fritz says.

The economy is humming along, propelled in part by tax reform and regulation that’s more business friendly, Fritz says.

But the growing trade war between the U.S. and its trading partners in Asia, Europe, and North America threatens the economy and American jobs, he says.

“Freight rail thrives when consumers consume things, when the industrial economy is healthy and producing, and when international trade is healthy,” Fritz says.

Tariffs disrupt all three, he says, and jeopardize the 40 percent of UP volume that originates or terminates outside the U.S.

“Our government has the chance to continue creating economic opportunity for American workers and businesses, but only if we lead the world and maintain our longstanding commitment to international trade,” Fritz says. “The best step our government could take is to create a climate in which businesses have the confidence to invest and to create jobs. But the recent trade policies have done the opposite, by creating uncertainty that’s going to cause capital investment to slow down.”

Trade agreements need to be modernized to ensure that they are fair to the United States, Fritz emphasized. But the U.S. should work constructively with its allies and trading partners, rather than picking fights, the CEO says.

UP directly feels the impact of the 25 percent tariff the Trump administration placed on Japanese steel. A ship loaded with Japanese-made rail remained off San Francisco for four weeks because of a dispute over whether UP would have to pay the $6 million tariff for the shipment, Fritz says.

For every American job protected by tariffs on aluminum and steel, 16 jobs in other sectors are lost, Fritz says. And up to 760,000 auto industry jobs are at risk from the auto tariffs the administration has imposed or is considering, Fritz says.

“Withdrawing from NAFTA would be disastrous,” Fritz says, noting that 14 million American jobs depend on free trade with Mexico and Canada.

UP, which serves all six rail gateways to Mexico, handles 70 percent of the rail volume that crosses the U.S.-Mexican border. Mexico traffic accounts for about 11 percent of UP’s overall volume.

Fritz says it’s wrong to blame U.S. manufacturing job losses on trade alone. Some 88 percent of manufacturing jobs lost between 2000 and 2010 went away due to technology and automation, Fritz says. Still, the U.S. remains the world’s second-largest manufacturer.

The U.S. should do more to fund job-training programs that better match workers’ skills with available jobs, Fritz says.

“The best way to create new jobs is trade,” he says. “For every billion dollars of international trade, the United States creates 5,800 new jobs.”

Fritz spoke and answered questions for more than an hour as the keynote speaker at the National Press Club’s headliner luncheon.

The final question for Fritz: Since most people gained exposure to freight trains as children, do you see yourself more as a Thomas or a Sir Topham Hatt?

“I’m definitely a Thomas,” Fritz said with a hearty laugh. “I try hard, I’m a grinder. We’ll take on any challenge as a team and succeed. We’re Thomases.”

NEWSWIRETrains News Wire

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