PULASKI, N.Y. – At first glance, the small manufacturing plant that Vinny Lobdell Jr. and his father opened in this rural village would seem to be what President Donald Trump had in mind when he promised to “Make America Great Again.”

The HealthWay Family of Brands began as an offshoot of a company Vince Lobdell started in his family home here about 30 years ago, selling air cleaners to remove cigarette smoke from bars and restaurants.

The business took off as the company sold U.S.-made air purification and filtration systems to the owners of large commercial buildings, including hotels run by Marriott and Hilton. In 1999, HealthWay opened a plant in China to make smaller, portable air cleaners for the residential market.

When the family was ready to expand the company again in 2016, the Lobdells decided to make their portable air cleaners in Pulaski. The idea was to bring manufacturing jobs back to the United States, boosting the Oswego County village of some 2,000 people that had fallen on hard times.

Now almost four years later, HealthWay has fallen victim to Trump’s trade war with China as U.S. tariffs of 25% on Chinese imports take a rising toll on the company.

HealthWay’s fully-assembled products imported from their Chinese factory are exempt from the U.S. tariffs. But the U.S. rejected HealthWay’s application to exempt some of the Chinese-made parts that go into the air cleaners manufactured at its Pulaski factory, leaving American workers to feel the brunt of the tariffs.

HealthWay said last week that it would have to lay off eight of its 42 U.S. employees because of the tariffs and the impact it had on the small manufacturer’s cash flow.

“It’s as though we are being penalized for moving our manufacturing from China to the U.S.," said Vince Lobdell, 63, the company founder.

The company has also decided to delay a planned $2 million factory expansion expected to create 35 to 50 new production and office jobs in Pulaski, Vinny Lobdell Jr., the company president, told Syracuse.com | The Post-Standard.

The new employees would have made $35,000 to $100,000 per year in a county that had New York’s fourth-highest unemployment rate in November at 4.8%, up from 4.5% in the same month of 2018.

All told, the U.S. tariffs cost HealthWay at least $700,000 last year, a big hit for a small, privately-held company with annual revenue of less than $20 million, Lobdell Jr. said.

“It’s had a crucial impact on our business,” he said. “It’s been a major challenge for our business. There are casualties to every war, and certainly we’re casualties of this war.”

Trade war hits home

For many people, the trade war with China is a distant concern, a battle taking place with a country some 7,000 miles away from Upstate New York.

But the impact of U.S. and Chinese retaliatory tariffs has rippled across the U.S. economy. It’s taking a toll that extends beyond the bottom line of small manufacturers like HealthWay and to the kitchen tables of people struggling to make a living.

A study by the non-partisan Congressional Budget Office concluded that Trump’s trade wars will reduce the average U.S. household’s income by $580 in 2020. It’s the equivalent of about $60 billion in lost economic activity.

In Central New York, the tariffs have hit hard with family dairy farmers. Cayuga Milk Ingredients, a milk processing plant owned by farmers in Cayuga County, has been forced to delay an $89 million expansion project.

In Cortland County, family-owned Gutchess Lumber furloughed or reduced hours for its 500 employees after China imposed retaliatory tariffs of up to 25% on U.S. hardwoods. Before the tariffs, China had become the top buyer of the company’s prized Northern hardwoods.

Manufacturers like HealthWay, which supported Trump’s idea of negotiating fair trade rules with China, are now raising alarms about the U.S. strategy.

The National Association of Manufacturers warned the Trump administration in August against imposing an additional 10% in new tariffs on $300 billion worth of goods from China.

NAM President and CEO Jay Timmons said he’s concerned about U.S. companies and their workers “who are feeling the negative impact of the current tariffs and will be made even less competitive with this new tax on trade.”

The association’s survey of its member companies found that “manufacturing optimism took a substantial hit” last year, driven largely by uncertainties in trade policy.

Interim trade deal won’t help HealthWay

The layoffs at HealthWay took place in the same week Trump signed an interim trade deal with China, essentially calling a truce to the conflict that began nearly two years ago.

Under terms of the deal signed in a White House ceremony on Wednesday, China agreed to increase imports of American goods and services by at least $200 billion over two years. The total includes $40 billion to $50 billion worth of agricultural goods each year for two years.

China also agreed to protect American intellectual property and to stop forcing U.S. companies to transfer their technology to Chinese companies as a price for doing business with the world’s second-largest economy.

The so-called “phase one” deal did not eliminate the U.S. tariffs on Chinese products, including parts imported by HealthWay.

As part of the deal, Trump held off on increasing tariffs on Chinese goods that he threatened to impose last year. But he left in place tariffs on about $370 billion worth of Chinese products imported to the United States.

Those tariffs are paid by U.S. companies like HealthWay, which import the products, not the Chinese manufacturers.

A setback for U.S. manufacturing

Lobdell Jr. said the U.S. tariffs ended up penalizing his company for making portable air cleaners in the United States.

When the U.S. first imposed the tariffs on Chinese imports in 2018, HealthWay applied for and received an “exclusion” from the U.S. Department of Commerce. The waiver allowed the company to import its fully-assembled air purification equipment from its plant in China without paying the extra duties.

But when HealthWay applied for a similar exclusion for parts it imports from China for its U.S.-made portable air cleaners, the Commerce Department declined to waive the tariff, Lobdell said.

The company, which sells its U.S.-made air cleaners under the Intellipure brand name, pays an extra 25% in tariffs on the Chinese-made motors and key pads that it ships to the Pulaski plant.

The U.S. tariff increased the cost of the motors from $52.20 to $65.25 per unit for the portable air purifiers, and from $125.50 to $156.87 per unit for its commercial air purifiers, Lobdell said.

HealthWay has been unable to find an exact replacement for the Chinese-made motors in the United States, and motors that are similar would cost about twice as much as those he imports from China, according to the company.

HealthWay pays the tariffs up front when imported parts arrive from China. The company can’t recapture the costs until months later when exporting its finished products to China and other markets.

Lobdell said it’s ironic that about 80% of his company’s U.S.-made portable air cleaners are sold in China and other Asian markets, where customers are willing to pay a premium for the quality of American products.

“Air quality is the number one health risk facing people worldwide,” he said. “We have the best product in the fastest growing market in the world to tackle the biggest health challenge of our time, yet we’re being put at a disadvantage.”

The Intellipure air purifiers made in Pulaski are prominently labeled, “Made in USA.” The equipment is marketed as a high-end product, selling for up to $1,600 per unit in Asia compared to $999 online in the United States.

Members of Congress try to help

Before deciding he had no choice but to lay off employees, Lobdell turned to local members of Congress for help.

U.S. Reps. Anthony Brindisi and John Katko wrote to U.S. Trade Representative Robert Lighthizer on Sept. 27, asking for his support to exclude HealthWay from the U.S. tariffs. But the Commerce Department denied the application last week.

Brindisi said that the U.S. tariffs appear to be hurting companies they were intended to help.

“This is a perfect example of a company trying to do the right thing by bringing manufacturing jobs back to the United States,” Brindisi said in an interview. “However, like many Upstate New York businesses, they are becoming victims of this trade war.”

Brindisi said he supports the idea of holding China accountable. But he said it must be done by working with U.S. allies to pressure China.

Vinny Lobdell agrees.

“When it comes to China, we needed to do something,” he said. “There just needs to be more thoughtfulness about how this impacts small businesses. Smaller businesses take a 25% hit and it makes a big difference.”

HealthWay’s setback also makes a difference for Pulaski, where the Lobdells have helped revitalize the village by purchasing about 20 vacant or dilapidated buildings and renovating them for retail, office and residential use.

HealthWay's headquarters building in Pulaski, N.Y., is among 20 properties in the village renovated by the company and the Lobdell family.

The family renovated the historic Kallet Theater on the main road through the village, reopening the 350-seat theater into a multi-purpose building that plays movies and hosts conferences, plays and musical acts.

“We fixed them up, repaired them and rented them,” Lobdell Jr. said. “But we haven’t been able to invest any money back in capital projects or infrastructure because of the tariffs.”

Tariffs hit Trump stronghold from 2016

Lobdell Jr. declined to discuss his political views or whether he supported Trump in the 2016 presidential election.

Trump won Oswego County’s vote in the presidential election by more than 20 percentage points over Hillary Clinton, and he won the wider 22nd Congressional District by more than 15 points.

The 39-year-old said he would like to share his company’s story with Trump and explain how it helped boost a small community while building one of the nation’s leading air quality companies.

More than anything else, Lobdell Jr. said, he would ask the president to bring some certainty to his trade policies so that business owners can make long-term plans about their investments.

“He’s so unpredictable that it’s hard to make decisions,” Lobdell Jr. said of Trump. “As business people, we make decisions every day. When you don’t know what the government position is going to be, it just prevents growth. Manufacturing is dying in this country and we’re trying to bring it back. He’s making it very difficult to do so.”

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Contact Mark Weiner: Email | Twitter | Facebook | 571-970-3751

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