Minnesota company’s plastic-and-wire closures—a fixture on bread bags—are at the leading edge of Washington’s tariff tiff with Beijing

The U.S. has been fighting a trade war with China over broad economic terrain—agriculture, steel, electronics.

Newly entering the battlefront is a crucial American technology: the twist-tie.

The yuan’s artificially low value has let China price its ties below cost, contends Bedford Industries Inc. of Worthington, Minn., which says it developed the modern plastic twist-tie and wants the U.S. to impose duties on Chinese competition.

“We have been doing this for 50 years and have a really efficient process,” says Bedford President Jay Milbrandt . “It didn’t seem right to us that China could make twist-ties, ship it to the U.S., market it, all for a price where you can’t even buy the basic raw materials.”

Bedford’s wiry closures are all over the supermarket—around bags of bread, lettuce leaves, containers of coffee, potato packs—and in hardware stores holding power cords and reels of hose.

In June, Bedford filed suit with the International Trade Commission and Commerce Department, the first U.S. manufacturer to file such a case against Chinese imports since the Trump administration revised regulations this year and let companies seek tariffs against foreign competitors if they can show the products benefited from currency manipulation.

Twist-tie tariffs would set a precedent, so trade experts are watching Bedford’s suit as a test case.

The Chinese government is contesting the case and has filed more than 3,000 pages of documents, arguing it is absurd to think Beijing would adjust its currency to corner the twist-tie market.

Responding to queries about the case, the commercial office of the Chinese Embassy in Washington said in an email: “Taking undervalued currencies as a countervailable subsidy will bring a significant risk to the multilateral trading regime and the international monetary system.”

Bread as we know it is at stake, says Mark Kramer , president of Kramer Corp., an Atlanta broker of food packaging and equipment who says he doesn’t know of anyone who disputes Bedford’s claims to the twist-tie’s creation. “To my knowledge, there are only three ways to close a bread bag,” he says. “There’s the twist-tie, the plastic tab, and then there’s resealable tape.”

“Bedford is the number one manufacturer of twist-ties in the United States,” he says. “If Bedford closed their doors tomorrow, the bakery industry would be scrambling.”

It’s a personal fight for Mr. Milbrandt, whose grandparents Robert and Patricia Ludlow started Bedford in 1966 and say they invented the process of marrying wire and plastic in a tie rugged enough to withstand machines that bag bread and other products.

A former turkey farmer, Mr. Ludlow was looking to get into a more lucrative trade. Inspiration struck, Mr. Ludlow says, when Mrs. Ludlow was at a friend’s Minnesota ice-fishing cabin and encountered a paper-and-wire tie. He believed he could make a superior version that wouldn’t rip as easily in a bread-packaging machine.

“I thought that if I could make a twist-tie with a plastic coating that adhered to the wire and survived the application machine showing no bare wire, there could be a market for such a tie bag closure,” says Mr. Ludlow, 91.

Mr. Ludlow experimented with a plastic extruder and farm equipment for baling wire to devise the ties, then traveled the country to pitch them—originally called Tie-Tites—to bakeries. Mrs. Ludlow, now 90, worked as secretary, shipping clerk and other jobs.

They named their company Bedford, Mr. Ludlow’s middle name, so if things didn’t work out it wouldn’t tarnish the family name. They expanded into a variety of bands, tags and tips with names like Bib Ties, Flag Ties, Snap-A-Tag, Double Wire Tin-Tie and PolyTwist.

The family secured scores of patents, including for tags with bar codes to track produce to the field where it was grown and a tie used as the nose wire in face masks.

“You don’t think of ‘twist-tie’ and ‘technology,’ but the fact is their products have growers putting a URL, on a tie, around a head of lettuce,” says John Toner, vice president of the United Fresh Produce Association. “Their solutions allow someone to say ‘Oh, this is where this lettuce came from.’ ”

Bedford says it sells tens of billions of ties a year, typically in spools, boxes or by the foot, at prices from tenths of a penny to several pennies a foot.

About 3.7 billion loaves of bread are sold a year in the U.S., mostly with Bedford ties, the company says.

About five years ago, Chinese manufacturers began cutting into its market, Mr. Milbrandt says. Bedford began preparing to act last year after finding a

Chinese twist-tie maker had won a food-packaging contract at a suspiciously low price, he says: “The Chinese were coming in at half the price we could offer twist-ties for.”

Bedford’s lawyer, Roy Goldberg , says he concluded Chinese manufacturers benefited from a range of export credits, loans, tax deferrals and tax reductions. Bedford’s plans to seek punitive levies were under way when the U.S. changed regulations last year, he says. The new regulation went into effect this year just as Bedford was finalizing its case.

China says in a twist-tie-case filing that its currency wasn’t undervalued in 2019, the period the case covers, and to the extent the yuan declined it was because “since 2018, the United States has repeatedly provoked and escalated Sino-US economic and trade confliction.”

Trade lawyers are closely following Bedford’s case, including Adams Lee in Harris Bricken’s international-trade practice, who says: “This currency manipulation subsidy is definitely more interesting than the twist-tie case itself.”

The new regulation is completely untested against China. Only one other currency case, concerning the Vietnamese dong and passenger-vehicle tires, has been filed under the system.

If Bedford wins, tariffs would apply only to twist-ties but would establish a precedent for any other company competing with China in 2019. Many analysts argue that, while China’s currency was undervalued in the past, it hasn’t engaged in manipulation recently. The International Monetary Fund in 2020 said the yuan was “broadly in line” with where it should be.

Mr. Milbrandt says he just wants to ensure the 450 jobs at his factory aren’t wiped out.

“We identify with twist-ties more than anything else we do,” he says. “It’s a great American success story. A great legacy. All these families that have built their lives around this company. How can you keep this going? How do we keep it going another 50 years?”

Source: Wall Street Journal

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