The unfolding story of the hazardous trailers used to house victims of Hurricane Rita and Katrina has raised an alarm about safety standards in emergency housing and the ability of the government to respond – safely and humanely – to disasters. But this is not just a story about hurricane victims, or federal ineptitude, or sloppy construction. It is also a story about a broader problem: the loss of U.S. manufacturing capacity to foreign imports.

In the wake of the hurricanes, Federal Emergency Management Agency officials hustled more than $2 billion worth of trailers and mobile homes into the disaster zone to house the newly homeless. Fast forward to 2008, when thousands of those victims have been moved out of the trailer parks, many of them complaining of serious health problems linked to high levels of formaldehyde in the temporary homes.

Adding insult to injury, the prime culprit in this case seems to be plywood from China – inexpensive and loaded with formaldehyde.

The trailer debacle has spurred a class-action lawsuit that may take years to sort out. It has FEMA, the manufacturers and the suppliers all pointing fingers, while the hurricane victims are uprooted once again. While the question of responsibility remains a complex question, one thing seems clear: The hardwood plywood market qualifies as the latest poster child for the erosion of U.S. manufacturing strength.

Foreign competition is “a huge problem,” said Kip Howlett, president of the Hardwood Plywood and Veneer Association. According to Howlett, just 12 years ago, U.S. companies produced about 67 percent of the $1.2 billion worth of hardwood plywood products sold in the United States. Today the market has grown to some $2.4 billion – but imports from China account for 67 to 70 percent of that material.

Howlett said that 40 percent of the U.S. plywood/veneer manufacturing capacity has been shut down permanently, and what’s left is operating at about 60 percent due primarily to the continuing gains by imports. The ongoing housing downturn only worsened an existing downward spiral.

The situation is complex, but an uneven playing field – one fostered by U.S. policies – is the common thread cited by industry and political leaders. China and other foreign markets can easily undercut U.S. prices because of cheap labor and plentiful government subsidies and scant environmental controls.

“We have allowed the importation of products that are not certified to be safe, and we have allowed the importation of products that could come from logging sources that are illegal,” Howlett said.

The consumer gets cheap foreign-made goods, but at considerable costs to the U.S. economy.

“And who winds up really paying for it?” Howlett asked. “The poor mill guy sitting in Springfield, Oregon, who’s out of a job.”

Domestic manufacturers of plywood products have been dealing with regulation of chemical components since 1984, when the first HUD standards on formaldehyde went into effect for plywood-veneer building materials. More recently, California adopted more stringent rules to protect public health and the environment. The California rules are being phased in over the next several years.

Because plywood products are used in so many goods, and because so many goods produced in the United States have a good chance of ending up sold to California consumers, the more stringent rules on formaldehyde are expected to be taken as the standard – the unofficial, yet practical standard – for manufacturers across the nation.

But industry officials fear that “unofficial” may not be good enough to stop the flood of imports. “Until there is a stated national standard, there is no way to enforce it against other countries,” Howlett said.

He and others are hopeful that our national leaders will rectify the situation by imposing strict rules on the chemicals in these imported wood products, and that more people will become aware of the consequences of having a double standard. Certainly, after the FEMA trailer disgrace, the public could use some reassurance that our health and safety requirements will apply equally, whether the products come from Oregon, California or China.