Element (copy)

The Element Electronics manufacturing plant in Winnsboro is shutting down in October due to the impact of tariffs, just the latest economic casualty in Fairfield County. Jamie Lovegrove/Staff

Back behind Walmart's electronics section, underneath a wall of TVs, there's a box that makes a big promise: a high-definition TV that's both "affordably priced" and "assembled in the USA."

There's nothing else like it at Walmart, or any other store in America. It's one of the only TVs on the planet that passes through a U.S. factory — this one a small outfit north of Columbia called Element Electronics.

It's on the verge of going away.

A wave of tariffs is about to swamp the nation’s only link to the work of making televisions. The threat of a trade war wiping out American jobs has directed national attention to Element and Winnsboro, the struggling town it calls home.

But the truth about Element isn't as simple as the headlines suggest. It had been on the edge for years, and to call Element a TV maker belies the reality of the industry: Its products were mostly made in China.

So when President Donald Trump's administration lobbed a 25 percent tax on Chinese TV parts, Element quickly had a problem. Its razor-thin profit margins were blowing up.

Pre-assembled

When Element first tested the idea of an American TV plant, it started small.

It went to Michigan and hired a company called Lotus International to do some assembly work in the suburbs of Detroit. TVs showed up at Lotus's door mostly finished, and they came with a kit to put on the last touches.

Workers unscrewed the back of each TV, put in a memory board and a couple of cables and put it back together. As Darren Ivey, Lotus's marketing director, remembers it, the work wasn't very extensive. But technically, it was the first TV manufacturing to land in the U.S. in years.

Element wanted to bet that a U.S. manufacturing plant would help set it apart in a crowded TV market, and Lotus was hired to show that American workers could put the last touches on new sets — on the cheap.

The strategy worked: In 2014, Walmart agreed to buy Element TVs as part of a push to fill its shelves with more products made in America.

The TVs would get a spot in every Walmart store in America, and Element quickly needed to grow its operations. South Carolina dangled $1.3 million in incentives to land the plant, and Element decided to set up in Fairfield County, in a rural pocket of the Midlands.

At the time, the company's CEO told The Wall Street Journal he wanted to expand Element's work in Winnsboro. He imagined workers putting together TVs piece by piece, instead of using kits. The company told state officials they'd eventually hire 500 workers.

Element didn't respond to questions about whether its manufacturing process has changed, but there is little indication it has. TVs still come to South Carolina in kits, and workers run quality-control tests before sending them off, according to Ty Davenport, Fairfield County's economic development director.

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Element TV

Element Electronics markets its TVs as "assembled in the USA" and "affordably priced." Thad Moore/Staff

Made in America?

Soon after Element set up its factory in South Carolina, Scott Paul's trade group hatched a plan for its new office: It was going to furnish the place using only American-made products.

It seemed fitting for the Alliance for American Manufacturing, a group that promotes U.S.-made products. And anyway, domestic textiles and furniture weren't too hard to find.

But TVs were a stumbling block.

After all, the guts of a new TV set are mostly made overseas. There isn't a single factory that makes the costliest, most important part — the LCD screen. And since that's coming from abroad anyway, there has been limited interest in developing a new supply chain here.

But the trade group heard about Element, and it bought a couple of sets. When they opened their boxes — draped with pictures of the American flag — they were startled to see "made in China" stamped on the back.

So in 2014, they filed a complaint with the Federal Trade Commission, accusing Element of misleading marketing. They described the company's practices as "red, white and blue-washing," since a product can't be called "made in America" if its parts are all foreign.

"We felt kind of snookered and also like consumers were getting snookered," Paul said.

Element eventually toned down its packaging, and it settled on new wording that was limited to the five models it actually works on in South Carolina: "assembled in the USA."

There was little hope that "assembled" would become "made" any time soon. It will take years for the U.S. to open its first plant making LCD panels — the Taiwanese supplier Foxconn broke ground on a huge factory this summer — and even longer to land more suppliers.

So when tariffs struck, Element had nowhere to turn.

Death blow

It didn't help that for as long as Element has been in South Carolina, it has been on thin ice.

Existing tariffs on TV parts — 4.5 percent — had eroded its bottom line, and it was essentially holding on until it could get an exemption from paying taxes on its imports, according to Davenport, the county economic development director.

Congress seemed to be on board with giving it a pass, and Davenport said it seemed like a routine request, since no one in the U.S. is making what it needs. But the process stalled, and for years, Element ate the cost.

Davenport says the company was more or less breaking even — maybe turning a small profit. It was essentially betting year after year that it would eventually get a waiver.

Instead, the tariffs quintupled.

On Twitter, Element has said that it's trying again to get a pass. If that doesn't work, it says it will lay off 126 workers in October.

The shutdown plans — disclosed to state officials last week — mark some of the first layoffs directly tied to the growing trade war between the U.S. and China. The president's backers have accused Element of making excuses, of blaming new tariffs for a business model that was unsustainable.

Paul, for one, says he thinks its operations all along were "built on a house of cards."

But that's little comfort in Fairfield County, which has taken blow after blow over the past year. It absorbed one of the largest layoffs in state history when plans to expand the V.C. Summer nuclear power plant were called off last summer. And months later, it lost its oldest and largest industry, a textile mill that had hung on for more than a century.

And so the county — one of the state's smallest and poorest — is reeling again, hoping that the TV tariffs were a mistake, a line-item oversight in a wave of mounting trade tensions.

"Otherwise, we're just collateral damage in a trade war," Davenport said.

Even if the tariffs stand for now, he says the county has a glimmer of hope that Element will be back when the trade war ends. Element is going to keep a few employees for a while.

And when it gets back to business, he says, it shouldn't take long to train workers how to put the last parts in a TV.

Reach Thad Moore at 843-937-5703. Follow him on Twitter @thadmoore.