TESTIMONY OF

MICHAEL TANNER, PRESIDENT
WREN INDUSTRIES, INC.

HEARING ON UNINTENDED CONSEQUENCES OF
INCREASED STEEL TARIFFS ON AMERICAN MANUFACTURERS

BEFORE THE
HOUSE COMMITTEE ON SMALL BUSINESS

July 23, 2002

My name is Michael Tanner, and I am President at Wren Industries. Thank you very much for inviting me to speak at this hearing about the unintended consequences of increased steel tariffs on American manufacturers.

I am here because the steel tariffs imposed by the President in March have increased the price and reduced the availability of steel in the market to the point that our supply of steel is not reliable. Without a reliable supply of steel, we cannot continue to operate.

Wren is a metal stamper located in Tipp City, Ohio. We are a tier 1 and tier 2 supplier of parts for the automotive industry. We employ over 200 workers and have been in business since 1977.

The steel tariffs imposed by the President in March have reduced the availability of steel in the market to the point that our supply of steel is not reliable. Wren's service center suppliers have been placed on allocation and the steel deliveries that we are able to secure have been arriving a month or two late. This causes additional manufacturing time, which means additional manufacturing cost. Plus, on several occasions, I hate to admit how close we have come to shutting down our customer's production lines, which would be catastrophic for our reputation and credibility as well as incurring substantial penalty charges - all because we could not get the steel we need on time. I have no assurance of steel supplies past September of this year.

In addition, several of our service center suppliers have breached existing contracts with us. For example, our service center provider that supplies 25% of our steel requirements increased the price of delivered steel by as much as 48 percent despite our contract. We had relied on these contracts with our suppliers, and based our pricing to our own customers accordingly. My customers will not pay the increased prices I am now being forced to pay for steel.

Ladies and Gentlemen of the Committee, the bottom line is that my business is in danger if I cannot get steel and must continue to pay the increased prices. Unless things change rapidly, my company will lose business to foreign competition, now that our international competitors have a built-in cost advantage and a ready supply of steel.

Wren is a small business. We operate on the tight margins in a very competitive market. We can't pass on any of our increased costs to our customers. If there is no relief in the pricing of steel, I don't know how our business will be able to survive beyond the end of this year. We are in these dire straits due to the operation of the Steel 201 tariffs.

Thank you for your time.