Steel, TA-201-73
Testimony of James O'Donnell
Chief Financial Officer
Camcraft, Inc., Hanover Park, Illinois

Good morning. I am Jim O'Donnell, Chief Financial Officer of Camcraft, Inc., a manufacturer of precision turned parts located in Hanover Park, Illinois. In Illinois, there are 33 jobs in steel consuming industries for every job in steel production.
Our annual sales are approximately $25,000,000 and we employ 200 people. The majority of our sales are made to large, U.S. automotive and hydraulic customers. In the last three years, we've purchased about 1500 tons of cold finished bar, on average. Our industry nationwide includes approximately 1600 U.S. companies in the turned parts industry, consuming approximately 200,000 tons of cold finished bar per year. In our industry, Camcraft is considered a fairly large company.
The turned parts industry is in a state of transition. As with many other industries, foreign turned parts producers are a source of intense competition.
To stay in business, American turned parts companies must focus on high-end products: difficult, close-tolerance work that meets stringent quality levels. To produce these parts, high levels of investment are required for state of the art equipment. In recent years, Camcraft has had to invest 10% of sales annually for new equipment.
At the same time, turned parts companies are under intense cost pressure. Customers are requiring annual cost reductions and, for the last year have been demanding additional, one time price reductions. Outright demands, on-line reverse auctions, and global sourcing to name a few are the tactics we face. On the cost side of the ledger, health care costs are spiraling out of control.
Our international competition has an advantage because their steel raw material costs are quite a bit lower than ours in the U.S. We recently received a survey from the Syndicate International Du Decolletage, a consortium of turned parts companies from Europe and the United States, issued a survey that showed that companies in the United States pay from $.04 to $.08 per pound more for free-cutting cold finished bars than a company in Europe. Since bar typically constitutes 10 to 40% of our costs, an increase in domestic steel costs relative to global steel prices will reduce our global competitiveness.
We need and use steel from domestic producers now. However, if action by this Commission and the government undermines our competitive position, as import restrictions would do, our ability to remain in business as a domestic steel consumer would be in jeopardy. Our customers are already shifting to offshore production and in some cases are moving their production (along with their sources of supply) elsewhere in the world. Any import remedy for U.S. steel producers that increases costs to domestic customers will only accelerate this offshore flight, which will harm the U.S. steel industry as well as its customers.