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TESTIMONY OF
Timothy Tindall, President
Hearing Concerning Investigation 332-452,
"Steel-Consuming Industries: Competitive Conditions with Respect
to Steel Safeguard Measures"
Before the
United States International Trade Commission
June 19, 2003
Re: Steel-Consuming Industries: Competitive Conditions
with Respect to Steel Safeguarding Measures, Investigation No. 332-452
Dear Madam Secretary:
Spring Engineering and Manufacturing Corp. is a
$12 million supplier of metal stampings, springs and small assemblies
to the automotive marketplace. We are a family business that was
started more than 50 years ago. We employ approximately 90 people
in one facility in Canton, MI.
Strip and wire steel products comprise approximately
35% of the total cost of the parts we manufacture. We buy steel
both domestically and from foreign sources with the overwhelming
portion domestic.
Since the imposition of the steel tariffs in March
of 2002, we have experienced a sharp increase in all steel products
that we buy, averaging between 20-30%. We also experienced spot
shortages in several critical products that forced us to pay even
higher prices in the spot buy market.
The tariffs also negatively impacted our quality
levels of incoming material because of having to either buy from
a lowest-priced inferior supplier or from a totally unknown spot
buy supplier.
The variability in quality of this steel creates
additional costs to us beyond just the price. We are forced to
increase our levels of incoming inspection and testing as well
as increase our time to set or reset our machines to adapt to
the different materials. Our final output is also impacted by
higher final part rejection rates. As you can see, the direct
price increase of 20-30% was only part of the increase in total
costs caused by the tariffs.
The most serious impact of the steel price increases
for our business is that we are totally unable to pass the increase
on to our customers. We have had to absorb the entire material
increase, which impacts 35% of the total cost of the each part.
After experiencing severe and increasing global competitive pressures
during the past five to six years, our pricing is already at minimal
profitability. In many cases, the increases in steel pricing put
us at zero profitability or even a net loss. The choice for us
was either to except these conditions and hope that the tariffs
would be rescinded, or exit the business in total.
The steel price increases have also impacted this
company's ability to compete for new work. We are forced to compete
with all global competitors, but not able to buy steel at the
most competitive prices. This gives my competitors an automatic
advantage. The net result is that we are not able to gain future
work because of our current steel prices. If we cannot grow with
future business, we cannot hope to remain financially viable long
term.
In our case, the steel price increases have severely
impacted our financial condition. We were not profitable in 2002
and do not expect to be profitable in 2003. As a small supplier,
we cannot expect to sustain losses of this magnitude and stay
in business.
In a larger sense, the entire steel consuming manufacturing
sector, of which we are a part, is at a critical tipping point,
both in the Midwest and nationally. The U.S. manufacturing base
has been steadily declining. We have lost more than two million
jobs over the past three years. The steel price increases from
the tariffs have only worsened a bad situation for manufacturers.
Spring Engineering is a high quality, competitive
leader in our industry. We produce domestically and ship globally.
We have maintained our position by investing in people and the
latest technologies. We cannot, however, offset artificially driven
material price increases that our customers will not accept.
Current statistics indicate that for every one steel-producing
job positively impacted, the steel tariffs have negatively impacted
57 jobs in steel-consuming industries. The high paying manufacturing
jobs that we are losing are going away forever. In its most basic
sense, the tariffs are making a very serious national economic
problem even worse.
Manufacturing does matter. It is the basis of our
technological leadership, our national security and one of the
critical drivers of our economy and employment. It is, without
a doubt, one of the largest factors that sustain our middle class
standard of living. It needs to be grow not decline.
The tariffs have had very large, and I'm sure unintended
consequences for this important segment of working America and
small business. I hope you will thoroughly review the full impact
of the tariffs on steel consumers, and I urge you to recommend
rescinding them at the earliest possible date.
Thank you for the opportunity to testify.
Sincerely,
Timothy Tindall
President
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