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TESTIMONY OF
JOHN GROVE, VICE-PRESIDENT, PROCUREMENT
COLD METAL PRODUCTS, 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 John Grove, Vice-President, Procurement,
with Cold Metal Products, Inc. I am grateful for the chance to testify
before this committee to tell you about the impact the Steel 201
tariffs have had on my business. As a result of the Steel 201 tariffs,
we have been put on allocation by our domestic suppliers, and cannot
get enough steel for our operations. We have also lost business
because our customers are unwilling to pay for our increased steel
costs.
Cold Metal Products is located in Swickley, PA with
plants and service centers in Youngstown, OH, Indianapolis, IN,
and Roseville, MI, and Ottawa where we employ over four hundred
workers. Our production workers are members of the United Steelworkers
local union nos. 3047 and 1999-2. We manufacture specialty and conventional
strip steel to meet the critical requirements of precision parts
manufacturers. We also provide value-added products to manufacturers
in the automotive, construction, cutting tools, consumer goods,
and industrial goods markets. As a leading maker of intermediate
steel products in this country, a constant and reliable supply of
raw steel material is critical to our success.
The steel tariffs imposed in March have increased
the price and reduced the availability of steel to the point that
our supply of steel is not reliable. Cold Metal Products has been
put on allocation by three of our long-time suppliers in the U.S.
- WCI Steel, Steel Dynamics, and Gallatin Steel - they simply cannot
supply us with the volume of steel we need, given their capacity
limitations and orders from larger customers. As a result, we have
run out of steel a number of times in the past couple of months
and have not been able to service our customers. We have no assurance
of steel supplies past September of this year. When we are able
to obtain steel, it arrives late roughly fifty percent of the time.
In addition, because of the scarcity of the steel
in the U.S. market, we have been forced to accept non-negotiable
price increases of $130 per ton since 01/01/92. The $130
constitutes more than a thirty percent price increase and is the
largest increase in a six-month time span ever seen by Cold Metal
since its founding in 1926.
Our customers have refused to pay any of these increased
costs and have begun to move their business off-shore where steel
is cheaper. For example, one of our long-standing customers, Stanley
Tool, recently told us that they were diverting their business from
us to England because the product was cheaper there. Stanley Tool
also told us that they plan to send additional business to China.
This loss of business has a profoundly negative effect on our company.
We anticipate that we will lose more business in the future because
our increased steel prices due to the Steel 201 tariffs have made
us unable to compete in a global economy.
Cold Metal has long been recognized as the leading
innovator in the strip steel industry, with an unmatched capability
to develop products and processing that provides solutions for our
customers' applications. Our business is based on providing cold-rolling,
annealing, normalizing, edge conditioning, oscillate winding, slitting
and cutting-to length. In order to provide these value-added specialty
steel products, we must have steel to process. In the current environment
of Steel 201 tariffs, however, we cannot get the steel we need.
We have done everything we can do to be a success
in a very demanding marketplace. The effort to save the U.S. steel
mills, however, should not sacrifice companies like ours.
Thank you.
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