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TESTIMONY
OF LESTER TRILLA
TRILLA STEEL DRUM, CORPORATION
HEARING ON UNINTENDED CONSEQUENCES OF INCREASED
STEEL TARIFFS
ON AMERICAN MANUFACTURERS
BEFORE THE
HOUSE COMMITTEE ON SMALL BUSINESS
July 23, 2002
Good morning. My name is Lester Trilla. I am the president of Trilla
Steel Drum Corporation. Mr. Chairman and Members of the Committee,
I want to thank you very much for the honor of appearing before
you to testify about the impact of the Steel 201 tariffs on my business
and on my workers. I want to thank the Chairman especially for his
leadership on behalf of small business owners. I also would like
to express my appreciation to the Consuming Industries Trade Action
Coalition, or "CITAC," for its good work in standing up
for America's steel users, especially small businesses like mine.
By way of short introduction, Trilla Steel Drum is located in Chicago,
IL. We are a leading manufacturer of new steel drums used in the
filling and transportation of a variety of products, including hazardous
materials. Trilla is a family-owned, family run business - three
generations of the Trilla family have built the company from a drafty
garage on the Southwest Side into a major Midwest supplier of more
than one million 55-gallon steel drums annually to a diverse client
base. Cold-rolled steel is the major raw material used in our drums.
The imposition of a 30 percent additional tariff on the steel that
Trilla needs to import has been a disaster for Trilla. It has effectively
cut off our supply of the major raw material we need. The significant
shortfall in domestic capacity and expanding lead times give us
grave concern that we may not be able to get enough steel from domestic
sources to meet our needs. Furthermore, its inconsistent quality
makes it poorly suited for Trilla's use.
Trilla has a stringent qualification process. Only imported steel
consistently meets our exacting requirements and those of our customers.
Trilla's customers include an increasing number of companies that
ship hazardous, sensitive, and expensive materials. The integrity
of the steel drums used to ship these materials is critical, as
any contamination or leakage into the environment could be disastrous.
Drums with cracks, fractures, and leaks - which can easily result
from the use of steel that is unsuitable for our steel drums - are
unacceptable, but will be inevitable if we are forced to use steel
that does not consistently meet our strict specifications. Not only
would this have a severe impact on our ability to compete effectively-
increasing our costs due to scrap and rejections - but it would
impact the quality of our drums, and undermine our credibility with
our customers.
In order for Trilla to certify to its customers that each drum
meets the stringent performance requirements set forth by the United
Nations and required by the U.S. Department of Transportation, we
can only use raw materials that meet exacting gauge control requirements,
hardness value, and surface cleanliness, and are free of defects
caused by laminations or pinholes. For instance, steel that does
not have a consistent, low hardness value will not withstand the
state-of-the-art expansion process we employ, which ensures a stronger
container with better stacking and vacuum strength and dent resistance.
The imported steel has better gauge tolerance, resulting in an
increased yield. In addition, while less than one percent of the
imported steel is rejected, the domestic steel scrap figure is two
to three times higher.
The 201 tariffs, coupled with the threatened antidumping duties,
have removed our imported steel from the market. The price of the
domestic steel that we now must buy has increased by over 54 percent
since the imposition of the steel tariffs. That equates to around
a 20 percent increase in the cost of a drum. Add to that the cost
of increased scrap, breakdowns, and rejected drums because of the
quality of the steel, and you can see our competitive damage.
Trilla simply cannot absorb these huge cost increases.
Our customers are balking at significantly higher prices necessitated
by steel tariffs, and are starting to look for lower-cost plastic
and bulk packaging. More significantly, if this situation continues
for any length of time, some of our larger customers will choose
to fill drums overseas. This would not only dramatically reduce
production and jobs at Trilla and other American drum manufacturers,
but at domestic filling operations as well.
While we appreciate that the Steel 201 remedy was put in place
to aid the U.S. steel industry in its time of crisis, it does not
make sense if it creates a crisis for us. Because of the steel tariffs
we have had to cut back our production hours, effectively reducing
employment. Because the President could not have intended to help
the steel industry by sacrificing the steel consuming industries
in this country, we need to have a product exclusion to keep Trilla
Steel Drum from being a victim of the 201 remedy.
Thank you for this opportunity to present my views. I would be
happy to answer any questions you have.
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