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TESTIMONY OF
MERLE EMERY
G.R. SPRING & STAMPING
HEARING ON UNINTENDED CONSEQUENCES OFINCREASED STEEL TARIFFS
ON AMERICAN MANUFACTURERS
BEFORE THE
HOUSE COMMITTEE ON SMALL BUSINESS
July 23, 2002
Thank you for holding this hearing on the unintended consequences
of increased steel tariffs on American manufacturers. I am grateful
that you are taking the time to hear from the small businesses who
have been deeply hurt by the 201 action.
My name is Merle Emery. I am the Vice President and General Manager
of G.R. Spring and Stamping. We are located in Grand Rapids, Michigan,
and employ 200 workers in the custom manufacture of metal stampings,
progressive die, slide stampings, springs, wire forms, and value-added
assemblies. Our customer base is 70 percent automotive, 15 percent
appliance, 10 percent office furniture, and others. The imposition
of steel tariffs have led to uncertainty in supply and price of
the steel we need. It has also cost us significant business and
has placed us in a price-cost squeeze.
GR Spring requires 20,000 tons of steel each year. With the increased
cost and decreased supply of available steel, our service centers
have broken their long-term commitments to supply us with steel.
This has forced us to buy from the spot market to obtain the steel
we need. As a result, our price of steel has increased 20-30 percent.
These increases in steel prices have already cost us a substantial
amount of business. For example, soon after the Steel 201 tariffs
were put in effect, GR Spring lost a major contract with a well-established
customer of ours, to a Canadian company. This Canadian company is
now able to purchase its steel for 30 percent less than we can,
and this cost advantage was directly reflected in their bid. This
customer had never worked with the Canadian company - their decision
was solely based on price. We are a $30 million company and this
was a $4.5 million contract. This contract was huge for us, but
we could not compete on price due to increased steel costs.
The reality of our market is that we cannot pass the additional
cost of the tariffs on to our customers. As the example above illustrates,
our customers will take advantage of a global economy and buy our
product from a cheaper, foreign source. Nor can we afford to absorb
these additional costs. These additional costs are so high that
they will turn our margins negative and put our company on the road
to ruin.
In addition, since the imposition of the steel tariffs we find
ourselves faced with uncertainty of both supply and price. We have
not been receiving steel when we need it. When we receive steel
orders late, this adds to our costs by:
We have also been faced with uncertainty of pricing. Because of
volatility in the market, our service center suppliers have refused
to price steel more than a month in advance. This means that we
have to guess what our steel costs will be when we calculate a price
for our customers. This is an impossible way to operate a small
business.
Our present circumstance must change. We have already lost one
sizeable contract and we are in danger of losing more due to the
increased steel costs. Furthermore, the uncertainty of pricing and
availability for our steel is untenable. Our short-term and long-term
viability as a company is threatened.
Thank you very much.
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