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TESTIMONY OF
Nels Leutwiler
Park View Metal Products
THE UNINTENDED CONSEQUENCES OF INCREASED STEEL
TARIFFS
ON AMERICAN MANUFACTURERS
Submitted to the
House Committee on Small Business
My name is Nels Leutwiler and I am the CEO of Parkview Metal Products,
a 52 year old, family owned and run metal stamping company headquartered
in Chicago, Illinois. I thank you for the opportunity to submit
testimony on the unintended consequences of increased steel tariffs
on my company.
Parkview Metal has four plants in the United States and one plant
in Mexico. We make metal components for Sony big screen televisions,
which Sony assembles in their plant in Pennsylvania. Well over 50
percent of the cost of the parts we produce is the metal itself.
Parkview's 2002 pricing to Sony was based upon purchasing steel,
per our agreement with Worthington Steel, our service center on
these items, for $0.2145 per pound. In late March, after the Steel
201 tariffs were implemented, our service center immediately imposed
a significant price increase on our orders, to $0.2905 per pound.
To make matters worse, they couldn't secure adequate quantities,
so we were forced onto the spot market where prices were even higher.
The universe of suppliers we can use for this product is limited
due to quality issues.
We went back to Sony with a price increase, which they reluctantly
accepted, enabling us to pass through most of that initial increase.
At the same time, Sony understandably vowed to search for other
sources that weren't subject to the tariffs.
Now, as the attached e-mail states, Bethlehem Steel, which supplies
our service center, is pushing out orders and forcing us back on
the spot market. Parkview Metal is now paying $0.3495 per pound.
We will lose money on every part we ship at this price. We have
no option but to approach Sony for pricing relief again.
The likely outcome of this is that the parts will be re-sourced
to someone out of the country, to a company that doesn't have to
contend with the steel tariffs. The United States government, in
its infinite wisdom, has effectively diverted imports of steel to
downstream products incorporating steel. Ultimately, these steel
pricing and supply issues are just going to expedite the transfer
of the entire Sony big screen product line to China or some other
country where parts manufacturers can take advantage of globally
competitive steel prices. These components are vital to Sony's production
in Pennsylvania - without them, they cannot build the product line.
In short, not only are the U.S. parts manufacturers like me at risk,
the future of the Sony assembly plants in the U.S. is in also jeopardy.
Many U.S. jobs will be lost.
This is simply one real world example of the threat that the steel
tariffs pose to an American small business. The current steel market
crisis has dramatically impacted our business in other aspects as
well. We have been forced to absorb increases in labor costs in
overtime premiums due to raw material availability and lead times
infringing upon total required manufacturing time. In too many instances,
these delays have resulted in premium or airfreight costs required
to meet customer demand. It is hard to fathom that such a result
could have been intended.
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