|
Milwaukee Journal Sentinel
February 28, 2005
Steel Supply Puts Manufacturers in a Pinch;
Majority of Companies Surveyed Say January
Orders Came Incomplete or Late
By Rick Barrett
Roy Frederiksen guides metal through a cutter Monday at Speedy Metals in New Berlin. Steelproduct
manufacturers are struggling to get enough metal, according to a survey from a trade
group with Milwaukee-area members.
Sixty-six percent of the surveyed companies said they received only partial shipments of the steel
they expected in January, while 77% received late shipments. More than half of the companies
said current steel market conditions are "significantly to critically" disrupting their businesses.
After a four-month decline in imports of hot-rolled steel, which is commonly used by
manufacturers, the Precision Metalforming Association is calling for the elimination of tariffs on
the material from Brazil, Japan and Russia. The tariffs range from 19% to 42% and were imposed
about five years ago to protect the U.S. steel industry.
A government hearing is scheduled Wednesday in Washington, D.C., to discuss whether the
tariffs should be dropped or continued another five years, according to the U.S. International
Trade Commission.
Eliminating the tariffs could encourage more steel imports, which would be good for U.S.
manufacturers that are scrambling to find enough materials, said Bill Gaskin, president of the
Cleveland-based metal-forming association.
"There is simply no need for these duties," Gaskin said. "The U.S. steel industry has gone through
consolidation and is healthy, strong and making record profits. Further government protection
isn't needed."
Without adequate imports, Gaskin said, manufacturers are forced to pay high spot market prices
for steel that's in short supply. Often, orders aren't completely filled or arrive late.
"That causes all kinds of problems," Gaskin said, from manufacturers missing deadlines to costs
that can't easily be passed on to customers.
Some steel prices have more than doubled in the last year.
A Wisconsin manufacturer lost 25 orders because the price it paid for hot-rolled steel went up
69% and the customer refused to pay the increase, according to Gaskin.
"The customer said it was cheaper to buy parts in China and have them shipped here," he said.
Eliminating the duties on hot-rolled steel from Japan, Brazil and Russia would help steel
consumers more easily obtain what they need at globally competitive prices, Gaskin said. Ford
Motor Co. and several large automotive parts suppliers have joined the Precision Metalforming
Association in a bid to get the tariffs removed, he added.
Foreign competition feared
But taking that action could severely harm the U.S. steel industry, said Alan Price, a Washington,
D.C., attorney who represents Nucor Steel Corp., one of the nation's largest steel producers.
"If the duties are dropped, there will be a surge of dumped and subsidized imports," Price said.
China is gearing up to become a major steel exporter, which could put further pressure on U.S.
steel mills, according to Price.
"Absolutely, we need to keep the tariffs in place," he said.
Wisconsin has hundreds of metal-product companies, and steel prices are a hot issue here.
A few more steel imports could help reduce prices, said John Baker Jr. with E.C. Sty-berg
Engineering Co., a Racine manufacturer.
"There needs to be a better check-and-balance in the pricing system," he said. "If that means
reducing the tariffs and seeing what happens, then I would say that's probably not a bad idea."
Steel prices are a "double-edge sword," said Tom Turner with Speedy Metals Inc., a New Berlin
steel distributor.
"Yes, we could use some more steel imports because it helps keep U.S. steel mills from getting
too greedy," Turner said. "But I can understand the steel companies' position, too. They're trying
to get some profits that weren't available in the last 10 or 15 years."
Tariffs should not have been placed on imported steel without providing tariff protections for
metal-product companies, said Alan Tonelson with the U.S. Business and Industry Council in
Washington, D.C.
"All we ended up doing was raising prices for a key raw material for many American
manufacturers," he said.
China continues to have a big impact on steel prices, according to Tonelson.
As China continues on an "industrial development binge," it consumes huge amounts of the
world's raw materials, he said. "The China effect has been much more important in driving steel
prices high, and keeping them there, than the remaining U.S. steel tariffs."
It can take a long time for the government to make changes in tariffs, which is frustrating for both
sides of a trade issue.
"The trade law system in this country is anything but nimble. We need some way of adjusting to
rapid changes in the marketplace," Tonelson said.
|
