DAVID PRITCHARD, PRESIDENT AND CEO
HEARING ON UNINTENDED CONSEQUENCES OF
July 23, 2002
Good morning. Thank you very much for asking me to testify about the consequences the Steel 201 tariffs have had on my company. My name is Dave Pritchard, and I am President and CEO at A.J. Rose Manufacturing Co.
A.J. Rose, headquartered in Avon, OH, is a family-owned company, with three generations in the business since 1922. We have 400 "associates". 270 are members of the United States Steel Workers' Local #735.
We specialize in manufacturing tight tolerance metal stampings, air bag components and spun-formed products for the automotive market, OEM, and aftermarket. Over 90 percent of our products are components used in motor vehicles, running at very high RPM's. The need to produce safe and reliable products is of the utmost importance. Failure of our components would be devastating, not just to our company's reputation, but also for our customers, and their customers, not to mention the risk to passenger and highway safety.
Because of these considerations, we have developed a relationship with Corus, who, along with their predecessor company, have provided us with 100 percent of our requirements of a particular grade of hot-rolled steel material since 1976. This supply relationship was the result of collaboration between the engineering teams at A.J. Rose, Corus, and our U.S. processor, Imports International/ Chesterfield Steel, to develop unique steels to make our products the best and safest on the market.
Our partnership with Corus and Imports International/Chesterfield Steel has been an integral and necessary part of our growth. Corus supplies us with hot-rolled material with the guaranteed tight tolerances and unique characteristics that we need, and that as yetcannot be duplicated by other mills. U.S. producers are unable to produce products meeting these requirements without significant retooling and diversion of their production line. In fact, when we have contacted domestic mills, they have declined to even provide us with a quote. This is the reason we have applied for exclusions from the steel tariffs for these products (Product Exclusion Request No. N-330.01 - .07).
A.J. Rose has been able to grow and add jobs because we manufacture a high quality product that a limited few can do.
Now, however, with the Steel 201 tariffs, everything has changed.
The additional tariff increases the cost of our basic raw material significantly. Many of our customers have refused to accept any price increase and those that have accepted a price increase have only agreed to accept a portion of our increased costs-leading us to absorb the rest. These additional tariffs are disastrous for our business. They make us much more vulnerable to foreign competition which is not crippled with these artificially inflated raw material costs.
In fact, one of our major customers has recently contacted us to let us know that they will be resourcing 11 of our current jobs (parts) overseas due to a savings of 38 to 42 percent on finished parts that they can import from Brazil and Asia. In addition, a significant number of our customers have told us that they are "market testing" our product, which means they are trying to find lower cost suppliers anywhere in the world. Thus, we are concerned that we may soon lose additional business as well.
This constant threat to our business is very real and will only get worse if we are forced to continue to pay such a premium for the steel we need to run our business. The hardship of this tariff and our constant inability to pass on any price increases to the automotive companies will cost not only jobs, but also most certainly, affect A.J. Rose Manufacturing Company's ability to survive.
Thank you. I will take any questions that you have.