CITAC STEEL CONSUMERS TESTIFY:
"How much damage must be done? . How many U.S. jobs have to be lost?"
Washington, DC - Member companies of the Consuming Industries Trade Action Coalition (CITAC), disillusioned with the exclusion process, and outraged with the 201 steel tariffs that have resulted in steel shortages, massive price increases, and lead times increasing up to 60 percent, urged the House Small Business Committee to "lift these tariffs as soon as possible."
Jon Jenson, president of CITAC, and small business executives Erick K. Ajax of E.J. Ajax and Sons, Jay Carlson of G.R. Manufacturing, Jennifer Johns Friel of MidWest Fabricating Co., Brian Robinson of Wilson Tool International and Chris Dowding of Dowding Industries described to Chairman Donald Manzullo (R-IL) and other members of the Committee the worsening problems since the last Committee Hearing on July 23. Members of Congress who introduced their constituents on the panel included Rep. Mark Kennedy (R-MN), Rep. Nick Smith (R-MI) and Rep. David Hobson (R-OH).
Today's session, "Lost Jobs, More Imports: Unintended Consequences Of Higher Steel Tariffs (Part II)," began with testimony from Grant Aldonas, Under Secretary of Commerce for International Trade. Supporting the Bush Administration's March 201 decision, Aldonas testified that, "the President's action was not taken without consideration of the downstream effects of imposing the tariffs. We understood that there would be repercussions." Aldonas told the Committee that he would continue to meet with steel users across the country and "monitor the impact" of the 201.
Following Aldonas, Jon Jenson, president of CITAC announced that "CITAC's top priority is the repeal of the steel tariffs that are wreaking havoc in the steel market for downstream manufacturers." Between 1995 and 2001, steel-using manufacturers added 1,255,000 new jobs to the economy Jenson said. "It is indeed ironic that such an important generator of economic growth is being punished by our steel trade policy."
Since the Committee's July 23rd Hearing, Jenson said that conditions have seriously worsened. Skyrocketing prices (up to 70 percent), uncertain supply due to allocations and lengthening lead-times (up to 60 percent), broken contracts and quality problems are causing steel consumers to suffer. A harmful ripple effect is being felt by industries such as service centers, finishers, platers and assemblers whose work depends on steel consumers.
The Administration touted the exclusion process as a mechanism providing potential relief for steel users. However, Jenson stated that exclusions have not solved the problems. "It is a flawed process - inadequate, ineffective, inherently unfair, and manipulated - to the disadvantage of the steel user." "Exclusions," he said, "clearly did not provide relief to all steel-using manufacturers that were deserving of relief or that truly needed it."
Executives of steel-using companies confirmed Jenson's testimony with detailed evidence from their businesses. Brian Robinson, President of Wilson Tool International, has had to lay-off more than 285 employees in less than a year. He told the Committee that he filed for an exclusion as early as October 2001 after being unable to purchase steel products from domestic sources. Not only was Robinson not granted an exclusion, but the Administration never even offered an explanation for the denial.
"I have come to Washington to testify because there is something inherently flawed with the process when our exclusion request is totally ignored and we are not even told why." "We have serious problems," Robinson said, "when small businesses must engage lobbyists to represent them or be compelled to travel to Washington."
Asking that the tariffs be lifted immediately, Erick Ajax, Vice President of E.J. Ajax and Sons of Fridley, Minnesota - a business that three generations of his family spent six decades building - told the Committee that despite making investments in employee training and modern equipment over the last ten years, the section 201 tariffs have undermined his competitiveness in just a matter of months.
"They [the tariffs] have made it difficult for us to continue to sell parts domestically, let alone abroad." After already having to lay off 20 percent of his workforce since March, Ajax was recently informed that one of his largest clients received bids from international competitors that were 50-70 percent less than what Ajax could offer. "Clearly we are in danger of losing this business," he said.
Jay Carlson of G&R Manufacturing also testified that his foreign competitors had substantially lower steel costs and could export their product to the U.S. duty free. As a result of facing unreliable steel supplies, lead times that have increased from four or six weeks, to 16 weeks or more, and price increases of 40 to 60 percent, Carlson said, "G&R Manufacturing, like many other small and mid-sized companies, is having a difficult time competing and finding it difficult to stay in business."
"How is the small steel user company supposed to have the ability to play in this arena any more than steel producers?" Chris Dowding of Michigan-based Dowding Industries asked, after describing how steel tariffs are forcing her to consider moving her company to Mexico. "My father's dream has been to develop our community and provide jobs for Americans, not move our company abroad." However, she stated, "we cannot continue to operate when our profit is eroded to a point it doesn't justify the business any longer. This could mean the loss of 150 jobs."
Jennifer Johns Friel, President of MidWest Fabricating Company, said that she lost an eight year, forty million dollar contract because her customers would not accept the new pricing and delivery fluctuations. Instead, her customer found a Canadian supplier that was able to offer a reliable price and steel supply.
"We are a twenty-five million dollar company," she said. "We will not have a chance to recapture that business until the next redesign- eight more years. Therefore, the steel tariffs will continue to have a negative impact on our business long after the tariffs are lifted." Friel stated that "the negative impact is spreading far beyond what could have been anticipated."
In closing his testimony, Jenson asked, "how much damage must be done, and how many U.S. jobs have to be lost before the Administration recognizes that the steel tariffs were a mistake and must be lifted?" He offered several reasons for terminating the tariffs: they are doing more harm than good, they do not address the steel industry's problem of non-competitiveness, they threaten relationships with U.S. trading partners, and they also inhibit steel producers from restructuring.
Immediately following the Hearing, steel consumers from eighteen states and Congressional Representatives Donald Manzullo (R-IL), Grace Napolitano (D-CA), Peter Hoekstra (R-MI), Mark Kennedy (R-MN) and Cal Dooley (D-CA), held a press conference to announce the formation of the Steel Task Force within CITAC to focus exclusively on ending trade restrictions on steel imports.
William Gaskin, President of the Precision Metalforming Association (PMA) and Chair of the Steel Task Force Executive Committee told reporters, "We could sit in our offices and hope policymakers come to their senses, or come to Washington and demand that our government representatives stop sacrificing the 13 million workers in our industries to gain political points with Big Steel. You can see what we decided."