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"Commentary: Drummed out of business?"

By Dale M. Cann

St. Louis Post-Dispatch
October 7, 2002

I've been hit with a tax by the Bush administration that is unfair and that was imposed without any thought to how it might hurt my company.

I operate a small, family-owned steel drum manufacturing facility in Fenton, which employs 65 people.

I don't often have time to reminisce about America's past, but I've been thinking recently about the Colonial days in 1775 when Americans grew frustrated because they were taxed unreasonably by the British and governed without consideration for their interests.

Lately, I've felt like those Colonial Americans. I've been hit with a tax by the Bush administration that is unfair and that was imposed without any thought to how it might hurt my company.

In March, President George W. Bush, under pressure from "Big Steel" (the old integrated steel companies), put a 30 percent tariff on a wide range of imported steel products. That's essentially a tax on business people like me, which he's more or less handing directly to domestic steel producers in the form of higher steel prices.

A 30 percent tax is high. And the result is that domestic mills now that they have little competition from imports are hiking steel prices. Prices are 50 to 75 percent above pre-tariff levels. With imports falling, steel is scarce, deliveries are unpredictable and quality is inconsistent. At times, drum makers have been forced to go to the spot market where prices have reached up to 90 percent above pre-tariff prices.

Steel producers say that steel users didn't complain when prices were low. They miss the point. It doesn't matter if steel costs $1 or $1,000. What matters most is what my overseas competitors are paying for steel. If I am paying hundreds of dollars more a ton for steel than my overseas competitors, which is what is happening, my customers have the option to take their business overseas.

A few years back, I had the opportunity to try some Korean steel. The materials processed well, the end product was excellent and my costs of production fell with less scrap and downtime. My customers loved the product and the manufacturing process was more productive and profitable. I didn't buy the Korean steel because of the price. In fact, I paid a premium for that steel because it benefited the company in so many ways.

Now I see I enjoyed a special privilege having the right to choose what is best for my product and my customers. Today, I have no more choices and very little time.

Steel-consuming industries, like the drum industry, knew there would be negative consequences from the tariff. I took that message to my congressional delegation in Missouri and have received their support. However, the interests of steel users are in no way met by the exclusions the president has granted (not one exclusion was granted to my industry).

If the tariffs remain in place, the outlook is grim. Companies like mine will lose business as our customers complete the shift to substitute containers or buy and fill their drums overseas. We'll be forced to cut even more costs, including jobs, and herein lies the key. In this country, there are 59 steel-consuming workers for every one steelworker. In Missouri (according to the Consuming Industries Trade Action Coalition) there are 303,702 steel-consuming jobs and 2,435 steel-producing jobs, a ratio of 125 to 1. Think about the ripple effect through families and communities if Missourians lose their jobs because the U.S. government has made their companies unable to compete on a global basis by placing an unfair tax on them.

You think the situation across the river at Granite City Steel is bad? You ain't seen nothing yet.

COMMENTARY: A FORUM FOR OTHER VOICES, IDEAS AND OPINIONS\Dale Cann is president of Nesco Container Corp., Fenton.



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