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TESTIMONY OF
Mr. James M. "Jim" Jones, Vice-President
Dixie Industrial Finishing Company
On behalf of
The National Association of Metal Finishers
The Metal Finishing Suppliers Association
The American Electroplaters & Surface Finishers Society
Hearing Concerning Investigation 332-452,
"Steel-Consuming Industries: Competitive Conditions with Respect to Steel Safeguard Measures"
Before the
United States International Trade Commission
June 19, 2003
Good morning, Commissioners. I am Jim Jones, Vice-President of Dixie Industrial Finishing Company. We are located in Tucker, Georgia, and have 85 employees. For 43 years, we have supplied metal finishing services on steel and other metals to a range of industries, including automotive, aerospace, construction, lawn and garden, heavy equipment, electronic cabinetry, and a host of others.
I am testifying today on behalf of the National Association of Metal Finishers (NAMF), the leading industry trade association for the metal finishing industry, as well as its sister organizations, the Metal Finishing Suppliers Association (MFSA) and the American Electroplaters & Surface Finishers Society (AESF). The metal finishing industry employs more than 100,000 workers nationwide. I am also the current President of the Georgia Industry Association, which has established an existing industry task force focusing on saving jobs and growing our current manufacturing base.
My reason for being here today is simple - it is about jobs. The metal finishing industry is possibly experiencing the worst period we have seen in the past 40 years. Some in our industry tell us they have seen declines by as much as 60 percent, and others are closing their doors. One metal finishing company in the Atlanta area operating for over 100 years is now completely out of business as of this past year. Our own company has 25 fewer employees since the beginning of last year. Our experience is typical of the industry as a whole, though not as drastic as some.
We believe that one of the major reasons for this is the downstream, or "ripple effect," of the 201 steel trade action on key segments of the U.S. manufacturing base. This effect is now becoming painfully clear to industries like metal finishing. Our economic livelihood depends on the health of our customers - the steel consuming industries. It's basic economics - when our customers suffer, we suffer.
Like numerous other industries, we play a significant value-added role in the steel manufacturing supply chain. We make most of the things Americans come in contact with every day work better, look better and last longer. We apply a range of coatings onto literally millions of different types of fabricated steel, castings, stampings, forgings, and wire. Steel products account for an estimated 60 percent of finished goods by volume, and our role in corrosion protection alone in the U.S. provides about a $200 billion annual economic benefit.
As others have testified here today, materials costs for steel are increasing significantly, and the steel consumers face extremely difficult times. Once the business of the domestic steel consuming industries disappears, another piece of the metal finishing market disappears, and seldom does it ever return.
In fact, not only are finishing firms seeing a drop-off in business from their steel-consuming customers, many finishers are taking price reductions from customers just to keep the work they have. The dynamics have become very destructive. Essentially, the steel consumer that is fabricating a part is faced with uncontrollably higher materials costs, but he must find a way to lower the overall cost of his product. What are his options? One is to make up for his higher raw material costs by extracting a lower price for his metal finishing service. Another, if he can, is to simply source the manufacturing - and the finishing - out of country.
This puts in motion a second problem. Most finishing firms are quite small and therefore are true "price takers" in this market, so they end up competing against one another just to get business in the door, even if they have to lose money in the short term.
Thus, the steel tariffs have both shrunk domestic demand and have increased downward pricing pressures for metal finishing services. These combined effects have had a significant negative impact on the U.S. metal finishing industry.
The plight of U.S. manufacturing is alarming. Over the last two years more than two million manufacturing jobs have been lost, many of which were outsourced or relocated overseas. In addition, manufacturing output has had virtually no growth since December 2001. As an industry, metal finishing has experienced substantial declines in production and number of jobs during this same period. While my industry clearly recognizes there is a combination of factors responsible for our financial pain, tariffs on steel have played a significant role in compounding and accelerating the problem.
We thank the ITC for conducting this investigation to consider the impact of the steel tariffs on the U.S. economy. We hope that in the context of this investigation the ITC will include consideration of the impact that the steel tariffs have had on U.S. metal finishers.
Thank you for this opportunity to appear before you today.
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