TESTIMONY OF

Jennifer Johns Friel
Mid - West Fabricating Company

Hearing Before The
House Committee On Small Businesses

"Lost Jobs; More Imports The Unintended Consequences of Steel Tariffs"

September 25, 2002

Thank you for inviting me to participate in this hearing. My name is Jennifer Johns Friel. I am President of Mid West Fabricating Company. Mid West Fabricating is a leader in the cold forming of steel wire into special fasteners and rods for automotive and lawn and garden customers, as well as a magnitude of components for various industrial and consumer products including appliance, highway and housing construction. Mid West Fabricating Company is a family owned corporation that was started in 1945. We are headquartered in Amanda, Ohio, but we also have plants in Lancaster Ohio, and Santa Fe Springs, California. We have approximately 260 families that rely on Mid West for their employment.

My company has been adversely affected by the Section 201 tariffs on steel even though we only buy from North American steel producers. We process an average of 20 million pounds of steel each year. The bulk of that steel is Industrial Quality Rod, a lower quality steel. The steel tariffs have prompted our suppliers to dramatically increase the pricing of this material, and extend the delivery times from historic four to six week lead times to upwards of 12 and even 14 weeks. The 201 remedies have caused tremendous dislocations in the market that have affected my ability to get the steel I need at a reasonable price. It is very difficult for my company to operate under these conditions. Our customers will not consider price increases, do not give us firm schedules 12 to 14 weeks in advance and therefore we are not certain that we are purchasing enough material to meet their future demands.

Here is one example of the problems we are facing as a direct result of the steel remedies. Our steel supplier pushed back a quoted lead-time an additional three weeks. Since we owed parts to an assembly line that could not wait an additional three weeks for parts, we were forced to purchase material on the spot market from a supplier we consider to be sub-standard. Half of the material we purchased turned out to be defective, resulting in contaminated material throughout our supply chain. Sorting, evaluation and containment costs associated with this event caused us to lose substantial money on this shipment. Obviously we don't want to, and can't afford to, repeat this situation.

It is very difficult to run a business when you have no assurance that you will be able to obtain the raw material you need. While we are doing everything we can to obtain the steel we need, we are concerned that lack of steel will mean that we are not able to supply particular orders.

The pricing and delivery environment that has developed in the wake of the Section 201 decision is also of concern to our customers. After the steel tariffs were put into effect, one of our long-standing customers placed a huge order with a Canadian supplier, instead of with us, because the customer was concerned that we would not be able to get the steel we needed. The order that we lost was worth five million dollars per year for eight years. We are a twenty-five million dollar company. This order would have been very important to us, and the people who work for us. It will be very difficult to recover this lost business. This particular part will have a life span of approximately eight years. 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.

The steel tariffs have clearly harmed many downstream consuming industries. The negative impact is spreading far beyond what could have been anticipated--even into small businesses such as mine. Please help me, and the people who work with me, by lifting these tariffs as soon as possible.

Thank you.