Posted on 03/08/2002 6:02:50 AM PST by 11th Earl of Mar
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Business News Steel users brace themselves for higher prices Thursday, March 07, 2002By Barbara Wieland
Steelcase Inc. chose its name for a reason. The country's largest furniture manufacturer goes through more than 200,000 tons of steel a year, said Brian Van Dommelen, leader of corporate steel services for the Grand Rapids-based company. Steel is the single largest commodity the company buys. So it is no wonder that Steelcase has turned a wary eye toward the tariffs President George Bush recently slapped on imported steel. The tariffs, ranging from 8 percent to 30 percent, could have a major impact on Steelcase's business. But how much of an impact remains to be seen, Van Dommelen said. Other steel users in the area also wonder how the tariff decision will affect business. Some have already seen steel prices increase. Others worry that foreign steel producers will shy away from the American market, causing a steel shortage. Part of the steel users' uncertainty rests on the complexity of the tariff decision. Some steel products will be exempt from the tariffs while others will see large price increases. And it is too soon to know how steel manufacturers, both domestically and abroad, will respond to the tariffs. Steel users may be unsure about future steel prices, but steel producers are not. Steel users such as Haworth Inc. and GR Spring &Stamping already see higher prices. The tariff could increase steel prices 20 percent at Holland-based office-furniture maker Haworth, spokeswoman Beth Parenteau said. She said 20 percent of Haworth's yearly purchases are for steel, not including components bought from suppliers that include steel. Steel prices have gone up at GR Spring &Stamping, too, President Jim Zawacki said. "Even before Bush made the decision, our suppliers started ripping up the contracts," he said. "They said they can't honor them anymore, that prices would go up." Normally, GR Spring &Stamping signs one-year contracts that lock in steel prices. The company, which stamps out metal parts and makes springs, uses 20 million pounds of steel a year. "We felt we've been let down," he said. "We didn't expect anything over 10 percent. This will raise our costs substantially." That cost might be high enough to prompt some manufacturers to leave the country, said Andrew Samrick, executive vice president of Mill Steel Co. His Grand Rapids company buys steel in bulk and cuts it down to size for office furniture, automotive and appliance manufacturers. Higher costs of production have induced some businesses to leave West Michigan before. That happened when LifeSavers decided to leave Holland for cheaper sugar prices in Canada, he said. Now, both Canada and Mexico might have cheaper steel than the United States. "With higher steel pricing, we'd expect those places to become far more enticing," he said. Samrick hasn't heard any local companies talk about leaving, but the topic has come up in industry trade association talks. "What could be done to prevent that happening? I honestly don't know," he said. Another steel distributor, Anderson Metal Service in Grand Rapids, thinks the tariff decision could further hurt the ailing tool and die industry. Anderson Metal sells steel to local tool and die shops, which make the dies manufacturers use to stamp out metal parts. Even before the tariff decision, many manufacturers were lured by cheaper prices offered by overseas tool and die shops. Now that the steel used by American tool shops will be higher, more manufacturers could opt to send their business abroad. Dan Anderson, president of Anderson Metal, also thinks the tariffs could lead to steel shortages. "There could be fewer foreign steel makers willing to sell to the U.S.," he said. "There's been talk about the possibility of steel allocations, where (steel) mills dictate how much steel is available to any company." Those shortages could push steel prices up even further, he said. It's still too soon to know if any of those scenarios will become reality, Anderson said. But it's something he and other steel users will watch in the weeks to come. "We'll have to wait to see how far-reaching it will be," he said. Press Reporter Rob Kirkbride contributed to this report.
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"We felt we've been let down," he said.
I hear ya pal.
Political payola, out of my pocket, for the corrupt socialist unions.
Thanks, Bush.
No tariffs, manufacturers leave.
Tariffs, manufacturers leave.
Looks like they're gonna leave no matter what.
Basic Economics by Dr. Thomas Sowell
If you don't think there is manufacturing in the country, maybe you ought to take a second look.
The optimal solution is a relatively low, across-the-board revenue tariff of 10-20% on ALL imported goods from ALL foreign countries.
"Targeted" tariffs have the disadvantage of providing loopholes and, as others will be quick to point out, the potential to hurt other domestic industries.
A prime example is our failed embargo on the importation of Cuban goods. Cuban sugar has been routinely imported to the U.S. through the back door: Canada. Cuban sugar is shipped to Canada where it is dissolved in molasass. "Canadian" molasass is then legally imported to the U.S. where the sugar is easily refined back out. The leftover molasass is then exported back to Canada where the cycle is repeated. Large sugar-users (such as candy makers) are also closing their domestic factories and moving to Canada where they can legally use Cuban sugar, then import it as candy to the U.S.
An across-the-board revenue tariff of 10-20% would circumvent this type of abuse. Additionally, the revenue could be used to offset a major reduction or elimination of the corporate income tax, providing domestic producers a more "level playing field". (A Proposal to Abolish the Corporate Income Tax)
From a historical perspective, a revenue tariff of 10-20% is NOT excessive:
Though the Friedmans admit that unfair trade practices of other nations hurt us, they show that they hurt the offending nations as well. But more to the point, if we retaliate, we just harm ourselves more, not to mention prompting additional retaliation from other nations.
http://www.townhall.com/columnists/davidlimbaugh/dl20020309.shtml
David Limbaugh quoting Milton and Rose Friedman. What do you think Willie? How are they wrong?
It's a great way to undermine our national security that was unavailable to Tojo.
Quoting the Friedmans undermines national security?
No. The IRS, the EPA, OSHA and the unions killed manufacturing jobs in America.
I was a steel worker and in the union right out of HS. Kids were making $75 a day in 1971 for a 6 to 7 hour shift. That $75 has the purchasing power of $328.99 today. The industry is notorious for having no gains in productivey to match the increaes in labor costs. The machine I worked on was built in 1915 to help fight the Kaiser. The tax code is to blame for that, USS did better putting the money in the bank than upgrading equipment.
Feigning ignorance doesn't mask stupidity.
Speak slowly, I'm a conservative.
Damn that Tojo. Undermining our security by selling us cheap steel. Oh the humanity.
Conservatives are usually better educated.
Do a Web search on "Tojo", "Pearl Harbor" and "scrap steel".
You might actually learn something that'll enable you to avoid making an @$$ out of yourself.
It's a great way to undermine our national security that was unavailable to Tojo.
Then you told me...
Do a Web search on "Tojo", "Pearl Harbor" and "scrap steel".
So I found this... In July 1940, Roosevelt began his program of economic warfare by embargoing strategic goods. In September, he prohibited exports of iron and scrap steel to Japan. In June 1941, he restricted oil shipments.
So I guess that allowing Japan to sell us cheap steel will lead them to drive all our mills out of business.
Then, they will cut off the supply and bring us to our knees?
I just want to be clear on your point. Is that it?
Much the same way OPEC jerks us around on oil.
Yes, that's part of the scenario.
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