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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You were lost 20 replies ago.
I figure you're hopeless.
I'm crushed! A rapier wit and a world renowned free market economist. I'm in the company of greatness.
So the sky isn't won't fall if Bush tweaks the EU for a couple of years? Life will go on if the socialists have to rid themselves of some excess capacity? There won't be a depression and a world war? A president actually kept his word from when he campaigned?
I'll be damned.
Not at all. Pig iron is $200 per ton last I looked, which was 20 years ago. It's a controlled price. Manufactured steel has variable prices depending on alloy and shape; it's not a controlled price. The steel industry is not mainly producing virgin pig iron, but steel shapes and alloys. Much of the steel has been through the mill before, has come back after the manufactured item has worn out, and is thrown into the furnace along with new iron. Steel girders in Arafat's office building are right now headed for the recycling furnace, for example.
The real room for growth of the steel industry is in the developing world. Right now steel usage worldwide is about 20% of what it could be if all countries were running at Western levels of usage.
Prices skyrocket, commerce nosedives. Ripples throughout our economy, nobody's immune
I can always point to this and tell people you almost had a correct thought.
Orders increased 1.6% to $ 325.8billion, reflecting more demand for autos and computers, after rising 0.7% in December, the Commerce Department said. The last time factory orders rose in consecutive months was February and March 2001, just as the economy was slipping into recession.
Shows how little you know. Find below a list of products manufactured in the USA, with links to the companies that manufactur them. (This is just one of about 15 manufacturing categories)
| Automation, Production and Testing Equipment | HOME | NEW SEARCH |
LOL I just wanted to read this again.
Eventually they turn off their malaysian made computers, turn on their japanese made TVs and watch a good canadian hockey game. Of course they do it with the blinds drawn and the lights down in the living room.
The steel industry itself has been a major importer of semifinished steel products. In 1998 more than 6 million tons of steel slabs, billets, and blooms were imported for use almost exclusively by steel mills.
When combined with wire rod and other semifinished products, imports by the steel industry reach 20 to 25 percent of overall steel imports. In November 1998 the International Trade Commission heard testimony that several of the major steel mills that have petitioned against steel imports were themselves placing orders to import large amounts of the very same products as recently as August 1998.
In the view of the big U.S. steel mills, apparently, these are “good” steel imports, while steel products that compete directly with what they produce are “bad” imports.
If you're interested, later I may pass along what the Commerce Dept. says about another phony argument from the protectionists - defense needs.
He didn't catch the drift that high prices are bad whether they do it to us, or we do it to us.
Maybe I'll get him to admit it next time.
Shucks, thanks for noticing.
So the sky isn't won't fall if Bush tweaks the EU for a couple of years?
Yeah and the steel industry won't be saved either. The Rocky the Squirrel reference is because we tried this tariff thing before and the steel industry still loses tons of money. Why will it be different this time?
If these targeted tariffs are such a good thing tell me why those countries with the highest tariffs have such poor economies?
Argentina sound familiar? They sure are doing a good job of protcting their industrial base.
Kinda of like when you find a man that is drowning, be sure to offer him a drink of water.
From what you're saying, when intermediate users of steel produce auto parts, machinery, or washing machines from it, they have to pay a tariff, but when another intermediate user - steel companies - use imported raw steel to make pipe or structural shapes, they don't have to pay a tariff?
Did you say you had an economic point to make? You certainly failed the first time. Try rereading the last line of the CATO article - some steel imports are good and some are bad. Explain that in economic terms.
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