Steel tariffs of '02 costing suppliers' jobs

With Bush's steel tariffs enacted last year on imported steel, the automotive suppliers have felt the pinch. While the barely-competitive US steel companies and unions cheered the intervention, the negative aftershock on the automotive suppliers (which isn't much of a surprise) have been realized.

The following article is from the Automotive News. I haven't provided a link because of the registration required, but here is the "copy n' paste": Suppliers: Steel tariffs have cost jobs
Some are shifting production overseas to avoid extra cost

By Terry Kosdrosky
June 23, 2003

DETROIT -- The steel tariffs enacted last year helped save steel jobs here but are starting to cost auto supplier jobs, executives in both industries say.

U.S. Steel Corp.'s recent purchase of National Steel Corp. and its Great Lakes division in Ecorse, Mich., and River Rouge, Mich., would not have happened without the relief granted by the tariffs, company and union officials say. About 3,000 local jobs were at stake.

Ailing Rouge Industries Inc. is in preliminary talks with an unidentified potential buyer, the company confirmed two weeks ago. Rouge, of Dearborn, Mich., employs about 2,700.

But suppliers are feeling pain from the tariffs. Metaldyne Corp. of Plymouth, Mich., says tariffs contributed to a decision to lay off about 200 hourly and salaried workers this year, including 150 in Michigan. The company also is not filling about 100 positions. Metaldyne, which manufactures chassis, driveline and engine components, has been a leading force against steel tariffs.

Not all layoffs are related to steel tariffs, but steel prices are part of the economic equation for suppliers, says Kurt Ruecke, Metaldyne's director of corporate communications.

ArvinMeritor Inc. of Troy, Mich., also says U.S. jobs are threatened. The company is moving production offshore because there is no tariff on finished steel components, says Jerry Rush, senior director of government and media relations.

The Bush administration in March 2002 imposed tariffs ranging from 8 percent to 30 percent on a variety of imported steel products. They will last three years, in theory enough time for the domestic industry to restructure itself and for steps to be taken internationally to reduce excess steel production capacity.

Pressure in Washington

Suppliers are setting the stage to try to overturn the three-year tariffs when they hit their midpoint review in September.

"We just want to get the truth and our side of the story out," Ruecke says. "When the administration does the midterm review, we want them to have a broader picture of what the impact has been."

The steel industry says the tariffs have had the intended effect: The industry consolidated. U.S. Steel and International Steel Group Inc. of Cleveland have been buying up bankrupt steel makers such as National, Bethlehem Steel Corp. and LTV Corp. Those steel makers were pushed toward bankruptcy by unfair competition from foreign steel makers that receive generous subsidies and dump their products for cheap prices in the United States, the companies argue.

"The (tariffs) gave us the relief we needed to restructure the industry," says John Armstrong, manager of public affairs for U.S. Steel in Pittsburgh.
Harry Lester, director of United Steel Workers of America District 2 in Taylor, Mich., says he thinks the Detroit economy would have been depressed further without the tariffs.

"We saved all those jobs at National Steel that would've been gone if we hadn't had the tariffs," he says.

Lost jobs

But suppliers squeezed by annual price cuts from their automaker customers say they can't afford the higher prices. Some say they're importing more finished components or shifting production overseas to avoid the tariff.

"There are some specific instances where parts we used to make at Detroit and one we made in Royal Oak (Mich.), we're now buying preformed out of South Korea and doing some finishing here," Metaldyne's Ruecke says. "That cost jobs, plain and simple. And if we don't do it, our customers will simply go offshore and do it themselves."

Steel insiders wonder how widespread that is. There are several exemptions to the tariffs, and imports continue to pour into the country and decrease spot-market prices, says Bill Hornberger, vice president of employee and public relations for Rouge.

"Quite frankly, we don't see the fact that steel is difficult to get right now," he says. "Those people who said they couldn't withstand a 50 percent increase, we didn't hear them crying when steel prices went down $100 a ton. And I don't believe consumers saw it in the marketplace."

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