Battle Over

The impassioned battle over the Bush Administration's attempts to bolster domestic steel producers and punish foreign producers for dumping cheap steel here comes to a conclusion in December as the president repeals the tariffs.

The Motor & Equipment Manufacturers Assn., which represents suppliers claiming the tariffs forced them to swallow sky-high steel price increases, applauds the decision.

A source of great controversy since their inception in 2002, the tariffs ran as high as 30% on imported steel, and many auto suppliers claimed they impeded their ability to compete on a global basis.

The tariffs, which were instituted to shelter the domestic steel industry during reorganization from low-priced imports, originally were meant to last for three years. But President Bush, under pressure from the European Union and the World Trade Organization, re-examined the policy at the halfway point.

“Eliminating the tariffs is an important and significant step in the administration's overall initiative to support and revitalize American manufacturing,” says MEMA President and CEO Chris Bates. “As a result of the President's action, thousands of jobs within the U.S. automotive supplier industry will be more secure.”

Bates says the repeal of the Section 201 tariffs will protect workers in family businesses, small- and medium-sized companies and large, multinational firms. One of the unintended consequences of the tariffs, MEMA officials say, was that jobs and plants were driven offshore where materials were not subject to “artificially inflated” prices.

Tim Leuliette, president and CEO of Metaldyne Corp., a supplier adversely affected by the tariffs, says it is doubtful those jobs ever will come back. “It will stop further job erosion due to U.S. steel cost,” he says.

Jeff Stoner, vice president-procurement at supplier ArvinMeritor Inc., says his company suffered during the last 20 months as a direct result of the steel tariffs. ArvinMeritor closed its Gordonsville, TN, plant, resulting in 300 lost jobs — most of which went to Mexico. Downsizing at another Tennessee plant, which makes shock absorbers, eliminated another 100 jobs, which mostly went to Spain, Stoner says.

While auto suppliers are rejoicing in the news, U.S. steel makers are bracing for their industry to suffer job losses without the protection. The steel industry had been pressuring President Bush to maintain the tariffs, contending the protection is needed to give U.S. producers more time to restructure in order to compete against lower-priced imports.

Leuliette says the steel industry has been seeking special treatment. “There is no one today isolated from the elements of global competition,” he says.

But the American Iron and Steel Institute says automotive suppliers used the steel tariffs as a “convenient excuse.” Auto supplier jobs were lost, says an AISI spokesperson, due to currency manipulation on the part of countries such as Japan and China, combined with lower environmental standards, exceedingly cheap labor, lower health-care costs and lower energy costs.
— with Brian Corbett