Tariffs May Buoy Steel Producers, But Some Metal Fabricators Feeling The Sting

Jun 27, 2018
Originally published on June 28, 2018 11:47 am

As seen in recent weeks, how companies view President Trump's tariffs on foreign steel and aluminum depends a lot on what business they're in. 

This week there's been a lot of attention on Harley Davidson, which said Monday it would move some factories overseas as a consequence of EU counter-tariffs on U.S. imports.

But steel producers seem happy.

Last week Republic Steel said the tariffs have boosted demand, so it hired 25 new people in Canton, and is recruiting another 50.  The company also said it expects to restart its plant in Lorain in September hiring an initial 80 people. 

Republic did not make anyone available for an interview this week, but in a statement it said it had invested $12 million in the last 18 months to supply increased demand.

But not everyone who works with metal is happy with how things are going.

“If there was a tariff on imported metal components used in solar, that would be great—I’d be find with that. But there’s not, so we have the highest-priced steel in the world and I’m expected to compete with off-shore products that are imported without a tariff,” says Steve Peplin, CEO of Talan Products, a Cleveland metal stamping company that makes various components like systems to put solar panels on rooftops. 

“It’s hard to believe. It’s kind of the opposite of the government trying to help us,” he says.

I visited him for a future story on renewable energy and manufacturing in Northeast Ohio, but we ended up talking a fair bit about tariffs, and how they are already hurting his company.

“We are very material-intensive, we’re a high-volume, high-speed producer of high-volume parts. There was a project we had been working on for five years. Parts are coming from China now, and so it’s very hard to compete with China—they had far lower labor costs, they are subsidized by the government and whatnot—by being innovative, and creative, and really designing a better system, and taking virtually all the labor out of it—automating our process, and using robots—we were able to compete with China. This is in March, $5 million job, that’s like 10% of our company, very significant project.  We had been working on it for years. They said, ‘you’re going to have a P.O. next week…’ they said ‘you’ve got the contract.’ And then they announce the tariffs in March, this was in February, March. Well it’s funny, the P.O. hasn’t shown up yet,” Peplin says.

 

“This was four months ago, they said it was going to be any day. I know what happened: the day they announced 25% tariffs on imported steel, U.S. steel went up 24% the same day they announced the tariffs. I mean, why not,” he says. “What I don’t get is it’s a hand-out to the U.S. steel-producing industry, steel and aluminum-producing, but what about the consuming industry? There’s 80 of us for every one producer. There’s 140,000 steel-producing jobs in the U.S., and 6.5 million steel consuming jobs. It’s gonna be devastating.”

Peplin points to past tariffs as an example, where major job losses led the Bush administration to reverse course.  And if the current tariffs aren't reversed, some estimate hundreds of thousands of jobs could be at risk.

But for now, Peplin says his company is in a holding pattern to see what happens.

And he’s not holding his breath that his major contract will ultimately come through.

Copyright 2018 90.3 WCPN ideastream. To see more, visit 90.3 WCPN ideastream.