Canton Repository

July 24, 2002

Steel users claim survival at risk 

Copley Washington correspondent 

WASHINGTON — U.S. steel makers have raised prices so dramatically since President Bush imposed tariffs earlier this
year that the survival of some small family-owned manufacturers that depend on steel is in peril, several business
owners told a congressional committee Tuesday.

Lester Trilla, president of Trilla Steel Drum Corp. in Chicago, said the cost of steel used by his company has increased by
54 percent.

“I’ve been in this business all my life and I’ve never seen prices escalate like this,” he said.

David Pritchard, president and chief executive officer of A.J. Rose, a metal stamper in Avon, Ohio, complained that his
steel costs have risen by 15 percent.

The sharp price increases led Rep. Donald Manzullo, R-Ill., to suggest that American steel companies are engaged in
illegal price fixing.

“There could be some collusion going on,” said Manzullo, who on Tuesday asked the Justice Department to investigate
steel prices.

Bush ordered tariffs of up to 30 percent on steel imports in March, after the U.S. International Trade Commission
determined that imported steel had harmed the U.S. steel industry.

Since then, steel prices have been rising, pleasing the steel industry while alarming manufacturers that use steel.

The manufacturers said they have been unable to pass on price increases to their customers. Several of them added that while the tariffs have made foreign steel expensive, domestic steel makers are unwilling or unable to provide them with the type of steel they need.

The A.J. Rose firm, for example, approached Cleveland-based LTV, which went out of business last year, to see if it could replace the European steel used by the company.

“We received a letter five weeks later that they were unable to produce this material,” Pritchard said.

Trilla’s company, which makes 55-gallon storage drums, buys most of its steel from Korea. In the United States, Trilla said, “It’s difficult to find a mill that consistently meets our requirements.”

While most of the witnesses who testified before the committee complained about the tariffs, one of them said they were helping his business.

Magneco/Metrel in Addison, Ill., supplies refractories, a piece of a steel-making furnace. Charles W. Connors, its chief executive officer, said the company lost $2.3 million over the past three years as the industry suffered. But since the steel tariffs were increased, the company is selling the devices again and earned about $500,000 in income, he said.

In a statement to the House Small Business Committee, which is chaired by Manzullo, a coalition of steel makers and the
United Steelworkers union said steel prices were at “unsustainable” 20- to 30-year lows before the tariffs took effect. Even now, steel prices remain below the average of the last 20 years, the group said.

During the hearing, Rep. Shelley Moore Capito, R-W.Va., asked Trilla why his cost of steel would have risen by more than
50 percent when the tariffs are a maximum of 30 percent.

Trilla responded that Korean steel makers are sending over less steel, further reducing supply. They fear being hit by anti-dumping duties on top of the president’s tariffs, he said.

Manzullo urged Bush to scale back the tariffs, but he said there is no indication the president plans to do so. He also urged the administration to speed up approval of exemptions for certain steel imports from tariffs when a substitute for the imports is not available from U.S. steel companies.