Timken, Republic back steel tariff
Friday, July 25, 2003
By Paul M. Krawzak Copley Washington correspondent

WASHINGTON — Two eastern Ohio-based steel makers added their voices to a chorus supporting the temporary import tariffs President Bush enacted, as they testified before a federal agency Thursday.

If not for the fees on foreign steel, Republic Engineered Products, based in Fairlawn, might not exist, Republic Vice President James T. Thielens Jr. said.

“There is no doubt in any of our minds that without the measures we would not have been able to save as many jobs and mills at Republic as we did,” he told the U.S. International Trade Commission. “We may not have been able to save any at all.”

Republic, which makes specialty bar steel, formed last August after purchasing the most productive plants that its predecessor, Republic Technologies International, owned. The struggling steel company had gone bankrupt.

The Timken Co., based in Canton, has benefited from selling its specialty bar steel at slightly higher prices as a result of the tariffs, said Michael K. Haidet, senior government affairs specialist at Timken.

“Timken has benefited from the (tariffs) mostly in terms of a greater volume of steel shipped,” he said. The tariffs reduced imports from covered countries, “and we and other domestic companies were able to replace that volume from our underused capacity.”

Bush implemented the tariffs in March 2002 to give struggling American steel makers a chance to adjust to foreign competition after steel prices had dropped to the lowest levels in 20 years, triggering numerous bankruptcies.

The trade commission is preparing a report to help Bush decide whether to extend the program for a full three years.

Opponents say the tariffs have artificially raised the price of steel in the United States, temporarily benefiting steel companies while injuring manufacturers whose cost of steel has risen.

Jeff Hoye, president of Corus America, a Europe-based steel maker that opposes the tariffs, argued that the program provides little benefit to the bar steel producers who support the duties.

“That seems to be confirmed by the public versions of their briefs, which use words like ‘modest improvement’ and ‘beneficial though less positive’ than the effects of the tariffs on flat rolled operations,” he said.

Although the tariffs have helped stabilize the U.S. steel market, steel prices have not risen dramatically, the executives told the trade commission, which is assessing the effect of the program.

“The best that can be said is that at least the death spiral of price declines has been arrested, and we were able to recover some but not all of the steep cost increases we have since faced in raw materials and energy,” Haidet said.

Republic eliminated 1 million tons of unneeded steel-making capacity after purchasing RTI. The company is now selling 25 percent less steel than RTI did, but because of improved efficiency and productivity, it’s doing so with 50 percent fewer employees than RTI had, Thielens said.

Both Timken and Republic urged the tariffs be extended through 2005 to prevent another surge in imports and give domestic steel makers additional time to become more productive and efficient.

Hoye, though, argued that the real problems facing bar steel producers are overcapacity among steel companies and the stubborn survival of inefficient mills “whose first concern is cash, not profits.” Those mills “persistently offer below market prices that force down the price level,” he said.