PVF industry offers views on steel and aluminum tariffs
The news President Donald Trump is levying tariffs on steel (25%) and aluminum (10%) products with some country exemptions was met with plenty of strong opinions among industry manufacturers, distributors and master distributors. Supply House Times reached out to a cross-section of the PVF industry, asking opinions on how the tariffs will impact the industry in the short- and long-term.
On the manufacturing side, Barry Zekelman, CEO of Zekelman Industries, which includes manufacturer Wheatland Tube, said his company is in favor of the tariffs. “We believe the domestic steel market is in need of immediate, significant action to ensure its long-term survival. We hope the tariffs help stem the quantum of imports and increased domestic production. It’s an important step to level the playing field in the U.S., so domestic producers can compete in a market that includes massive amounts of over-capacity, much of which is subsidized and sold without regard to profit. This reality has resulted in a distorted and manipulated market for decades. Many domestic firms have gone out of business as a result and thousands of high-paying jobs have disappeared from the domestic labor market.”
Brad Muller, vice president of marketing at Charlotte Pipe, says while the company will not be directly impacted, it generally is supportive of the tariffs. “We are supportive because for too long our trade partners have taken advantage of low barrier to entry into U.S. markets while using currency manipulation, non-tariff trade barriers and other tactics to gain a trade advantage with the U.S. We have seen it firsthand competing with China over the years.”
The sentiment on the distribution end of the business centers on concern about current and future projects. “The major short-term effect, at least in the Midwest, is the impact on industrial/commercial construction jobs starting up once the weather turns,” Central States Group President and CEO Todd Ford says.
“Like in most cold-weather areas, jobs are slated to start in late April or early May. This means material is/was slated to be purchased in the coming weeks. The increased tariffs have customers scrambling a little as most job quotes are invalid, which means both the customer and us have to rebid. I expect this to work itself out over the next 30 to 60 days, assuming no curveballs from the White House. The longer-term effect will be how this affects raw materials and scrap used in other materials we are purchasing domestically and globally. We could see steep price escalation that could significantly delay construction projects.”
Mike Abeling, CEO of Fontana, California-based Consumers Pipe and Supply, says patience is needed as more facts about the tariffs come to light. “We need to calm down and not have a knee-jerk reaction,” he says. “This is all very new. If you are a large stocking distributor, you just made a lot of money in the increases to your inventory in the short-term. In the long-term, everything will cost more.”
Abeling also notes the various separate antidumping suits that have nothing to do with the tariff ruling are increasing costs in the industry. “The carbon steel flanges suit, the separate one on stainless steel flanges and forged steel fittings all are leading to increasing prices in these commodities,” he says.
Current ASA President Brian Tuohey (The Collins Companies) says a fair trade policy in the U.S. cannot come at the expense of a fair trade solution to the problem. “Both these metals are absolutely critical to our country’s national defense and ultimately to our safety, so we cannot allow our production of these metals in the U.S. to be compromised by unfair sales practices being employed be another country.”
Greg Leidner, president and CEO of United Pipe & Steel, says the master distributor also is in favor of the ruling. “We believe in free trade as long as it’s also fair trade,” he says. “To combat the dumping of hot roll steel that has been happening in China, the tariff helps level the playing field. Second, as distributors that hold inventory, we like all measures that encourage some level of inflation because it helps support inventory investment. We have proudly supported U.S. manufacturers for decades and believe this measure will help ensure their success for decades to come.”
F.W. Webb Senior Vice President of Industrial Business Development Ernie Coutermarsh notes opportunity is now afoot in the industry. “It’s all about supply and demand,” he says. “We do the supplying and they do the demanding. I’m excited about the opportunity we are being provided to reinforce our value to our customers and make a profit. Let’s not squander this opportunity. Now is the time to get committed orders and take care of those who take care of you. Having inventory matters.”