Letterbox.

Progress in Trade Talks a Welcome Sign to Industry

This letter is in eager response to the article, "Keeping One Eye on Washington: Trade, MACT Threaten U.S. Foundries," which appeared in the May issue of MODERN CASTING. I felt a welcome sense that "maybe enough people are finally waking up" regarding unfair foreign trade.

I was elated to read the efforts AFS and members of the foundry community are finally mounting, and the emerging unity in the industry. regarding foreign competition. I felt this article was dead on the money, especially the focus of the targets for the 332 survey. As stated, a crucial factor for success is to have a good cross-sectional base of foundry types and sizes to get accurate data, which is not skewed. I don't think AFS will need any help in supporting the fact we are being treated unfairly.

Having recently worked for a foundry that is currently being liquidated, I can speak to this issue more personally than some. Texas Steel Partners, Inc., Forth Worth, Texas, among others, did suffer a significant blow due to foreign competition, namely from Brazil. With one customer, the castings were priced below break-even and we could not continue producing them at the losing price. Another customer came to us and demanded a price decrease that would have dropped the price to a loss or slightly better level with which we just could not afford to comply. The result was we lost a significant portion of fairly consistent volume.

The point being, customers currently have a tremendous hammer to hit us with: "Give us what we want or we will move the work." As your panel agreed in last September's article, "Talking Trade: Execs Debate How to Compete Against Offshore Competition," stated, customers can preach all day long about quality and delivery but decisions almost always are made on price.

Many in our country still think our current economic malaise is due to 9/11, the airlines or the war with Iraq. I firmly believe it is a result of the tremendous surge in our trade deficit in recent years. Never have we faced a deficit as large as we have now. To this end, maybe conventional thinking and relating historic trends don't apply so much anymore. Chart the trade deficit going back 30 or 40 years. Then, on a time line, chart the enactment of trade agreements. Do corresponding charts for leading economic indicators and then compare all of your research. It is shocking! For a much simpler test, every time you are out shopping, pick up items and see where they are made.

Unfortunately for many companies, the efforts of AFS and MODERN CASTING come too late. Many more companies will likely fail before results from these efforts can bear any fruit. But as momentum builds and more and more congressional support signs up, the pendulum will swing our way. A solution exists to this very complex problem and with continued pressure from the manufacturing community, it will be uncovered!

Randy Schudalla

formerly of Texas Steel Partners Inc.

Fort Worth Texas

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