Printer Friendly

As steel tariffs kick in, costs rise for local manufacturers.

Byline: Emily Thurlow

As a family-owned steel distributor, Habot cuts steel plates for machine shops in Adams, Lancaster and York counties, as well as northern Maryland.

Traditionally, the first three months of the year are especially busy for the nearly 60-year-old business and then demand starts to dip.

But this year, that isn't the case, said Brett Warner, Habot's office manager. In fact, the business has seen an increase in demand, which he says is driven by the ratcheting up of global tariffs.

In March President Donald Trump imposed a 25 percent tariff on imported steel. The U.S. steel industry has suffered for decades because of unfair trade and policies imposed by other countries, according to Trump. The tariffs, he said, would help ensure that U.S. companies can thrive.

Following the tariff proposal in March, the Trump administration offered exemptions on steel from U.S. allies, which included the European Union, Canada and Mexico. After a compromise could not be reached, Trump revoked the concessions. As a result, the EU retaliated with tariffs of its own on a number of U.S. goods.

The EU tariffs, which took effect in July, are already making an impact on midstate companies. Steel-using manufacturers are seeing product price increases of 50 percent or more and are facing difficulties in obtaining the steel they need, said Paul Nathanson, spokesman for the Washington, D.C.-based Coalition of American Metal Manufacturers and Users.

"The U.S. is becoming an island of high steel price, resulting in customers simply importing the finished part," he said. "So if the president wanted to help manufacturing, this is the exact opposite way of doing it."

The coalition formed in April to ensure that steel and aluminum users had a voice in the tariff debate, Nathanson said.

Although Habot hasn't had an issue locating or maintaining the material it needs, the company did have to increase prices for customers as a result of the tariffs. But even with the increased prices, demand remains steady.

"We've been putting in long weeks and putting in a lot of overtime and purchasing a lot of material. Because we're just a small family-owned business, it's not really feasible to do a lot of speculation in the market and purchase a bulk quantity of material to try and get prices while they're low," Warner said. "But the nature of those [tariff] talks has been a driver of short-term demand. People are seeing that price increase trend and maybe they're getting to projects sooner and are trying to get it in before the prices get worse."

Other than in March or April, Habot's pricing has remained stable, he added.

"I can certainly see longer range that we might pay the price for this increase [in sales] we're having," he said, describing the situation as volatile. "We're controlling our pricing based on the pricing of our inventory as it comes in."

Warner is, however, concerned with what will happen in the long term now that the retaliatory tariffs have officially gone into effect. He isn't alone in those concerns.

The Wisconsin-based Harley-Davidson Inc., which has an assembly plant in York County, said at the end of June it would be shifting some of its production overseas to avoid the retaliatory measures. The measures, Harley estimates, would add approximately $2,200 to the cost of the average motorcycle exported from the U.S. to the EU.

As an engine in the York County economy, it's likely that the cost increase would have an impact not only on Harley and its customers, but also to the businesses that supplement the work at the York Harley-Davidson plant, said Kevin Schreiber, president and CEO of the York County Economic Alliance.

"The tool and die machine shops or metal fabricators would certainly be at risk if Harley changes their plans locally," he said.

Earlier this year, Harley announced it was looking to hire 400-plus employees at its York operations. It still remains to be seen whether the shifting of operations overseas will have an impact on that hiring. Harley could not be reached for comment.View the full article from the Central Penn Business Journal at Copyright 2018 BridgeTower Media. All Rights Reserved.

Copyright {c} 2018 BridgeTower Media. All Rights Reserved.
COPYRIGHT 2018 BridgeTower Media Holding Company, LLC
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 2018 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Author:Thurlow, Emily
Publication:Central Penn Business Journal
Geographic Code:1USA
Date:Jul 13, 2018
Previous Article:After 100 years, change still in the air for DH.
Next Article:Election 2018 Where do Wagner and Wolf stand on the issues?

Terms of use | Privacy policy | Copyright © 2020 Farlex, Inc. | Feedback | For webmasters