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Walorski Shares Feedback From Hoosier Businesses Impacted by Tariffs at Ways and Means Hearing

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Last week, Congresswoman Jackie Walorski (IN-02) shared feedback from Hoosier businesses affected by steel and aluminum tariffs at a House Ways and Means Committee hearing on the impact of tariffs on the U.S. economy and jobs.

“Historic tax cuts and regulatory reforms have revived America’s economy, but I am constantly hearing from businesses in northern Indiana that steel and aluminum tariffs are driving up costs and making it more difficult for them to grow and create jobs,” Walorski said after the hearing.

“The administration has taken steps to narrow these tariffs to better target unfair trade, but more must be done to protect businesses and jobs here at home. I will continue listening to Hoosier manufacturers, farmers and workers, and making sure their voices are heard so we can keep our economic momentum going.”

Video of Walorski sharing local businesses’ feedback at the hearing:

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She read the following quotes from Hoosier job creators in a wide range of industries:

• (We’ve seen) a 50% increase (in the price of steel), mostly since the tariffs were announced. Additionally, there is a shortage of steel. We are furloughing the production line in (one facility) today and will probably have to furlough some of the guys in (our main facility) later in the week due to lack of availability of material. We have raised prices to our customers but because (our product is) a low margin item – the combination of the increase and the lack of availability is affecting sales.”

• “We cannot switch to a U.S. source, and it would take 1 to 2 years for us to get approval from our customers if there was a U.S. source. We will continue to import steel and will pay the duties. So far we have incurred about $15,000 in tariff costs with a potential of another $240,000 based upon the orders we have already booked with (our) Japanese steel supplier. We are moving forward with our exclusion requests; so far the cost has been close to 100 hours to complete these exemption forms along with some legal costs for review and advice.”

• “We have rolling shortages of steel and we are on allocation (from our supplier in Utah) … Prices had already gone up 25% and 30% respectively (on aluminum and steel) because of speculation. Now we are seeing a trend past 30-35% each. Of course, I am livid.”

• “We observed steel prices starting to move up in early 2017 on just the talk of potential steel tariffs and a sharp escalation in steel prices in the last 3 months as the tariffs started to become a reality. This has resulted in a 15% to 29% increase in the cost of our steel. To put this in perspective, our increase in steel cost is larger than the entire cost of providing health insurance to our workforce.”

• “We are the sole manufacturer left in the United States that manufactures this type of product. Our competitors import all or most of their finished product from either Mexico, China, Vietnam, etc., therefore avoiding any impact of this tariff…The bottom line is this, if you raise our steel and aluminum prices, our prices will have to increase in order to cover the cost. Our foreign competitors will not be affected. … We currently purchase all our steel and aluminum from domestic sources.”

• “We are in the process of trying to build a 147,000-square-foot warehouse. (The company building the warehouse) gets their steel from Canada, a country exempted from the steel tariff. However, we are unable to get a firm quote even out of Canada, because prices are beginning to rise there with so much demand shifted to Canada. It is not on hold – we have to build it – so we are at the mercy of a volatile market.”

• “When purchasing raw materials, we give preference to domestic steel mills wherever possible. We enjoy long, outstanding relationships with many domestic mills. We want them to thrive. … The actual dynamics of the entire metalworking market have evolved in the last 40 years. … In some cases, we find that domestic mills cannot meet the quality standards required by our customers; or they cannot meet the quality standards at a competitive cost. In those cases, we will buy foreign material. … Why put a tariff on these items?”

Alcoa Warrick Earns Global Honor for Commitment to Safety, Environment

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Alcoa's Warrick Operations has been in Newburgh for over 50 years, and was just honored for its commitment to safety at its corporate headquarters in Pittsburgh. For more information on that achievement, see below. And for more on this impressive employer in southwestern Indiana, read this 2011 BizVoice article about the company. Odds are if you ever drink from an aluminum can, Alcoa has played a role in your life.

Alcoa's top leaders, including Alcoa Chairman and CEO Klaus Kleinfeld, congratulated employees from Alcoa Warrick Operations during the corporation's annual leadership conference in Pittsburgh. The event also commemorated the corporation's 125th anniversary.

Warrick Operations won the corporation's global award in the category of Environmental, Health and Safety (EHS) during the March 18 awards program.

In 2012, Alcoa Warrick Operations had its best-ever safety performance: The OSHA recordable rate for the sprawling facility, which employs nearly 2,000, finished the year at 1.23. That result is significantly lower than the U.S. Department of Labor's reported rate of 3.8 for all businesses, including government.

The OSHA Recordable Injury Rate is determined by multiplying the number of recordable injuries by 200,000 and then dividing by total work hours. A recordable injury can range from minor injuries such as muscle strain/sprain or an injury that could result in lost work time. There were no lost workday injuries at Warrick Operations in 2012.

"This strong safety performance happened through the collective effort of our workforce — employees who consistently focus on working safely, watching out for each other, and using proven and robust safety systems and tools," said Ed Hemmersbach, the V.P. of Alcoa Global Packaging. "It's excellent to receive this level of recognition from the highest levels of our corporation, and we'll continue to share safety best practices with our manufacturing peers here in the Tri-State."

At Warrick Operations, safety processes are ingrained in the culture, which includes daily toolbox meetings and pre-task reviews. During pre-task reviews, employees complete a safety evaluation before specific tasks are started. Also, employees are authorized to stop any job if they observe an unsafe condition. Safety takes priority over profit or production. In fact, employees are recognized when they identify an unsafe condition and take action to correct it.

Royce Haws, the Location Manager for Alcoa Primary Metals, said employees are ever-vigilant in identifying and then eliminating safety risks.

"We're proud of this safety achievement," Haws said, "but we also know that one injury, no matter how small, is one too many. So we continue to improve and not rest on previous accomplishments, including this one.

"Importantly, our employees know that it's possible to have zero injuries, and that's our goal every year," Haws said.

Fort Wayne’s Steel Dynamics Builds Strong Foundation in Pittsboro

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Here’s an encouraging piece from the Indianapolis Star about how Steel Dynamics is turning a near-bankrupt steel mill in Hendricks County into a thriving source of production and jobs. Through heavy investment, the company ultimately hopes to enhance its production by over 50% and produce nearly one million tons of steel annually at the plant.

Designed and built in the late 1990s by Qualitech Steel Corp., the mill barely had come online, melting test batches of high-quality bar steel intended for automotive and appliance manufacturing, when the world steel market was flooded by cheap Chinese exports and the price of steel fell through the floor. Nearly a dozen "mini-mills" like Pittsboro’s were left in bankruptcy court.

Indiana’s investment of $40 million in incentives and Hendricks County’s $20 million bond issue were at risk if the mill didn’t reopen.

After a legally disputed auction, the Steel Dynamics offer of $45 million won the court-run bidding against North Carolina’s Nucor in 2002.

Steel Dynamics also invested nearly $100 million to redesign, remodel and reequip the plant to reopen in 2004. The trends have been up ever since.

Employment at the mill has increased steadily over the years from 400 to 500 workers. Steel Dynamics has not announced whether new jobs will be created in the next two years.

It will expand the facilities and add a second line for rolling out long bars of high-quality steel, the type suitable for machining into parts of cars, engines and other manufacturing. Companies such as Caterpillar are among the steelmaker’s bigger customers.

The mill occasionally has turned out other types and qualities of steel, including rebar used as concrete reinforcement in the $1 billion terminal building and other improvements opened in 2008 at Indianapolis International Airport.

Steel Dynamics said that with the latest addition, its engineered bar products division will be among the largest making specialty-bar-quality steel in North America.

It also will expand the mill’s bar-finishing capability, potentially doubling the amount of finished products that can be inspected.

The current production line rolls out long steel bars in diameters from 1 inch to 9 inches. The new line will focus on 1- to 3-inch-diameter bars favored for use in transportation, energy and automotive applications.
 

“700 Tons of Metal a Day; Now Sir, You’re Tellin’ Me the World’s Changed?”

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Kind of a random headline for this blog, but when I can work a Springsteen lyric (from "Youngstown") into a headline, I’ll do it every time. Governing tells the story of how rust belt cities are rebounding, citing Youngstown, Ohio as a prime example. 

The "rust is chic" movement has been around for a while, but thanks to blogs and online magazines, such as RustWire.com, a certain fascination with places that have fallen on hard times like the Rust Belt — which stretches from the Midwest through the mid-Atlantic and up into the Northeast — has taken hold. Part of it is the scruffy, industrial look. It may also be a rejection of cities with gleaming condo towers, bistros and boutiques that were once so trendy yet now seem so frothy and fake in the wake of the economic meltdown.

But the other fascination is the defiance these Rust Belt cities have shown. Many of them, such as the gritty cities Bourdain visits, reflect a rebellious attitude. Youngstown, Ohio, has to be the poster child of this stance. Once part of America’s steel manufacturing hub, Youngstown went into a death spiral as the industry collapsed in the mid-1970s. Today, Youngstown’s population is 75,000, less than half of its original size, and is 43 percent vacant.

Yet nearly 10 years ago, the city made the bold decision to embrace its new shrunken state rather than put time and money into trying to grow back. Public officials created a master plan, called Youngstown 2010, that envisioned a smaller, but thriving city with a more diversified economy. Indeed by 2010, certain elements of what Youngstown could become were falling into place.

The downtown area has come back to life, and more importantly, economic development has begun to take hold, delivering an interesting range of jobs to the area. The Youngstown Business Incubator (YBI) has played a key role, providing free or reduced rent and equipment to startup software companies. Ohio provides a large chunk of the YBI’s funding, and the payoff so far is about 300 technology jobs.

Recently, software firm Reserve Data in Silicon Valley, Calif., pulled up stakes from pricey San Francisco and opened shop in inexpensive Youngstown, trading California’s Bay Area chic for Rust Belt grit. The number of jobs that follow may be modest — 50 to 100 — but the staff will be able to enjoy Youngstown’s unique social scene, which includes the Rust Belt Brewing Co., located in an old train station.

Meanwhile, Youngstown’s manufacturing tradition isn’t over yet. French company Vallourec announced plans to invest $650 million in a steel manufacturing facility that will put another 350 people back on the payroll. How chic — sorry, "gritty" — is that?

Energy/Environment Hot Topic of Friday Conference Call

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In today’s First Friday Conference Call, Indiana Chamber VP of Energy & Environmental Affairs Vince Griffin chimed in via phone all the way from Ireland. Ok, it was Ireland, Indiana near Jasper, but it still sounded quite magical. (And we don’t have to claim Colin Farrell in the Hoosier version.)

At any rate, Vince offered some key tidbits on the state of energy in Indiana. Here are just a few of the items conveyed in the hour-long call:

  • By 2013, experts from Purdue University have forecasted that Indiana will need close to 5,000 additional megawatts of power; today we produce just over 20,000.
  • The Great Lakes contain 20% of the world’s fresh water.
  • Indiana has seen droughts in the 1940s, 1960s, 1988 and is due for another. Vince says these tend to follow periods of heavy rain and snow, which Indiana has seen the last couple of years.
  • Water is critical. No water = no electricity.
  • Indiana consumes over 60 million tons of coal per year, second only to Texas. Vince also expressed hope that President-elect Obama will back off his campaign rhetoric regarding the impending downfall of coal. "We’re hopeful that Obama understands how important coal is to the United States. It provides a large number of jobs and Indiana has 95% of its electricity come from coal."
  • Indiana uses a lot of power. One reason is that we are the nation’s top producer of steel, which is very energy-intensive.

The First Friday Conference Call is just one of many benefits Indiana Chamber members receive. The monthly calls feature a different topic each month, and are totally interactive with 30 minutes of the hour dedicated to answering questions of listeners. If your company is a member, anyone at your business can call in and take part. To inquire about Chamber membership, call the territory manager for your area.