Automotive Coalition Company Executives Travel to Washington to Urge Bush Administration to End Steel Tariffs

WASHINGTON, Oct. 8, 2003 -- In meetings with the White House, Office of the U.S. Trade Representative, Departments of Labor and Treasury, two dozen members of the Automotive Coalition on Steel Tariffs yesterday detailed extensive damage done by steel tariffs to manufacturers of automotive parts and components, and urged repeal of the tariffs as soon as possible. The U.S. automotive parts industry has been one of the hardest hit industries by the tariffs -- confirmed by the International Trade Commission's (ITC) report released on September 19.

"We believe that the Bush Administration is listening to our concerns about the economic harm caused by the steel tariffs and we are optimistic that something is going to be done about the tariffs," said Larry Yost, Chairman of the Board & Chief Executive Officer of ArvinMeritor, Inc., a Detroit-based global provider of automotive systems, and a Coalition member, which brings together U.S. manufacturers of automotive products.

In a morning briefing at the U.S. Capitol, which was moderated by Rep. Joe Knollenberg (R-MI), members of the Coalition gave specific examples of job losses and lost business as a result of the steel tariffs, personalizing data already reported in the ITC study on the impact of the tariffs on steel consumers. The study found that nearly three-fourths of automotive parts and component manufacturers surveyed reported changes in contract prices for steel, 87 percent of automotive products manufacturers reported that U.S. steel prices were higher than global prices, and 31 percent reported that their customers were now buying finished parts or assemblies overseas.

"The fact is that the real 'unintended consequences' of the steel tariffs is that the United States is exporting jobs overseas," continued Yost. "Tariffs had an impact on all steel supplied in the U.S. ArvinMeritor buys 95% of its steel from domestic sources. When the tariffs were put into place, we suffered from price hikes, broken contracts and longer lead times. We cannot pass the price hikes along to our customers. We had no choice but to close our plant in Gordonsville, Tennessee and to lay off many employees in Pulaski, Tennessee resulting in the loss of 400 jobs. Unfortunately, these jobs are gone for good and are not coming back."

Larry Denton, President and Chief Executive Officer of DURA Automotive Systems, based in Rochester, Michigan, which has 26 plants in the U.S., said that the price of steel spiked 26% when the tariffs were put in place and are now up 10% over pre-tariff levels.

"We supply automotive jacks to 50 or 60 customers in the U.S. About 76% of the cost is steel components," stated Denton. "Our workers can compete with any other workers in the world, but we cannot absorb a 26% price hike on an input that is three-quarters of our costs. We have no choice but to look overseas, putting hundreds of union jobs at risk."

Richard L. Clayton, President of Textron Fastening Systems, a $1.6 billion unit of Textron, with 5,000 employees in the United States estimated that the steel tariffs have cost the company millions of dollars in increased costs and lost sales. "We tried to put in place a 'steel surcharge' so that we can pass along the steel price increase to our customers. Unfortunately, we have lost $14 million in business from customers who have refused to accept the surcharge and are now sourcing their products overseas."

Similar situations were reported by Ramzi Hermiz, Vice President, Global Supply Chain Management, of Federal Mogul Corporation, which employs 20,000 workers in the United States, and Bill Shaw, President of Means Industries. Hermiz reported that 90% of Federal Mogul's contracts with steel suppliers were broken after the tariffs were put in place. "Steel is 70% of costs in our products," stated Hermiz. "We bought 96% of our steel from domestic sources prior to the tariffs. Now we are moving some of our tools and products manufacturing plants to other countries to stay competitive."

Russ Harpring, a Plant Manager in Minerva, Ohio for Metalydine, a company that manufactures metal-based components for transmissions and other auto parts and employs 11,000 workers, stated that he has been forced to layoff 15% of his workers at his plants who have been with the company for as long as 30 years, cancel wage and salary increases for 2003 and cut back on capital investment. Ironically, the employees were United Steelworkers Union of America workers.

"These were some of the best paying jobs in the area and the layoffs have had a devastating effect on the whole community," said Harpring. "It's time to end the steel tariffs. We are willing to compete in the global marketplace and our suppliers should too."

The Automotive Coalition on Steel Tariffs represents U.S. manufacturers of automotive products, including original equipment and aftermarket parts, components and accessories, and specialty and high performance automotive products. Coalition members include the Automotive Aftermarket Industry Association, the Motor & Equipment Manufacturers Association and the Specialty Equipment Market Association.

For more information about the Automotive Coalition on Steel Tariffs contact Neal Zipser, MEMA, at nzipser@mema.org, Lee Kadrich, AAIA, at lee.kadrich@aftermarket.org, or Stuart Gosswein, SEMA, at stuartg@sema.org.