Manufacturers in Vernon Demand Tighter Ports

Steel product manufacturers and local political representatives want to see U.S. Customs enforce tariff laws.

By Elizabeth Hsing-Huei Chou, EGP Staff Writer

American manufacturing companies, including two in Vernon that saw 50 percent of their business disappear when the U.S. economy took a dive in 2008, want the government to crack down on illegal steel tube and pipe imports from China.

“There’s nothing cheaper than smuggled goods,” says Chris Knox, Vice President of Sales and Marketing at Vernon steel tube company Vest Inc, which along with another company, Hannibal Industries, Inc., employs 250 workers in Vernon.

The tubes and pipes produced by these companies are used in such products as motorcycles, motor homes, exercise equipment, and fencing.

“Pipe and tube have been high on the list of products to ship into the U.S. marketplace, demand has been strong for it,” says Tamara Browne, director of the Washington D.C.-based Committee on Pipe and Tube Imports, CPTI, which is comprised of 40 companies employing 25,000 workers around the country.

Shipments of steel tubes and pipes from China are supposed to be assessed import duties of as much as 264 percent of the market value, but U.S. companies say Chinese shippers are illegally circumventing such duties.

The tariffs are meant to even the playing field, especially at a time when domestic companies are trying to “claw their way back in depressed market conditions,” Browne says.

The two manufacturers worked with CPTI to file trade cases against China, say they suffered blows during the economic downturn. Hannibal Industries, an employee-owned company, reduced its workforce from 330 to 179 workers in 2008, according to its president, Blanton Bartlett, while Knox says Vest Inc. has had to cut back on the hours of its workforce of over 100 people.

Knox says that if Chinese steel tubes and pipe products continue to be “unfairly” shipped into the U.S., “we would all lose our jobs.”

“For the most part it’s very destabilizing to the price levels that we’re trying to sell our product for… This Chinese stuff is coming in substantially cheaper than we’re able to compete at,” Knox says.

Tariffs on Chinese products have also garnered the support of representatives for unionized workers, whose goal is to retain higher paying jobs by fighting what they call “unfair trade practices” from governments countries like China.

“Often these [manufacturing] jobs are better than retail jobs,” says United Steel Worker spokesperson Gary Hubbard.

In the last few months, steel industry investigators discovered that Chinese products were being smuggled into the states by way of Malaysia, where no U.S. tariff is imposed, or shipped inside mislabeled containers. Such cases were brought to the attention of customs and elected officials.

“We’ve become much more vocal and started to pave the way to work with custom service to ensure they’re doing their job to correct it,” Browne says.

Local U.S. representatives, including Congresswoman Lucille Roybal-Allard, have pressed the issue of enforcement with the U.S. Customs and Border Protection, and promised to follow up on the steps the agency takes to prevent further smuggling.

“This kind of illicit shipping puts American business at a competitive disadvantage and ultimately costs American manufacturing jobs,” Roybal-Allard said during a Mar. 24 hearing of the Homeland Security Appropriations Subcommittee.
While contractors and fabricators who buy products from China are motivated to get the cheapest products that they can get, representatives for U.S. steel tube companies say China has stacked the odds against domestic manufacturers.

Before the tariff was imposed in 2008, American companies were competing against products that were priced 30 to 40 percent lower than their own products because the Chinese government subsidizes the production of steel tubes and pipes, Knox said.

Companies like Vest, Inc. and Hannibal Industries “can compete with anybody in the world, but if it’s unfairly imported, they have a problem with that,” Browne says.

Inspection should be stepped up at the ports, Bartlett says. “They should look at more products brought in to see if it is what it should be… they need to do more inspection of products,” he says.

“Commercial enforcement should be just as important as matters of security” at the ports, Browne says.

Local companies have always had to compete with the international market because of their close proximity to nearby ports, including the Port of Long Beach, which funnels three quarters of the shipments into the U.S., Browne says. In Southern California, CPTI also represents steel tube and pipe companies in Long Beach, City of Industry, Santa Fe, and Rancho Cucamonga.

The U.S. companies have been filing trade cases going back 25 years, but the recent entrance of China into the market has made a dramatic mark, Browne says.

“China is a newer entrant, but they have ramped up so quickly and with such volume they are now a leader in global steel products,” she says.

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April 1, 2010  Copyright © 2012 Eastern Group Publications, Inc.

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