Canada lobbies Congress over Buy America

From the Hamilton Spectator (as a steel town newspaper, hardly a bystander in this arena), dated June 9th, 2009

Canada is launching a full court press in the U.S. Congress today against the Buy American provisions in the federal stimulus spending law.

[…]

The action is part of the ongoing campaign by our federal government to get the U.S. government to drop Buy America provisions that force U.S. municipalities and states to use American steel and manufacturing exclusively for projects paid by U.S. taxpayers.

The provisions are believed not to contravene international trade agreements because states and municipalities are sub-national jurisdictions and not subject to trade deals.

Sounds pretty weasily, doesn’t it? Sure we have these NAFTA provisions, and they apply to you, but they don’t apply to our states and municipalities. One wonders how Free Trade can have so many different meanings to different people.

Tax Funded Head-Start for Low Cost Country Tool & Die Makers

Joe Brown, in his blog, wrote an excellent, fictionalized (I presume) account of what it’s like to be laid off, followed by an excellent analysis of why we’re losing tooling money offshore and how the car companies are encouraging this.

What if we added that not only were taxpayer funds being funneled to China, the very recipients of these taxpayer funds, (GM, Chrysler and hundred’s of Tier 1 parts manufacturers) gave the Chinese competitors to North American manufacturers a 5-9% cost advantage by paying these Chinese suppliers on far better terms than they would pay say a company in Grand rapids, Detroit or Windsor.

Steel firms deny price fixing

The implications of such a suit, if it was to proceed, and especially if it were certified as a class-action law suit (which seems to be what the article is implying) would be vast.

journalgazette.net

A steel company customer has accused eight major steel manufacturers, including Fort Wayne-based Steel Dynamics Inc., of colluding to scale back production to force up prices.
A spokesman for Steel Dynamics on Friday denied the allegation made in a lawsuit filed last week. Also named in the suit is Nucor Corp., which operates plants in St. Joe and Waterloo. ArcelorMittal USA Inc. and its parent company, Luxembourg-based ArcelorMittal, are listed separately, making eight companies and nine defendants.
The suit was filed in U.S. District Court in Chicago by Standard Iron Works of Scranton, Pa.

Michigan wary of McCain trade message

FT.com

Jim Zawacki, chairman of a metal-stamping manufacturer in Grand Rapids, Michigan, was apologetic but firm as he doled out some “straight talk” to John McCain, the Republican presidential candidate, at a town hall meeting this week.
Though Mr Zawacki has donated $1,000 […] to the Arizona senator’s campaign, he said he disagreed with Mr McCain’s commitment to free trade and challenged his suggestion that Michigan’s staggering 8.5 per cent unemployment rate could largely be fixed by retraining displaced workers at community colleges.

“Where are you going to find teachers to teach them? What we need to do is control some of these trade issues. What we are asking for is fair trade,” he said.

Mr McCain has admitted he has “a lot of work to do” to win over the likes of Mr Zawacki. This week, he travelled from Ohio to Wisconsin to persuade voters to reject “isolationism” in favour of an economic agenda centred on tax breaks for small businesses, free trade and cuts in government spending.

Many Republicans are betting their candidate’s message will resonate in the home state of the big three US car manufacturers.

Jim isn’t against Free Trade, but he wants it to be fair trade. Like most small stampers, he’d be OK with free trade on a level playing field.

North American Breaker Co. Recalls Counterfeit Circuit Breakers Due to Fire Hazard

This isn’t a stamping story exactly, but many stamped products are also counterfeited in China, so it seems related to me.

The notice comes from the U.S. Consumer Product Safety Commission web site.

Consumers should stop using recalled products immediately unless otherwise instructed.
Name of Product: Counterfeit Circuit Breakers labeled as “Square D”
Units: About 50,000
Distributor/Retailer: North American Breaker Co. Inc. (NABCO), of Burbank, Calif.
Hazard: The recalled circuit breakers labeled “Square D” have been determined by Square D to be counterfeit and can fail to trip when they are overloaded, posing a fire hazard to consumers.

EU threatens to impose tariffs on steel from China

Once again, no one is dealing with the problem that small and medium manufacturers have, that is, if you tarif the raw materials but not the finished goods, they get around the tarifs by supplying the finished product, a flashlight, whatever, at below our costs for the raw materials.

International Herald Tribune
The EU began an inquiry into whether Chinese exporters, including Baoshan Iron & Steel and Wuhan Iron & Steel, sell flat-rolled steel in the EU below cost, a practice known as dumping. The inquiry covers €1.2 billion, or $1.7 billion, of imports of hot-dipped metallic-coated steel.

The investigation will determine whether the steel “is being dumped and whether this dumping has caused injury,” the European Commission, the executive arm of the EU, said in the Official Journal.

The commission has nine months to decide whether to impose provisional anti-dumping duties for half a year and EU governments have 15 months to decide whether to apply “definitive” levies for five years.

Here’s another, similar article, from the Toronto Star, a local (to Toronto) newspaper.

EU officials have warned of a protectionist backlash if China doesn’t do more to open up to European exports. They’ve also asked that Beijing address the valuation of the yuan, which they say gives Chinese exporters an unfair price advantage.

Canadian/American currency exchange

I haven’t written about currency issues here. Mostly I write about general stamping issues. This posting is written more from a Canadian stamping perspective.

The drop in value of the US $ is really starting to hurt us Canadian manufacturers.

On the one hand, it’s nice to get your raw materials cheaper. For instance, copper isn’t hurting us nearly as much as you might think, since it’s basically valued in US $ and we’re buying it in Canadian.

On the other hand, exports are a big part of our economy. It’s hard to say, even for an individual company, what fraction of sales are exported, because not all are direct exports. Some products, especially small metal parts, the area we’re in, get combined with other things by another canadian company before being exported to the US.

But sales to the US are hurting. If we keep the US$ price, we are losing our markup. If we ask for the Canadian price, it varies from one shipment to the next, an unfamiliar situatior for most american customers, who reject the idea. Even if they don’t, it prices us out of the market when compared to similarly qualified US suppliers.

It’s going to be an intesting ride …

Area lawmakers testify to keep tariffs on Chinese steel; Nucor called a victim

I don’t understand why anyone thinks it makes sense to impose tarifs on the raw materials coming from China and not the finished goods made from the same raw materials coming from China. All this does is cut the entire food chain out of North America and shift it all to China. Why don’t the steelmakers see it as shortsighted to cut off the legs of their customers? Why don’t the lawmakers see it either?

Nucor Corp. and other U.S. steelmakers are the victims of China’s illegal subsidization of exported steel, lawmakers testified Tuesday.

In the first day of a two-day hearing, dozens of lawmakers argued that the U.S. International Trade Commission should renew five-year punitive tariffs on hot-rolled flat carbon steel imported from China and 10 other countries. China was the main target.

China Currency Coalition

Every once in a while, I like to give a plug to the China Currency Coalition. They sure seem to be fighting an uphill battle (although I’m baffled as to why their point of view isn’t making itself in the eyes of the public and legislators).

Their basic premise is that Chinese currency manipulation is unfair. Well, of course it is. It’s also illegal under various statutes and international obligations. I’m no lawyer, so I’ll leave that one to the lawyers.

I can tell you this. Currency manipulation was rampant during the second world war war, and it was used as a weapon of war. That’s pretty serious. So why don’t we take these things seriously now?