The Impact of Steel Tariffs on Steel-using Companies

I want to begin my comments on the tariffs that the United States Commerce Department have imposed to let every reader know that I am passionate about this topic and have a strong personal and a professional opinion.

Over the years technology and communications have moved global and at this point we have no chance to slow down this process. Those that try to change the path towards globalization are fighting the tide, wind and weather, which is an impossible task.

As a country we may have negotiated poor deals with many other countries, and I believe that most people would agree with this. It is easy to understand that any agreement made between any two parties need to be revised, over time, due to unexpected consequences as a result of changes in technology, demographics and economic dynamics.

Tariffs on imported Steel- I want to be clear. I am specifically interested in Tinplate. Tinplate is very thin gauge flat rolled steel with an electro coated surface of tin. Tinplate was developed as a corrosion resistant surface for cans used for the preservation of food products.

Steel is 100% recyclable and can be used in any steel application without losing its strength or characteristics.

Today the can industry has evolved in many directions:

• Beer & Beverage Cans- Almost all containers for these products are made from aluminum
• General Line Cans- (Paints, Chemical, Aerosol) These cans are mostly made from tinplate with surface coatings and printed surfaces
• Sanitary Cans- {fruit and many vegetables (corn, peas, soups etc.)} These cans are made from Tinplate and a steel called TFS (tin free steel).
• Specialty Cans- (popcorn, candy, coffee, tea, cosmetics etc.) Nearly 100% of these cans are made with tinplate.

General Line and Sanitary cans use tinplate because it is required for the long term protection and security of the products packaged. There is no better package to secure these products than steel.

• Plastics are making inroads although this generally is a price driven issue and not the long term security of the product packaged.
• Plastics ultimately end up in landfills or the oceans posing environmental problems.

Specialty Cans- It is truly hard to define a specialty can other than it is a can that the largest can makers tend to no longer want to manufacture. The reason that the large can companies do not want to make them is that the volume or market demand is small requiring short runs and many changeovers.

Tinplate

Tinplate Globally: Steel companies around the world make tinplate. Tinplate as a product line is only about 3% of global steel production. No integrated steel company has tinplate as their primary product nor could they survive producing only tinplate.

• In the United States, currently, as a country we only produce approximately 57% of the tinplate required by all can makers in the USA.
• If all can companies in the USA bought from domestic steel companies and they had the capacity to produce the quality, coil sizes needed and could deliver on time, this would only add about 2% to the primary steel production.

Would Independent Can Company like to buy 100% domestic Tinplate? The answer is absolutely YES.

• Why don’t we buy 100% domestic?
• Up until about 2007 we bought 90% domestic- why did we go overseas?
• We buy on the following basis:
• Quality- We need steel that performs through our processes as well as the surface appearance.
• Service- We need to have delivery of ordered steel to arrive on time, as promised by our suppliers
• Price- We need globally competitive raw materials to compete in a global market place
• Domestic Steel supply:
• Quality: Due to lack of investment the US steel companies have not kept up with the demands of the latest equipment requirements for steel performance: coil width, temper control, surface quality
• Service: on time delivery: 2016 18% on time, 2017 12% on time and 2018 year to date 18% on time
• Price: We have been able to purchase from Europe at a slight price advantage with steel arriving on time and the quality has been near perfection.

Independent Can has submitted about 40 requests for exemptions for the tin plate we need to manage our business. As of the writing of this article we have no disposition for or against these exemption requests.

• The USA steel producers need 1-2 years to upgrade their facilities to be competitive and this is information from our domestic suppliers.
• We have asked our domestic steel suppliers to support a 2 year exemption while they prepare to be competitive so we do not lose domestic users of tin cans. Once we lose a customer to overseas production, they may never come back and that may result in a permanent loss of jobs. The steel companies have refused to support any exemption. Very short term thinking.
• We have joined forces with CMI (Can Manufacturer Institute) and are participating in many organized lobbying efforts as well as individual outreach to local governmental officials who have been very supportive.

As a specialty can maker we are proud that we have been able to thrive in a very competitive market place. Many of our competitors have closed their plants and have moved to the importation of tins. We remain focused on Made in the USA solutions as being demanded by many of our year round customers that are supportive of investment. We have great employees that are both talented and skilled. We have invested in the finest equipment that will allow us to meet our customers’ needs and demands for quality containers at globally competitive prices.

We thank our customers for their loyalty and their understanding in these trying times. Please call and ask questions.

We are working hard to get the message out: (Please see the video interview)

Voice of America – Impact of Steel Tariffs

https://www.wusa9.com/article/news/local/maryland/md-manufacturer-ponders-job-cuts-because-of-steel-tariff/65-571353552

Rick