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issue: August 2003 APPLIANCE Magazine

Guest Editorial: Section 201 Steel Tariffs
The Appliance Industry Will Benefit from the 201 Steel Program

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by Andrew G. Sharkey, III, president and CEO of the American Iron and Steel Institute (AISI)

A strong and competitive domestic steel industry is a prerequisite to a strong and competitive domestic manufacturing base. Many of our customers understand the importance of the steel 201 remedy and the positive long-term impacts that it will provide to U.S. steel-consuming industries.

Already, President Bush's Steel Program has enabled the most dramatic consolidation and restructuring to occur in the U.S. steel industry in decades. Nearly halfway into the program, more than U.S. $3 billion of industry investment is tied up in these streamlining efforts.

Maintaining the President's steel tariffs for the intended, full 3-year duration will enable America's steel industry to continue to expand our efforts to become more efficient and competitive, allowing us to better serve our customers in the future. The program has brought stability to the marketplace, which benefits steel consumers and producers alike. Availability of quality domestic steel is not an issue, and pricing has declined steadily since last summer to where steel prices in the U.S. are lower than in most markets overseas. To prematurely curtail Section 201 would be severely harmful to the progress underway, and could lead to another downturn for an industry vital to manufacturing and to national defense.

Long before the President initiated the 201 steel tariffs, our member companies established, through AISI, a leadership role in the development of programs to expand the markets for steel. Over the years, we became the acknowledged world leader in the development of innovative steel-customer partnership programs. At AISI, we long ago decided to focus most of our resources in this vital area because, if our members are to compete and win the global marketplace of the 21st century, it is essential that they produce steel products better, faster, and at an even more cost-competitive price. The "growth" strategy that we have pursued has emphasized expanding traditional markets, establishing new market growth, and creating innovative market applications.

Prior to the crisis conditions in our industry, AISI member companies had committed to a business plan requiring a $115-million investment over a 5-year period to advance the competitive position of our customers. The average steel producer today has an investment of $1 billion to $9 billion in capital equipment designed exclusively to make a range of quality steel products. Collectively over the past 2 decades, American steel producers have invested more than $60 billion into highly efficient facilities that meet aggressive standards for energy, environment, and product quality.

A strong domestic steel industry is essential if we are to ensure that our collective investment in steel's future will return the value on invested dollars to our customers and, ultimately, the consumer. Unfortunately, the very factors that led to the imposition of the Section 201 tariffs put these ambitious and beneficial pro-customer programs - and the industry's significant investment in them - in extreme jeopardy.

The steel import crisis substantially reduced the funding that was available for these programs, forcing the elimination of some investments. Many of the long-term investors, companies such as LTV, Bethlehem, and National, were in bankruptcy or severely weakened financial conditions and were unable to support our critical steel-customer partnerships and vital market development efforts. Now, however, thanks to the implementation of the President's steel tariffs, which served to stabilize the domestic steel market, our industry has been able to maintain its core market development programs, albeit at a reduced level.

As a result, we are maintaining steel's competitive position in more than 60 million tons of traditional markets, and have identified nearly 15 million tons in new, potential growth markets. These ongoing investments by U.S. and Canadian mills demonstrate that U.S. companies can come together to implement effective programs that directly support their customers.

Appliances, among the top four end-use markets for steel in the U.S., are an important part of this picture.

Together, these four end-uses account for more than 70 percent of U.S. steel consumption and more than 80 percent of steel service center shipments. For the first 4 months of 2003, steel shipments were 34,882,000 net tons, representing a 7.2-percent increase from the 32,528,000 net tons shipped during the same period in 2002. A year-to-year comparison of shipments (through April 2003) shows appliances, utensils, and cutlery up 5.6 percent.

If the U.S. does not maintain the 201 tariffs for their intended, full 3-year duration, our industry's innovative market development efforts and our substantial pro-customer investments in these areas will be in serious jeopardy again. Part of those efforts includes maintaining steel as not only the most recycled material in North America - at an industry-wide rate of more than 70 percent (totaling 70 million tons) - but also as the material that always contains at least 25-percent recycled content.

Through the Steel Recycling Institute, we have taught local communities how to gather appliances and other steel-containing products to return to the stream of commerce. Today there are almost 12,000 appliance recycling locations in the U.S.

Steel has been the engine driving appliance recycling, with the typical appliance consisting of 65-percent steel. In 2002, appliances had a recycling rate of 86.6 percent, up from 85.0 percent in 2001. This recycling effort, which the steel industry has been instrumental in developing, has kept the U.S. EPA out of mandating manufacturer responsibility for the disposal of white goods.

Through advances in steel manufacturing technology, we are providing our customers with a variety of new products and investments that could not have happened without the "breathing room" afforded by the President's steel tariffs. Putting these vital pro-customer investments at risk is not in the best long-term interest of America's steel-using industries.

America's steel industry must continue to make significant investments as we strive to improve continuously our ways of doing business. These programs are fundamental to a strong, globally competitive consumer base. They were in serious jeopardy in the period leading up to the imposition of the 201 tariffs and will be imperiled again if the tariffs are lifted prematurely.

Read another viewpoint on the issue of Section 201 Steel Tariffs:
Appliance Associations Urge End to Steel Tariffs
by Joe McGuire, president, Association of Home Appliance Manufacturers (AHAM)

Make YOUR opinions known on the subject of Section 201 Steel Tariffs.

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PLEASE NOTE : Any correspondence submitted to editors_mail@appliance.com may be published, in full or in part, on our web site or in our printed publications. If you would like to send us email that is NOT intended for publication, please send to: editor@appliance.com


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