DETROIT -- Domestic manufacturers of automotive components made of special bar quality (SBQ) steel appear to be on the verge of placing significant new orders for parts with offshore suppliers, who would use steel from suppliers in their own countries.
In at least some cases, a shortage of SBQ from North American sources has been cited rather than the high cost of domestic material.
At least one local parts forger, the Royal Oak, Mich., facility of Metaldyne Corp., already has begun using pre-forms imported from South Korea to make hot-forged clutch drums for an automotive customer, and similar actions at other companies are anticipated.
Between now and the middle of May, many parts makers consuming SBQ steel are expected to make decisions on overseas sourcing of components for future business. If those decisions favor imported parts, the duties on which are small compared with the Section 201 tariffs on imported steel, the new business going overseas could remain there for many years, possibly until long after the Section 201 safeguards have expired.
Domestic manufacturers generally are reluctant to import more components because of the difficulties and time required to qualify those parts and the steel going into them.
A group of five large U.S. parts makers, known as the SBQ Coalition, has been attempting to get Section 201 tariff exclusions for steel designated A760.01 through A760.06 because the steels aren't sufficiently available from domestic sources. The exclusions were said to represent a "minimal volume" of the total amount of SBQ steel consumed in this country.
Doug Grimm, chairman of the coalition and vice president of quality and supply chain management at Plymouth, Mich.,-based Metaldyne, said the domestic SBQ industry had reduced its steel production capacity by approximately 30 percent in the past three years, while the demand for SBQ steel had either increased or remained steady.
The five members of the SBQ Coalition--Metaldyne; American Axle & Manufacturing Holdings Inc. (AAM), Detroit; ArvinMeritor Inc., Troy, Mich.; Delphi Corp., Troy; and Dana Corp., Toledo, Ohio--are believed to consume considerably more than 1 million tons of steel bar and rod annually.
Grimm has written to a number of U.S. congressmen in recent weeks asking for their assistance in getting the exclusions granted. Since the implementation of the tariffs in March 2002, Grimm said, automotive parts suppliers had been "forced to endure ... capacity shortfalls and skyrocketing price increases." These problems were "particularly acute among users of SBQ bar steel," he added.
He said the situation had become untenable to the coalition's members, all of whom may soon be forced to increase their sourcing of finished parts from overseas affiliates.
Grimm said the SBQ Coalition "endorses a strong and vibrant domestic steel industry; it is critical to the wellbeing of our nation. Equally important, however, is the economic viability of the industrial sectors that rely on readily available and competitively priced steel."
Al Wrigley
ammdet@aol.com
