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Will the softwood lumber tariffs affect your business? Have the steel tariffs affected your business?

District Voices

Published July 1, 2002  |  July 2002 issue

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The tariffs [effective in late May] will have an effect on the market value. With the Canadians having free access in subsidized form, we experienced a trough. The tariffs should raise the bottom of the lumber market and make for more stable operations, fewer layoffs and hopefully we can run at break-even levels. When the tariff does go into effect, Canadian producers may have to close their doors. We're expecting prices should increase. By how much, we don't know. ... We're not anticipating significant price increases. This is the height of the building season, with a downturn in the fall. We're hoping the downturn won't be as bad as the past three years—2000 was just about disastrous. We laid off 40 percent of our workforce and haven't called them back.
Jim Hurst, President and Co-owner
Owens and Hurst Lumber Co.
Eureka, Mont.

The tariffs are going to increase the price of an average home from $1,000 to $1,800, at a minimum. We'll lose about 10 percent of our business due to higher prices. People who'd normally qualify for a loan for lumber supplies may not be able to. It's usually those building the lower-end homes that will end up not qualifying. It's a very serious situation. It's not only lumber that will be affected, but the window companies, floor companies as well as electric and heating. It affects the hiring. We're not anticipating any layoffs right now. Business is currently very good. ... At the first of the year the softwood lumber prices rose, possibly in anticipation. Maybe we'll be lucky and they won't rise as much again.
Rich Vandeloo, Manager
Wickes Lumber—Eau Claire, Wis.

The tariffs wouldn't affect me at all because we use lodge pole pine, and I harvest my own in Colorado. It's not an issue for me.
John Holm, Owner
High Pine Log Furniture—Custer, S.D.

The prices of domestic steel have skyrocketed. I've been in this business since June 1, 1966, and the current prices of steel are escalating to near-record levels. The demand has not caught up with the pricing. I believe the steel service centers have had very low inventories—not us, but the majority. When they saw the 201 rule [tariff] coming, they scrambled for product to beat the price increase, and now there's a shortage of product, which is due also to the shutdown of some steel mills because they aren't functioning properly. But that's a temporary shortage. ... If demand picks up between now and early fall, then the economy will be going great guns. But if demand stays very low, like it is, there'll be a glut and prices will go down again. ... The tariff immediately gave domestic mills an opportunity to raise their prices and they've taken full advantage of that. ... In some cases people will look for alternatives to steel. The demand is still there from our client base as far as the usage. We've always kept high inventories. We own our product at the old price. We'll market our materials at current prices, and our customers will not be affected as quickly and as drastically as the companies who didn't have the inventory.
David Berg, Owner
South St. Paul Steel Supply Co. Inc.—St. Paul, Minn.

We've seen and heard pricing that's gone up $100 a ton. ... The tariffs were for 30 percent, but that's a little more than 30 percent. We're seeing not only our raw material suppliers, but other suppliers looking for [price] increases. It erodes away from our margins because our customers will not accept a price increase. It could cause original equipment manufacturers [OEMs] to have components made outside of the United States if it cannot be corrected. ... The steel industry needed something besides tariffs. [Tariffs] are a band-aid that will hurt OEMs. If this remains a long-term issue, it will push major manufacturers to go offshore, and that'll be way more devastating to the economy than what the steel industry employs.
Scott Atkinson, Sourcing Specialist for Raw Materials
Bobcat Co.—Gwinner, N.D.

The tariffs have affected our customers' business in the steel market. We've seen resurgence in certain steel markets and have seen strength in our iron ore business. ... The steel industry fundamentals in the United States have turned positive due to the tariff arrangement and to the improving economy. I would say the demand for iron ore is improving to a level we haven't seen for the last two or three years.
Ralph Berge, Public Relations Manager
Clevelands-Cliffs—Cleveland, Ohio
(Owner of taconite mines in northern Minnesota and the Upper Peninsula.)

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