?Trump's Steel Tariff Squeezes US Can Manufacturer

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2018-07-11


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BELCAMP, MARYLAND —Outside Baltimore, Maryland, sheets of tinplated steel transform into colorful cans and containers for Zippo lighter fluid, Starbucks cookies, Nestle chocolates, and premium brands of peanuts and popcorn. Machines stamp, cut, print, shape and assemble multiple product lines under the watchful eyes of skilled work crews at Independent Can Company, which is fighting the Trump administration’s 25 percent tariff on imported steel.

“We are the largest manufacturer of specialty tins in the United States,” ICC president and CEO Rick Huether said. “The tinplated steel that we buy is close to 50 percent of [the cost of] what we produce. It is the driver when there’s a change in our prices to the marketplace.”

The new steel tariff has been welcomed by U.S. producers of the material, but slammed by American manufacturers like ICC that rely on a global steel supply chain to stay afloat. The company says its clients will turn to foreign can makers if its prices rise too high.

“Our primary competitor would be China,”Huether said. “If we’re more than five-10 percent higher [in price] than China, our customers will shop overseas.”

The Trump administration continues to defend tariffs as stiff but appropriate medicine to save vital American industries battered by decades of predatory foreign competition.

“Steel and aluminum imports threaten to impair our national security,” Commerce Secretary Wilbur Ross said at a recent Senate hearing. “The tariff actions taken by the president are necessary to revive America’s essential steel and aluminum industries.”

Huether said ICC has bought U.S.-made steel, but that imports bridge a gap in supply for high-grade tinplated steel needed for blemish-free lithographic printing his customers demand, adding that the mere threat of tariff-induced price hikes already cost the company a $2 million order.

“We’d like to be fighting to grow our can business, but we’re fighting our supply side to just get materials to satisfy the demands we have now. So it’s a very frustrating situation,” the CEO said.

ICC is warning of possible job cuts. The company employs more than 400 workers, paying well above minimum wage with a benefits package that includes health care.

“There are craftsmen in here that have been doing this for 20, 30, 40 years,” ICC lithographer Bryon Borrell said, adding that he is thankful to hold a middle class manufacturing job. “I have been very successful, raised a family. That is all I can ask for.”

ICC has asked the Commerce Department for steel tariff exemptions. U.S. Steel Corporation filed objections, arguing it has been harmed by “unfairly traded imports” and that “the domestic industry has ample production capacity to supply ICC’s needs.”

Huether countered that he has no guarantee when domestic production will be ramped up, the price ICC will be charged for tinplated steel, or whether quality standards will be met.

“U.S. Steel says they can produce our specification in sufficient quantities. Yes they can, in a year, when they invest the money they’ve already committed to upgrading the mill,” Huether said. “We would like to buy domestic. The lead times are shorter [than buying imported steel], but right now they can’t give us the material when they promised.”

The Commerce Department has not acted on ICC’s requests, but signaled that tariff exemptions will be rare.

“Relatively few of those [exemptions] will be granted because many of them have no substance,” Secretary Ross said.

“I think we’re fighting people that are not listening to our problem, our industry’s problem,” Huether said. “This is my family’s business—my sister, my dad, my cousin, my son are in this every day, on the floor, trying to develop. We’ve brought back $4-5 million dollars worth of cans to manufacture in the United States in the last three or four years. Not many companies can say that.”

ICC just installed a state-of-the-art assembly line that will expand production, if the company has enough steel to run it, and if it is able to keep prices competitive on its containers.

Huether credited President Donald Trump for tax reform enacted last year, saying it’s a boost to companies like his, but added that tariffs are counterproductive.

“Yeah, he [Trump] is encouraging us to invest. But on the other hand he’s raising our costs to produce those goods. Who are we going to have to sell it to if we don’t hit a right price [on steel]?” he said.


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