Trade commission says industry not harmed by Chinese imports.
In recent years, The People’s Republic of China has become the world’s largest producer and exporter of steel. The country’s economy is boosted by massive steel mills—some of which employ as many as 100,000 people who live in apartment towers on mill grounds. The Chinese produce the greatest amount of steel in the world, and at a much lower cost than anyone else. One of the driving forces behind this cost is the fact that instead of investing in efficient manufacturing technology, they use cheap labor. Where a U.S. steel mill might employ 500 people who earn $15.00/hour, a Chinese steel mill employs 5,000 at $0.25/hour.
The Chinese government decided it could make even more money if it stopped exporting raw steel to the rest of the world and instead made products from that steel and exported those products. To motivate its manufacturers to create these products, the government offered massive tax breaks and numerous subsidies for those companies that complied. These breaks were so large that, even after factoring in shipping costs, the Chinese companies were able to sell exported products for an even lower price than they could offer domestically. This led to an influx of Chinese-manufactured steel products into the American market. For a while, material handling didn’t feel the pinch, but by the late 1990s, signs of trouble started to show.
An Unwelcome Guest
According to Nashville Wire Products Division Manager Robert Rollins, Chinese-manufactured wire decking first started showing up in the United States in the late 1990s. “At first, just a few companies were importing it,” says Rollins. “Then it started picking up as the new millennium rolled around.” Eventually, Chinese decking companies started showing up at trade shows and several domestic distributors began distributing large amounts of inexpensive Chinese decks.
Typically, the wire decking industry wouldn’t have any complaints about the competition. But the Chinese weren’t competing on a level playing field. The U.S.-manufactured decking was superior in the quality department, but thanks to the massive government tax breaks, the Chinese companies could sell their decks at a much lower cost. With some products like forklifts, quality can overcome price, but with wire decking being such a commodity-based product, the American companies didn’t stand a chance. “I’ll put my decking up against anyone’s,” says Rollins. “As long as it’s a level playing field, none of the American companies are afraid of competition.” Unfortunately, due to the massive tax breaks and other government provided subsidies, the deck was stacked in the Chinese manufacturers’ favor, and the U.S. wire decking industry decided to do something about it. “The industry as a whole recognized the degree of damage these unfairly traded imports were causing,” says J&L Wire Cloth President Tim Selhorst. “It was either take action or die.”
An Unlikely Alliance
Recognizing the gravity of the Chinese threat, the major U.S. wire decking manufacturers decided that they either had to work together or die alone. An alliance was formed among Nashville Wire Products (Nashville, TN), J&L Wire Cloth (St. Paul, MN), American Wire Products (Frankfort, KY), ITC (Phoenix, AZ) and Wireway/Husky Corp. (Denver, NC). Typically competitors, the five companies were united with a common purpose—leveling the playing field for wire decking in the United States. In June 2009, the first step was taken: The alliance filed a formal trade case against four Chinese wire decking manufacturers.
The alliance and its team of attorneys first filed its case with the International Trade Commission to determine if the Chinese product was causing damage to the domestic industry. In July 2009, it was deemed that there was damage and the case was forwarded to the U.S. Department of Commerce (DOC) who would determine if dumping took place. That ruling also went in the alliance’s favor. In January 2010, the DOC issued a preliminary determination decision on the dumping duties. The duties for the four companies ranged from 42.61 to 289.00 percent. A few weeks after the decision was announced, the Chinese government released a statement specifically mentioning wire decking and condemning U.S. anti-dumping measures.
A Surprise Twist
On July 1, 2010, however, the International Trade Commission decided by a 4-2 vote that the domestic wire decking industry has not been harmed nor is in imminent threat of harm by Chinese imports. This decision overrules the preliminary antidumping duties that had been put in place by the Department of Commerce earlier this year. The vote came as a surprise to many in the industry, including Rollins, who says, “We are shocked and disappointed by this decision. It’s back to business as usual.”
The wire decking industry was the smallest steel-product industry that has ever brought a case before the Commission. Other fabricated steel products, such as wire hangers, nails and oil pipelines, to name a few, have all had successful votes in recent years, a major reason why this decision came as a surprise. The Commission is composed of six members who are not supposed to show political bias. But some people say that the International Trade Commission had become a rubber stamp for the domestic steel industry in antidumping cases, so they ruled against the wire decking companies to dispel that theory.
Whatever the Commission’s reasons, its decision is binding. The domestic coalition still retains the right to appeal this decision and can do so within 30 days of the decision’s official written publication in the Federal Register, which had not yet occurred as of the writing of this article. Once the decision is published, Rollins says the group will decide how to proceed. “Trade cases are very expensive to prosecute, so we’ll need to wait and see what happens,” he says. “But our heart is in American manufacturing and not being an importer. We’re about to find out how important that is to our customers.”