To the Editor:
I am writing in response to the letter from Todd Mazur, president of Viper Industrial Products, Inc., that was published in your August 2014 edition. Several of the statements made by Mr. Mazur concerning the antidumping and countervailing duty cases filed at the end of May are inaccurate and appear intended to create unfounded fear in the market. We would like to take this opportunity to provide a more complete and accurate assessment of the situation.
These cases were filed because the U.S. nail industry as a whole has been pushed to the brink. Starting in 2005, repeated surges of unfairly traded imports have put many long-standing U.S. manufacturers out of business, and have continued to badly injure those few that are left.
Over the past three years, imports from Korea, Malaysia, Oman, Taiwan and Vietnam have nearly doubled, and have forced prices down to unprecedented levels threatening the very existence of U.S. nail manufacturers. This occurred even while the housing market has been recovering after the Great Recession. If unfairly traded imports continue unabated, and the outcome of that is no U.S. nail manufacturers left to produce pallet nails………then what?
Mr. Mazur claims that the surge in imports from these countries is the result of improvements in U.S. demand, and “the transition of imports from the United Arab Emirates (UAE) after the last antidumping case.”
Importers who bought dumped steel nails from China and then from the UAE largely abandoned those markets after antidumping duty orders were imposed. Rather than source domestically, or pay their foreign mills a fair price for their nails, these same importers took their business to the countries now being investigated, exploited those new foreign producers for their own gain and continued to import at even lower prices than before. The consequences for the domestic industry have been predictable and dire. That is exactly why these cases were filed.
Don’t simply take my word for it. In a preliminary determination just two weeks ago, the independent, bipartisan U.S. International Trade Commission (ITC) decided unanimously that imports from Korea, Malaysia, Oman, Taiwan and Vietnam are a cause of “present material injury” – a lawyerly way of saying “severe harm” – to the U.S. steel nail industry.”
In his letter, Mr. Mazur attempts to scare the market when he predicts an unmitigated catastrophe for the U.S. pallet industry if these cases succeed. He claims that imports will be forced out of the market, and suggests that the U.S. industry alone can’t supply the market. With all due respect, these claims are flat out wrong.
First, the goal of these cases is not to eliminate imports from the market, as Mr. Mazur mistakenly implies. Importers and foreign producers do not have to stop importing! The goal is to stop trading practices that violate international agreements, U.S. law, and threaten the existence of our industry. The U.S. industry has asked our government to require these countries and their producers to follow international laws and rules that we all have agreed on. Fairly traded imports that can compete on their own merits have a place in the market. We have always believed in honest and fair competition, and always will. Consistent with this, we also will continue to defend our company and industry from unfair imports, exactly as our laws allow.
Second, contrary to Mr. Mazur’s claim, the U.S. industry has enormous unused capacity that could be brought online in short order. Also contrary to his statement it does not “take years if not decades” for new nail capacity to come on line. In fact, as was seen by the launch and rapid growth of production in Oman after a trade order was imposed on imports from the UAE, it happens very quickly. As far as the U.S. industry is concerned, in its report on the preliminary determination in these current cases, the International Trade Commission found the U.S. industry was operating at a meager 39% of its capacity, with over 200,000 short tons of unused available capacity.
Third, contrary to the scare tactic that “the supply of nails would be limited, sending the industry into a tail spin as happened in 2004.” The fact is 2004 had nothing to do with dumping cases but rather a shortage of steel around the world due to the building going on in China prior to the Olympics. The first successful case against China actually began in 2007.
Fourth, there is no price war between U.S. producers. These cases are supported by the vast majority of domestic nail manufacturers. Although we are the face of the industry in these cases, and squarely in the bulls-eye of our import competitors, we fight for all domestic nail mills, welcoming new domestic producers to join us on our own playing field.
Please remember that our company’s heritage and equipment investments show the level of commitment we have made to the pallet and crating industry. Many of your readers have been to Poplar Bluff to see our facilities. For those who have not, pallet nails are and will remain a significant percentage of our overall business. We make machine quality bulk and wire coil pallet nails every day of the week!
The U.S. market may fluctuate somewhat as these cases continue, but it will continue to be supplied with nails from a variety of domestic and foreign sources. We also expect that as a result of these cases, prices will start to return to fairly-traded levels, that U.S. producers will regain market share and use more of their capacity. This is exactly how the law is supposed to work, and will provide a badly needed breath of fresh air for the domestic industry. In fact, since the success of the China and UAE trade cases we have two brand new domestic manufacturers that are now producing nails right here in the United States.
The U.S. nail industry wants what every member of any domestic manufacturing industry – including the wood pallet industry – should want: to stay in business, compete fairly and earn a reasonable return on your investment and hard work. Mid Continent Steel & Wire employs more than 400 American workers. We believe in the strength of American manufacturing, and are working tirelessly to ensure the future of our industry. Honest competition is good for our company and workers. We know it is good for the market. Unfair competition, on the other hand, allows some importers to make more profit in the short term, but at the cost of valuable manufacturing jobs in the United States.
We ask our customers and competitors alike to support the U.S. nail industry as these cases proceed, because in the end, we all want to make sure that American companies like yours and ours succeed and have a future.
— George Skarich, executive vice president of Mid Continent Nail Corp.
