When is an imported injection molding machine not an injection molding machine?
Robert Branand asked that question, looked through U.S. Customs Service documents, and found some bizarre answers. His study of Customs Service data turned up a shipment of aluminum ingots counted as injection presses. In another case, clothing and personal effects from Portugal were shipped into the port of Los Angeles classified as 20 machines, valued at $5,000 each!
Branand, a Washington lawyer who often represents the Society of the Plastics Industry Inc. of Washington, studied 25 months of Customs Service import records. He completed the report late last year.
It already has yielded results. Beginning Jan. 1, all thermoplastic injection molding machines imported to the United States had to conform to a new, tighter classification system from the International Trade Commission. Each press must bear a new Harmonized Tariff System (HTS) number that designates the clamping-force tonnage range of the machine.
Invoices already must include a detailed description of the merchandise, the quantities in weights and measures and the purchase price.
``Exporters from foreign countries now also will have to fill out invoices by stating that it is a complete machine with a clamp force of X-number of metric tons,'' Branand said.
Customs agents now will be armed with the knowledge of how much a given size of machine usually costs and weighs.
Since government officials reviewed the import data, Branand said, 13 of the offending importers have stopped shipping the misclassified items.
SPI members are hoping the effort works. For years, U.S. machinery makers have complained that inaccurate government data overstates the strength of imported machines.
``The numbers were always in conflict for a long time,'' said Harold Faig, vice president of Cincinnati Milacron Inc.'s plastics technology group.
Faig became a vocal critic of the government data, sounding off at SPI Machinery Division meetings.
Finally, in early 1997, Cincinnati Milacron, the largest U.S.-owned plastics machinery company, commissioned the study by Branand and his Washington consulting firm, Robert Branand International.
Faig declined to say how much Milacron paid for the study. But, he said, fixing the import numbers is an important industry issue.
``This goes for a number of companies in the SPI, especially those in the machinery industry, that are public,'' Faig said. ``If you're a public company there are market analysts who study the industry and the industry trends, and this data is the only available documentation.''
Branand analyzed 25 months of Customs Service import data, from January 1995 through January 1997. First, he looked for shipments of an ``injection molding machine'' valued at less than $50,000 — a lower-than-reality price that raised a red flag. Branand labeled these machines as questionable.
Branand focused on imports of machines for molding thermoplastics, by far the largest category. Over the 25-month period, he found that 28.5 percent of thermoplastic presses were questionable — 2,404 of the 8,462 total imported units.
Then Branand narrowed down the list even more. He found that, of the 2,404 questionable shipments, about one-third, or 791, listed preposterously low values of $10,000 or less. Customs officials checked into what Branand terms extreme examples. Their findings: Just 37 of the 791 were actually injection molding machines.
What were the rest?
Shipped in September, October and November, 412 ``presses'' turned out to be medical and dental supplies from Germany shipped into the port of Philadelphia.
About 200 questionable machines came in from Europe through Boston. ``These were just parts of injection molding machines,'' Branand said. A freight forwarder made the error.
Aluminum ingots from Mexico were classified as 23 presses at three different ports.
Twenty boxes of personal effects from Portugal into Los Angeles were tallied as machines.
Ports in New York and Philadelphia had the most problems, reporting more than 400 questionable shipments during the period.
Why does this happen?
Branand said uncovering motive wasn't part of his job, but he thinks the relatively low machinery tariff of 3.5 percent could lure some importers to mislabel their wares deliberately.
But brokers, U.S. Customs agents and freight forwarders can make mistakes.
The speeded-up global economy is a big part of the problem, Branand thinks.
The vast majority of shipping boats entering U.S. ports use something called automated broker interface. That means incoming boats radio the information in ahead of time. U.S. Customs agents plug the number into computer programs, which compare the listed dollar value with past shipments, volumes and sizes. The computer is supposed to throw up red flags and alert Customs Service agents, who then open containers for a visual inspection.
But Branand said increased imports create a crush of data to crunch.
``The trend is for things to move faster and faster, to get in and out of the port so that you get it cleared even before the ship arrives in port. Ninety-seven percent of everything that's brought into the United States is electronically done.''
But another factor resulted in $5,000 injection molding machines — lack of knowledge about plastics machinery.
``It's still, at this point, too early to tell how successful this program will be,'' said Walt Bishop, executive director of SPI's Machinery Division. ``I think it's going to take a learning curve to make it emblazoned on people's psyche.''
In addition to prompting the new HTS clamping-force numbers, Branand also was charged with educating government agencies about plastics. By December, he had visited 10 ports around the United States to meet with agents.
In April, the Customs Service detailed common mistakes in a letter to Branand from Thomas Mattina, director of the South Florida Strategic Trade Center in Plantation, Fla.:
Machine parts have been misclassified as complete machines.
Various plastic injection molded items appear to have been misclassified under the HTS provisions for plastic injection molding machines. ... For example, an invoice description will state `plastic injection molded electrical components,' yet the importer/filer will classify these items as a `plastic injection molding machine' at time of entry.''
Invoice descriptions are unclear and lack specifics,'' which can cause the importer to incorrectly classify imported items.
Industry officials will be watching this year to see how the improvements affect the data. In mid-1997, concerns about the government data pushed the SPI Machinery Division to stop publicly releasing its own numbers of U.S. shipments.
Faig, of Cincinnati Milacron, favors releasing the SPI data again once the government numbers are accurate.
``When you compare the two,'' Faig said, ``it would definitely show the trend for the U.S. plastics machinery industry to be declining over time, when in fact the opposite is happening and U.S. share of the market is growing,'' he said. ``It doesn't benefit anybody to have inaccurate numbers published.''
Bishop said the Machinery Division will discuss the subject at its spring conference, April 19-22 in Palm Beach, Fla.
Meanwhile, the division also may move its import-data improvement efforts beyond injection molding, to include extrusion and blow molding.
Martin Stark, president of Williamston, Mich., blow molding machine supplier Bekum America Corp., supports expanding the project ``to correct something that has really been done wrong for many years.'' Stark praised Milacron ``for starting this ball rolling.''